Florida
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59-0712746
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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(Check one):
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
x
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Page
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Business
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Risk Factors
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Properties
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Legal Proceedings
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Mine Safety Disclosures
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Market for ISA's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Selected Financial Data
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Quantitative and Qualitative Disclosures About Market Risk
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Consolidated Financial Statements and Supplementary Data
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Controls and Procedures
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Other Information
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Directors, Executive Officers and Corporate Governance
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Executive Compensation
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Certain Relationships and Related Transactions, and Director Independence
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Principal Accountant Fees and Services
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Exhibits and Consolidated Financial Statement Schedules
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Item 1.
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Business.
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•
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Sorting
- After purchasing ferrous scrap material, we inspect it to determine how we should process it to maximize profitability. In some instances, we may sort scrap material and sell it without further processing. We separate scrap material for further processing according to its size, composition and grade by using conveyor systems, front-end loaders, crane-mounted electromagnets and claw-like grapples.
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•
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Cutting
- Pieces of over-sized ferrous scrap material, such as obsolete steel girders and used pipe, which are too large for other processing, are cut with hand torches.
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•
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Baling
- We process light-gauge ferrous materials such as clips, sheet iron and by-products from industrial and commercial processes, such as stampings, clippings and excess trimmings, by baling these materials into large, uniform blocks. We use cranes and conveyors to feed the material into a hydraulic press, which compresses the material into uniform blocks.
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•
|
Shredding
- In May 2015, we warm idled our shredder. Prior to this date, we shredded large pieces of ferrous scrap material, such as automobiles and major appliances, in our shredder by hammer mill action into pieces of a workable size that pass through magnetic separators to separate metal from synthetic foam, fabric, rubber, stone, dirt, etc. The metal we recovered from the shredding process was sold directly to customers or reused in some other metal blend. The residue by-product is usually referred to as “automobile shredder residue” (ASR) or “shredder fluff”. We disposed of the non-metal components, which can reduce the volume of the scrap as much as 25.0%, in a landfill.
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•
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Sorting
- Our sorting operations separate and identify non-ferrous scrap by using front-end loaders, grinders, hand torches and spectrometers. Our ability to identify metallurgical composition maximizes margins and profitability. We sort non-ferrous scrap material for further processing according to type, grade, size and chemical composition. Throughout the sorting process, we determine whether the material requires further processing before we sell it.
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•
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Cutting
- Pieces of over-sized non-ferrous scrap material, which are too large for other processing methods, are cut with hand torches.
|
•
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Baling
- We process non-ferrous metals such as aluminum cans, sheet and siding by baling these materials into large uniform blocks. We use front-end loaders and conveyors to feed the material into a hydraulic press, which compresses the material into uniform blocks.
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•
|
Shredding
- In May 2015, we warm idled our shredder. Prior to this date, we shredded large pieces of nonferrous scrap material, such as steel drums, copper and aluminum cable, tubing, sheet metal, extrusions, and baled aluminum, in our shredder by hammer mill action into pieces of a workable size that pass through magnetic separators to separate metal from synthetic foam, fabric, rubber, stone, dirt, etc. The metal we recovered from the shredding process was sold directly to customers or reused in some other metal blend. We disposed of the non-metal components, which can reduce the volume of the scrap as much as 25.0%, in a landfill.
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•
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Our quarterly operating results or the operating results of our operations in the ferrous, non-ferrous and used auto parts industries;
|
•
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Changes in general conditions in the economy, the financial markets or the ferrous and non-ferrous recycling industry;
|
•
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Loss of significant customers; and
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•
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Increases in materials and other costs.
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Item 2.
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Properties.
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Property Address
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Lease or own
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Segment
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Acreage
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6709 Grade Lane, Louisville, KY
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Lease (1)
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Recycling & Other
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1.326
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7023-7103 Grade Lane, Louisville, KY
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Own
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Recycling
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2.530
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7020/7100 Grade Lane, Louisville, KY
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Lease (K&R) (2)
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Recycling & Other
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14.230
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7110 Grade Lane, Louisville, KY
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Own
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Recycling
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10.723
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7124 Grade Lane, Louisville, KY
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Own
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Recycling
|
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5.120
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7200-7210 Grade Lane, Louisville, KY
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Own
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Recycling
|
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15.520
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3409 Camp Ground Road, Louisville, KY
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Own
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Recycling
|
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5.670
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|
960 S, County Rd 900 W, North Vernon, IN
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Lease (3)
|
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Recycling
|
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14.000
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1617 State Road 111, New Albany, IN
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Own
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Recycling
|
|
1.300
|
|
(1)
|
See Note 10 - Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information related to the 6709 Grade Lane lease.
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(2)
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See Note 10 - Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information related to the K&R lease.
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(3)
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See Note 4 - Lease Commitments in the accompanying Notes to Consolidated Financial Statements for additional information related to the Seymour/North Vernon lease.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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|
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Item 5.
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Market for ISA’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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|
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2015
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2014
|
||||||||||||
Quarter Ended
|
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High
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Low
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High
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Low
|
||||||||
March 31
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$
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6.00
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|
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$
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4.13
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|
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$
|
5.34
|
|
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$
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2.81
|
|
June 30
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$
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4.64
|
|
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$
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3.36
|
|
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$
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6.19
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|
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$
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4.27
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September 30
|
|
$
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4.08
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|
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$
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3.35
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|
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$
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6.99
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|
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$
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4.95
|
|
December 31
|
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$
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3.52
|
|
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$
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1.24
|
|
|
$
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6.10
|
|
|
$
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3.80
|
|
Item 6.
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Selected Financial Data.
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(Amounts in thousands, except per share data)
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||||||||||||||||||
Year ended December 31:
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2015
|
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2014
|
|
2013
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|
2012
|
|
2011
|
||||||||||
Total revenue
|
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$
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46,180
|
|
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$
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110,091
|
|
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$
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136,753
|
|
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$
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194,232
|
|
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$
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277,213
|
|
Net loss from continuing operations
|
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$
|
(9,085
|
)
|
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$
|
(8,686
|
)
|
|
$
|
(13,816
|
)
|
|
$
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(6,620
|
)
|
|
$
|
(3,881
|
)
|
Net (loss) income from discontinued operations
|
|
$
|
7,320
|
|
|
$
|
1,413
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|||
Earnings (loss) per common share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
(1.96
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
(0.56
|
)
|
Diluted
|
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
|
$
|
(1.96
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
(0.56
|
)
|
Earnings (loss) per common share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
0.92
|
|
|
0.19
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|||||
Diluted
|
|
0.92
|
|
|
0.19
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|||||
At year end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total assets
|
|
$
|
19,434
|
|
|
$
|
37,790
|
|
|
$
|
44,032
|
|
|
$
|
63,323
|
|
|
$
|
80,970
|
|
Current maturities of long-term debt
|
|
$
|
20
|
|
|
$
|
15,911
|
|
|
$
|
1,597
|
|
|
$
|
1,687
|
|
|
$
|
1,821
|
|
Long-term debt, net of current maturities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,295
|
|
|
$
|
23,369
|
|
|
$
|
26,688
|
|
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
Total accumulated other comprehensive loss as of 12/31/14
|
|
$
|
(10
|
)
|
Unrealized loss on derivative instruments during 2015
|
|
(5
|
)
|
|
Amounts reclassified from accumulated other comprehensive income during 2015
|
|
15
|
|
|
Total accumulated other comprehensive loss as of 12/31/15
|
|
$
|
—
|
|
•
|
a decrease of $1.5 million in direct labor costs, employment taxes and fees, and insurance due to fewer average employees on the weekly payroll in 2015 as compared to 2014;
|
•
|
a decrease of $0.3 million in repairs and maintenance expense; and
|
•
|
a decrease of $0.5 million in fuel and lubricants.
|
•
|
a decrease in stock option expense of $2.3 million primarily relating to the Algar stock option agreement entered into in 2013; and
|
•
|
a decrease in bonus expense to Algar of $0.4 million.
|
|
Fiscal Year Ended December 31,
|
||||||
Description Other Income (Expense)
|
2015
|
|
2014
|
||||
Income from settlements
|
$
|
34.0
|
|
|
$
|
—
|
|
Other
|
(7.0
|
)
|
|
8.6
|
|
||
Total other income, net
|
$
|
27.0
|
|
|
$
|
8.6
|
|
|
2015
|
|
2014
|
||||
Ferrous, and non-ferrous materials
|
$
|
2,407
|
|
|
$
|
5,347
|
|
Other
|
3
|
|
|
11
|
|
||
Total inventories for sale
|
2,410
|
|
|
5,358
|
|
||
Replacement parts
|
—
|
|
|
1,371
|
|
||
Total inventories
|
$
|
2,410
|
|
|
$
|
6,729
|
|
•
|
a decrease in current maturities of long-term debt of $15.9 million; and
|
•
|
a decrease in accounts payable of $0.5 million.
|
•
|
a decrease in cash of $0.4 million;
|
•
|
a decrease in net accounts receivable of $7.3 million;
|
•
|
a decrease in related party receivable of $0.2 million;
|
•
|
a decrease in inventories of $4.3 million;
|
•
|
a decrease of $0.4 million in prepaid expenses and other current assets; and
|
•
|
an increase in related party payables of $0.3 million.
|
|
|
Payments due by period (in thousands)
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 year
|
|
1 - 2 years
|
|
3 - 5 years
|
|
More than
5 years
|
||||||||||
Obligation Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Long-term debt obligations
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
|
3,000
|
|
|
1,168
|
|
|
1,546
|
|
|
286
|
|
|
—
|
|
|||||
Deposit from related party
|
|
500
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
3,520
|
|
|
$
|
1,688
|
|
|
$
|
1,546
|
|
|
$
|
286
|
|
|
$
|
—
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
(a)
|
Disclosure controls and procedures.
|
(b)
|
Internal controls over financial reporting.
|
▪
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;
|
▪
|
provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
▪
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
|
(c)
|
Changes to internal control over financial reporting.
|
|
|
Item 9B.
|
Other Information.
|
|
|
Item 15.
|
Exhibits and Consolidated Financial Statement Schedules.
|
(a)(1) The following consolidated financial statements of Industrial Services of America, Inc. are filed as a part of this report:
|
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
F-
1
|
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
F-
2
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2015 and 2014
|
F-
4
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015 and 2014
|
F-
5
|
|
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015 and 2014
|
F-
6
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
|
F-
7
|
|
|
Notes to Consolidated Financial Statements
|
F-
8
|
(a)(3) List of Exhibits
|
|
Exhibits filed with, or incorporated by reference herein, this report are identified in the Index to Exhibits appearing in this report. Each management agreement or compensatory plan required to be filed as exhibits to this Form 10-K pursuant to Item 15(b) is noted by an asterisk (*) in the Index to Exhibits.
|
|
|
|
(b) Exhibits.
|
|
The exhibits listed on the Index to Exhibits are filed as a part of this report.
|
|
|
|
|
|
INDUSTRIAL SERVICES OF AMERICA, INC.
|
|
|
|
|
|
Dated:
|
March 25, 2016
|
By :
|
/s/ Orson Oliver
|
|
|
|
|
|
|
|
Orson Oliver, Chairman of the Board and Interim Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Orson Oliver
|
|
Chairman of the Board and Interim Chief Executive Officer
|
|
March 25, 2016
|
Orson Oliver
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Todd Phillips
|
|
Chief Financial Officer
|
|
March 25, 2016
|
Todd Phillips
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Albert Cozzi
|
|
Director
|
|
March 25, 2016
|
Albert Cozzi
|
|
|
|
|
|
|
|
|
|
/s/ Sean Garber
|
|
Director, President
|
|
March 25, 2016
|
Sean Garber
|
|
|
|
|
|
|
|
|
|
/s/ Ronald Strecker
|
|
Director
|
|
March 25, 2016
|
Ronald Strecker
|
|
|
|
|
|
|
|
|
|
/s/ Vince Tyra
|
|
Director
|
|
March 25, 2016
|
Vince Tyra
|
|
|
|
|
|
|
|
|
|
/s/ William Yarmuth
|
|
Director
|
|
March 25, 2016
|
William Yarmuth
|
|
|
|
|
Exhibit
Number |
|
Description of Exhibits
|
|
|
|
2.1
|
**
|
Asset Purchase Agreement dated as of December 4, 2015, by and among Industrial Services of America, Inc., WESSCO, LLC, and Compactor Rentals of America, LLC. (Attachments and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Industrial Services of America, Inc. hereby undertakes to furnish supplementally copies of any of the omitted attachments and schedules upon request by the U.S. Securities and Exchange Commission.) (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated December 4, 2015) (File No. 0-20979).
|
|
|
|
3.1
|
**
|
Industrial Services of America, Inc. Amended and Restated Articles of Incorporation are incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 0-20979).
|
|
|
|
3.2
|
**
|
Amended and Restated By-laws of ISA, dated March 3, 2016. (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated March 3, 2016) (File No. 0-20979).
|
|
|
|
4.1
|
**
|
Securities Purchase Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC. (incorporated by reference to Exhibit 4.1 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
4.2
|
**
|
Registration Rights Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC. (incorporated by reference to Exhibit 4.2 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
4.3
|
**
|
Common Stock Purchase Warrant dated as of June 13, 2014 by the Company to Recycling Capital Partners, LLC. (incorporated by reference to Exhibit 4.3 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.1
|
**
|
Lease Agreement, dated January 1, 1998, by and between ISA and K&R, is incorporated by reference herein, to Exhibit 10.10 on Form 8-K of ISA, filed March 3, 1998 (File No. 0-20979).
|
|
|
|
10.2
|
**
|
Industrial Services of America, Inc. 2009 Long Term Incentive Plan (incorporated by reference to Exhibit 10.57 to the Company's proxy statement on Form DEF 14A filed on April 30, 2009) (File No. 0-20979).*
|
|
|
|
10.3
|
**
|
Form of Stock Option Agreement issued in connection with the 2009 Long Term Incentive Plan is incorporated by reference herein to Exhibit 10.57 of ISA's Report on Form 10-K, as filed on April 1, 2013 (File No. 0-20979).*
|
|
|
|
10.4
|
**
|
Promissory Note, dated October 15, 2013, by and between WESSCO, LLC and The Bank of Kentucky, Inc. in the amount of $3,000,000 payable to The Bank of Kentucky, Inc. is incorporated by reference herein to Exhibit 10.1 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
10.5
|
**
|
Promissory Note, dated October 15, 2013, by and between WESSCO, LLC and The Bank of Kentucky, Inc. in the amount of $1,000,000 payable to The Bank of Kentucky, Inc. is incorporated by reference herein to Exhibit 10.2 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
10.6
|
**
|
Security Agreement, dated as of October 15, 2013, by and among WESSCO, LLC and The Bank of Kentucky, Inc. is incorporated by reference herein to Exhibit 10.3 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
Exhibit
Number |
|
Description of Exhibits
|
|
|
|
10.7
|
**
|
Guaranty of Payment, dated as of October 15, 2013, by and among Industrial Services of America, Inc. and The Bank of Kentucky, Inc. is incorporated by reference herein to Exhibit 10.4 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
10.8
|
**
|
Assignment of Promissory Note, dated as of October 15, 2013, by and among Industrial Services of America, Inc. and The Bank of Kentucky, Inc. is incorporated by reference herein to Exhibit 10.5 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
10.9
|
**
|
Promissory Note, dated October 15, 2013, by and between Industrial Services of America, Inc., and WESSCO, LLC, in the amount of $3,000,000 payable to WESSCO, LLC is incorporated by reference herein to Exhibit 10.6 of the Company's Report on Form 8-K, as filed on October 21, 2013 (File No. 0-20979).
|
|
|
|
10.10
|
**
|
Management Services Agreement dated as of December 1, 2013, between the Company and Algar, Inc., including the Stock Option Agreement attached thereto as Attachment A is incorporated by reference herein to Exhibit 10.1 of the Company's Report on Form 8-K, as filed on December 4, 2013 (File No. 0-20979).*
|
|
|
|
10.11
|
**
|
Swap Confirmation, dated October 17, 2013, between WESSCO, LLC and The Bank of Kentucky, Inc. in the notional amount of $3,000,000 (incorporated by reference to Exhibit 10.68 to the Company's Annual Report on Form 10-K, for the year ended December 31, 2013) ( (File No. 0-20979).
|
|
|
|
10.12
|
**
|
Director Designation Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC. (incorporated by reference to Exhibit 10.1 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.13
|
**
|
Credit Agreement dated as of June 13, 2014 between the Company and Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.14
|
**
|
Revolving Promissory Note dated as of June 13, 2014 by Industrial Services of America, Inc. in favor of Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.3 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.15
|
**
|
Term Promissory Note dated as of June 13, 2014 by Industrial Services of America, Inc. in favor of Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.4 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.16
|
**
|
Security Agreement dated as of June 13, 2014 between the Company, its subsidiaries and Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.5 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.17
|
**
|
Continuing Guaranty dated as of June 13, 2014 issued by the Company’s subsidiaries to Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.6 of the Company’s Report on Form 8-K as filed on June 19, 2014) (File No. 0-20979).
|
|
|
|
10.18
|
**
|
Securities Purchase Agreement dated December 31, 2014 between the Company and Todd L. Phillips. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated December 31, 2014) (File No. 0-20979). *
|
|
|
|
10.19
|
**
|
Executive Employment Agreement dated December 31, 2014 between the Company and Todd L. Phillips. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated December 31, 2014) (File No. 0-20979). *
|
|
|
|
Exhibit
Number |
|
Description of Exhibits
|
|
|
|
10.20
|
**
|
Stock Option Agreement dated December 31, 2014 between the Company and Todd L. Phillips. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated December 31, 2014) (File No. 0-20979). *
|
|
|
|
10.21
|
**
|
Stock Option Agreement dated January 2, 2015 between the Company and Todd L. Phillips. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated December 31, 2014) (File No. 0-20979). *
|
|
|
|
10.22
|
**
|
Promissory Note, dated January 15, 2015, between WESSCO, LLC and The Bank of Kentucky, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 15, 2015) (File No. 0-20979).
|
|
|
|
10.23
|
**
|
First Amendment to Credit Agreement, dated January 15, 2015 among the Company, its subsidiaries, and Wells Fargo Bank. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 15, 2015) (File No. 0-20979).
|
|
|
|
10.24
|
**
|
Amended and Restated Subordination Agreement, dated January 15, 2015, between WESSCO, LLC and The Bank of Kentucky. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 15, 2015) (File No. 0-20979).
|
|
|
|
10.25
|
**
|
Security Agreement, dated January 15, 2015 between WESSCO, LLC and The Bank of Kentucky, Inc. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated January 15, 2015) (File No. 0-20979).
|
|
|
|
10.26
|
**
|
Guaranty of Payment, dated January 15, 2015, between the Company and The Bank of Kentucky, Inc. (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated January 15, 2015) (File No. 0-20979).
|
|
|
|
10.27
|
**
|
Offer to Purchase Real Estate dated April 30, 2015 from LK Property Investments, LLC to ISA Real Estate LLC. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 30, 2015) (File No. 0-20979).
|
|
|
|
10.28
|
**
|
Lease Agreement dated April 30, 2015 by and between Industrial Services of America, Inc. and LK Property Investments, LLC. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 30, 2015) (File No. 0-20979).
|
|
|
|
10.29
|
**
|
Stock Purchase Agreement, dated as of August 5, 2015, between Industrial Services of America, Inc. and Algar, Inc. (incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated August 5, 2015) (File No. 0-20979). *
|
|
|
|
10.30
|
**
|
Forbearance Agreement and Third Amendment to Credit Agreement, dated November 6, 2015, between the Company, certain of its subsidiaries and Wells Fargo Bank, National Association. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 6, 2015) (File No. 0-20979).
|
|
|
|
10.31
|
**
|
Loan and Security Agreement dated as of February 29, 2016 between the Company, its subsidiaries and MidCap Business Credit LLC. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 29, 2016) (File No. 0-20979).
|
|
|
|
10.32
|
**
|
Revolving Note made by the Company to the order of MidCap Business Credit LLC in face principal amount of $6,000,000. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated February 29, 2016) (File No. 0-20979).
|
|
|
|
10.33
|
**
|
Pledge and Security Agreement dated as of February 29, 2016 between the Company, its subsidiaries and MidCap Business Credit LLC. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated February 29, 2016) (File No. 0-20979).
|
Exhibit
Number |
|
Description of Exhibits
|
|
|
|
10.34
|
**
|
Guaranty and Suretyship Agreement of the Company’s subsidiaries as guarantors for the benefit of MidCap Business Credit LLC. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated February 29, 2016) (File No. 0-20979).
|
|
|
|
10.35
|
|
Term Note, date February 29, 2016, issued by the Company to K&R, LLC.
|
|
|
|
10.36
|
|
Term Note, date February 29, 2016, issued by the Company to 7100 Grade Lane, LLC.
|
|
|
|
10.37
|
|
Intercreditor and Subordination Agreement, dated February 29, 2016, among the Company and K&R, LLC for the benefit of MidCap Business Credit LLC.
|
|
|
|
10.38
|
|
Intercreditor and Subordination Agreement, dated February 29, 2016, among the Company and 7100 Grade Lane, LLC for the benefit of MidCap Business Credit LLC.
|
|
|
|
10.39
|
|
Restricted Stock Unit Grant Agreement, dated March 25, 2016, between the Company and Todd L. Phillips.*
|
|
|
|
10.40
|
|
Retention Agreement, dated March 25, 2016, between the Company and Todd L. Phillips.*
|
|
|
|
11
|
|
Statement of Computation of Earnings Per Share (See Note 9 in the accompanying Notes to Consolidated Financial Statements).
|
|
|
|
21
|
|
List of subsidiaries of Industrial Services of America, Inc.
|
|
|
|
31.1
|
|
Rule 13a-14(a) Certification of Orson Oliver for the Form 10-K for the year ended December 31, 2015.
|
|
|
|
31.2
|
|
Rule 13a-14(a) Certification of Todd Phillips for the Form 10-K for the year ended December 31, 2015.
|
|
|
|
32.1
|
|
Section 1350 Certification of Orson Oliver and Todd Phillips for the Form 10-K for the year ended December 31, 2015.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definitions Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Document
|
|
|||||||
|
2015
|
|
2014
|
||||
ASSETS
|
(in thousands)
|
||||||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
642
|
|
|
$
|
1,059
|
|
Income tax receivable
|
14
|
|
|
—
|
|
||
Accounts receivable – trade (after allowance for doubtful accounts of $35.0 thousand and $100.0 thousand in 2015 and 2014, respectively) (Note 1)
|
1,669
|
|
|
8,947
|
|
||
Receivables from related parties (Note 10)
|
208
|
|
|
409
|
|
||
Inventories (Note 1)
|
2,410
|
|
|
6,729
|
|
||
Prepaid expenses and other current assets
|
160
|
|
|
535
|
|
||
Assets held for sale, current (Note 15)
|
—
|
|
|
1,183
|
|
||
Total current assets
|
5,103
|
|
|
18,862
|
|
||
Net property and equipment (Note 1)
|
14,152
|
|
|
17,563
|
|
||
Other assets
|
|
|
|
|
|
||
Deferred income taxes (Note 7)
|
97
|
|
|
97
|
|
||
Assets held for sale, non-current (Note 15)
|
—
|
|
|
1,191
|
|
||
Other non-current assets
|
82
|
|
|
77
|
|
||
Total other assets
|
179
|
|
|
1,365
|
|
||
Total assets
|
$
|
19,434
|
|
|
$
|
37,790
|
|
|
See accompanying notes to consolidated financial statements.
|
F-
2
|
|
2015
|
|
2014
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
(in thousands)
|
||||||
Current liabilities
|
|
|
|
|
|
||
Current maturities of long-term debt (Note 3)
|
$
|
20
|
|
|
$
|
15,911
|
|
Bank overdrafts
|
—
|
|
|
79
|
|
||
Accounts payable
|
2,152
|
|
|
2,622
|
|
||
Income tax payable
|
—
|
|
|
27
|
|
||
Interest rate swap agreement liability (Note 1)
|
—
|
|
|
10
|
|
||
Payable to related parties (Note 10)
|
1,922
|
|
|
1,640
|
|
||
Liabilities held for sale, current (Note 15)
|
—
|
|
|
868
|
|
||
Other current liabilities
|
194
|
|
|
128
|
|
||
Total current liabilities
|
4,288
|
|
|
21,285
|
|
||
Long-term liabilities
|
|
|
|
|
|
||
Long-term debt, net of current maturities (Note 3)
|
—
|
|
|
—
|
|
||
Total long-term liabilities
|
—
|
|
|
—
|
|
||
Shareholders’ equity
|
|
|
|
|
|
||
Common stock, $0.0033 par value: 20.0 million shares authorized in 2015 and 2014; 8,049,622 shares issued in 2015 and 2014; 8,018,932 and 7,956,410 shares outstanding in 2015 and 2014, respectively
|
27
|
|
|
27
|
|
||
Additional paid-in capital
|
23,555
|
|
|
23,249
|
|
||
Stock warrants outstanding
|
1,025
|
|
|
1,025
|
|
||
Retained (losses) earnings
|
(9,417
|
)
|
|
(7,652
|
)
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(10
|
)
|
||
Treasury stock at cost, 30,690 and 93,212 shares in 2015 and 2014, respectively
|
(44
|
)
|
|
(134
|
)
|
||
Total shareholders’ equity
|
15,146
|
|
|
16,505
|
|
||
Total liabilities and shareholders’ equity
|
$
|
19,434
|
|
|
$
|
37,790
|
|
|
See accompanying notes to consolidated financial statements.
|
F-
3
|
|
2015
|
|
2014
|
||||
|
(in thousands, except per share information)
|
||||||
Revenue from product sales
|
$
|
46,180
|
|
|
$
|
110,091
|
|
Total revenue
|
46,180
|
|
|
110,091
|
|
||
Cost of sales for product sales
|
49,105
|
|
|
109,624
|
|
||
Impairment loss, property and equipment
|
637
|
|
|
—
|
|
||
Inventory adjustment for lower of cost or market (Note 1)
|
1,283
|
|
|
1,911
|
|
||
Total cost of sales
|
51,025
|
|
|
111,535
|
|
||
Selling, general, and administrative expenses
|
3,879
|
|
|
6,438
|
|
||
Total selling, general and administrative expenses
|
3,879
|
|
|
6,438
|
|
||
Loss before other income (expense)
|
(8,724
|
)
|
|
(7,882
|
)
|
||
Other income (expense)
|
|
|
|
|
|
||
Interest expense, including loan fee amortization
|
(695
|
)
|
|
(849
|
)
|
||
Gain on sale of assets
|
320
|
|
|
74
|
|
||
Other income
|
27
|
|
|
9
|
|
||
Total other expense
|
(348
|
)
|
|
(766
|
)
|
||
Loss before income taxes
|
(9,072
|
)
|
|
(8,648
|
)
|
||
Income tax provision (Note 7)
|
13
|
|
|
38
|
|
||
Net loss from continuing operations
|
(9,085
|
)
|
|
(8,686
|
)
|
||
Income from discontinued operations, net of tax, including gain of $6.0 million in 2015
|
$
|
7,320
|
|
|
$
|
1,413
|
|
Net Loss
|
$
|
(1,765
|
)
|
|
$
|
(7,273
|
)
|
|
|
|
|
||||
Net income (loss) per share of common stock:
|
|
|
|
||||
Basic:
|
|
|
|
||||
Continuing operations
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
Discontinued operations
|
$
|
0.92
|
|
|
$
|
0.19
|
|
Diluted:
|
|
|
|
||||
Continuing operations
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
Discontinued operations
|
$
|
0.92
|
|
|
$
|
0.19
|
|
|
See accompanying notes to consolidated financial statements.
|
F-
4
|
|
|
2015
|
|
2014
|
||||
|
|
(in thousands)
|
||||||
Net loss
|
|
$
|
(1,765
|
)
|
|
$
|
(7,273
|
)
|
|
|
|
|
|
||||
Other comprehensive income:
|
|
|
|
|
||||
Unrealized (loss) gain on derivative instruments
|
|
(5
|
)
|
|
61
|
|
||
Amounts reclassified from accumulated other comprehensive income
|
|
15
|
|
|
—
|
|
||
|
|
|
|
|
||||
Comprehensive loss
|
|
$
|
(1,755
|
)
|
|
$
|
(7,212
|
)
|
|
See accompanying notes to consolidated financial statements.
|
F-
5
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Stock Warrants
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Cost
|
|
Total
|
||||||||||||||||||||||
Balance as of December 31, 2013
|
7,192,479
|
|
|
$
|
24
|
|
|
$
|
18,649
|
|
|
—
|
|
|
$
|
(379
|
)
|
|
$
|
(71
|
)
|
|
(123,212
|
)
|
|
(177
|
)
|
|
$
|
18,046
|
|
||
Common stock and warrants
|
857,143
|
|
|
3
|
|
|
1,952
|
|
|
1,025
|
|
|
—
|
|
|
—
|
|
|
30,000
|
|
|
43
|
|
|
3,023
|
|
|||||||
Unrealized gain on derivative instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||||
Stock option compensation
|
—
|
|
|
—
|
|
|
2,591
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,591
|
|
|||||||
Common shares granted
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,273
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,273
|
)
|
|||||||
Balance as of December 31, 2014
|
8,049,622
|
|
|
$
|
27
|
|
|
$
|
23,249
|
|
|
$
|
1,025
|
|
|
$
|
(7,652
|
)
|
|
$
|
(10
|
)
|
|
(93,212
|
)
|
|
$
|
(134
|
)
|
|
$
|
16,505
|
|
Common stock
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,522
|
|
|
90
|
|
|
189
|
|
|||||||
Unrealized gain on derivative instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||||
Stock option compensation
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,765
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,765
|
)
|
|||||||
Balance as of December 31, 2015
|
8,049,622
|
|
|
$
|
27
|
|
|
$
|
23,555
|
|
|
$
|
1,025
|
|
|
$
|
(9,417
|
)
|
|
$
|
—
|
|
|
(30,690
|
)
|
|
$
|
(44
|
)
|
|
$
|
15,146
|
|
|
See accompanying notes to consolidated financial statements.
|
F-
6
|
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||
Net loss from continuing operations
|
$
|
(9,085
|
)
|
|
$
|
(8,686
|
)
|
Adjustments to reconcile net loss to net cash from operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
2,354
|
|
|
2,683
|
|
||
Inventory write-down
|
1,283
|
|
|
1,911
|
|
||
Stock option expense
|
207
|
|
|
2,516
|
|
||
Impairment loss, property and equipment
|
637
|
|
|
—
|
|
||
Gain on sale of property and equipment
|
(320
|
)
|
|
(74
|
)
|
||
Amortization of loan fees included in interest expense
|
242
|
|
|
73
|
|
||
Change in assets and liabilities
|
|
|
|
|
|
||
Receivables
|
7,278
|
|
|
1,233
|
|
||
Receivables from related parties
|
201
|
|
|
(19
|
)
|
||
Inventories
|
2,029
|
|
|
88
|
|
||
Income tax receivable/payable
|
(41
|
)
|
|
34
|
|
||
Other assets
|
128
|
|
|
(460
|
)
|
||
Accounts payable
|
(470
|
)
|
|
(2,712
|
)
|
||
Payables to related parties
|
521
|
|
|
1,110
|
|
||
Other current liabilities
|
66
|
|
|
(128
|
)
|
||
Net cash from (used in) operating activities
|
5,030
|
|
|
(2,431
|
)
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Proceeds from sale of property and equipment
|
2,117
|
|
|
82
|
|
||
Purchases of property and equipment
|
(21
|
)
|
|
(45
|
)
|
||
Net cash from investing activities
|
2,096
|
|
|
37
|
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Loan fees capitalized
|
—
|
|
|
(245
|
)
|
||
Proceeds from sale of common stock and warrants, net
|
—
|
|
|
3,063
|
|
||
Change in bank overdrafts
|
(79
|
)
|
|
(515
|
)
|
||
Proceeds from long-term debt
|
362
|
|
|
12,500
|
|
||
Payments on long-term debt
|
(16,253
|
)
|
|
(14,481
|
)
|
||
Net cash (used in) from financing activities
|
(15,970
|
)
|
|
322
|
|
||
Cash flows from discontinued operations
|
|
|
|
||||
Net cash provided by operating activities
|
1,783
|
|
|
1,832
|
|
||
Net cash provided by investing activities
|
6,644
|
|
|
(290
|
)
|
||
Net cash from discontinued operations
|
8,427
|
|
|
1,542
|
|
||
Net change in cash and cash equivalents
|
(417
|
)
|
|
(530
|
)
|
||
Cash and cash equivalents at beginning of year
|
1,059
|
|
|
1,589
|
|
||
Cash and cash equivalents at end of year
|
$
|
642
|
|
|
$
|
1,059
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
532
|
|
|
$
|
838
|
|
Tax refunds received
|
2
|
|
|
2
|
|
||
Cash paid for income taxes
|
58
|
|
|
6
|
|
||
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
|
|
||
Increase (decrease) in equipment purchases accrual
|
$
|
(30
|
)
|
|
$
|
30
|
|
Common stock issued in exchange for a reduction of accrued but unpaid bonus compensation
|
189
|
|
|
—
|
|
||
Real estate sale proceeds used to offset accrued but unpaid bonus compensation
|
50
|
|
|
—
|
|
|
See accompanying notes to consolidated financial statements.
|
F-
7
|
|
|
Fair Value at Reporting Date Using
|
|
|
||||||||||||
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
|
|
||||||||
2015:
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
642
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
642
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||
Long term debt
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
|
Fair Value at Reporting Date Using
|
|
|
||||||||||||
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
|
|
||||||||
2014:
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,059
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,059
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|||||||
Long term debt
|
|
$
|
—
|
|
|
$
|
(15,911
|
)
|
|
$
|
—
|
|
|
$
|
(15,911
|
)
|
Derivative contract - interest rate swap
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
December 31, 2015
|
||||||||||||||
|
Raw
Materials
|
|
Finished
Goods
|
|
Processing
Costs
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Ferrous and non-ferrous materials
|
$
|
1,354
|
|
|
$
|
649
|
|
|
$
|
404
|
|
|
$
|
2,407
|
|
Other
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total inventories
|
$
|
1,354
|
|
|
$
|
652
|
|
|
$
|
404
|
|
|
$
|
2,410
|
|
|
December 31, 2014
|
||||||||||||||
|
Raw
Materials
|
|
Finished
Goods
|
|
Processing
Costs
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Ferrous and non-ferrous materials
|
$
|
3,827
|
|
|
$
|
1,043
|
|
|
$
|
477
|
|
|
$
|
5,347
|
|
Other
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Total inventories for sale
|
3,827
|
|
|
1,054
|
|
|
477
|
|
|
5,358
|
|
||||
Replacement parts
|
1,371
|
|
|
—
|
|
|
—
|
|
|
1,371
|
|
||||
Total inventories
|
$
|
5,198
|
|
|
$
|
1,054
|
|
|
$
|
477
|
|
|
$
|
6,729
|
|
|
Life
|
|
2015
|
|
2014
|
||||
Land
|
|
|
$
|
4,993
|
|
|
$
|
5,745
|
|
Equipment and vehicles
|
1-10 years
|
|
25,363
|
|
|
25,181
|
|
||
Office equipment
|
1-7 years
|
|
1,624
|
|
|
2,057
|
|
||
Building and leasehold improvements
|
5-40 years
|
|
7,821
|
|
|
8,602
|
|
||
|
|
|
$
|
39,801
|
|
|
$
|
41,585
|
|
Less accumulated depreciation
|
|
|
25,649
|
|
|
24,022
|
|
||
|
|
|
$
|
14,152
|
|
|
$
|
17,563
|
|
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Revolving credit facility with Wells Fargo. See above description for additional details.
|
$
|
20
|
|
|
$
|
10,453
|
|
Note payable to Wells Fargo in the original amount of $2.8 million secured by shredder system assets and other Recycling equipment. See above description for additional details.
|
—
|
|
|
2,520
|
|
||
Note payable to the KY Bank in the original amount of $3.0 million secured by all WESSCO assets. See above description for additional details.
|
—
|
|
|
2,361
|
|
||
Revolving credit facility converted to term loan with the Bank of Kentucky, Inc. See above description for additional details.
|
—
|
|
|
577
|
|
||
|
20
|
|
|
15,911
|
|
||
Less current maturities
|
20
|
|
|
15,911
|
|
||
|
$
|
—
|
|
|
$
|
—
|
|
2016
|
$
|
20
|
|
2017
|
—
|
|
|
2018
|
—
|
|
|
2019
|
—
|
|
|
2020
|
—
|
|
|
|
|
|
|
Total long-term debt
|
$
|
20
|
|
2016
|
|
$
|
1,168
|
|
2017
|
|
1,142
|
|
|
2018
|
|
404
|
|
|
2019
|
|
286
|
|
|
2020
|
|
—
|
|
|
|
|
|
||
Future minimum lease payments
|
|
$
|
3,000
|
|
|
2015
|
|
2014
|
||||
Federal
|
|
|
|
|
|
||
Current
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
—
|
|
|
—
|
|
||
|
—
|
|
|
—
|
|
||
State and Local
|
|
|
|
|
|
||
Current
|
13
|
|
|
38
|
|
||
Deferred
|
—
|
|
|
—
|
|
||
|
13
|
|
|
38
|
|
||
|
$
|
13
|
|
|
$
|
38
|
|
|
2015
|
|
2014
|
||||
Federal income tax at statutory rate
|
$
|
(595
|
)
|
|
$
|
(2,460
|
)
|
State and local income taxes, net of federal income tax effect
|
(77
|
)
|
|
(221
|
)
|
||
Permanent differences
|
—
|
|
|
—
|
|
||
Increase in deferred tax asset valuation allowance
|
716
|
|
|
3,035
|
|
||
Other differences
|
(31
|
)
|
|
(316
|
)
|
||
|
$
|
13
|
|
|
$
|
38
|
|
|
2015
|
|
2014
|
||||
Deferred tax liabilities
|
|
|
|
|
|
||
Property and equipment
|
$
|
(1,459
|
)
|
|
$
|
(2,131
|
)
|
Gross deferred tax liabilities
|
(1,459
|
)
|
|
(2,131
|
)
|
||
Deferred tax assets
|
|
|
|
|
|
||
Intangibles and goodwill
|
2,286
|
|
|
2,535
|
|
||
Accrued property taxes
|
13
|
|
|
13
|
|
||
Allowance for doubtful accounts
|
14
|
|
|
41
|
|
||
Inventory capitalization
|
63
|
|
|
83
|
|
||
Stock options
|
1,147
|
|
|
1,084
|
|
||
Federal net operating loss carry forward
|
4,176
|
|
|
3,920
|
|
||
State net operating loss carry forward
|
1,758
|
|
|
1,659
|
|
||
State recycling equipment tax credit carry forward
|
4,598
|
|
|
4,604
|
|
||
Interest rate swap
|
—
|
|
|
4
|
|
||
Inventory valuation reserve
|
78
|
|
|
—
|
|
||
Accrued expenses
|
77
|
|
|
223
|
|
||
Other
|
11
|
|
|
11
|
|
||
Gross deferred tax assets
|
14,221
|
|
|
14,177
|
|
||
Valuation allowance
|
(12,665
|
)
|
|
(11,949
|
)
|
||
Net deferred tax assets
|
$
|
97
|
|
|
$
|
97
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Valuation allowance, beginning of year
|
|
$
|
11,949
|
|
|
$
|
8,914
|
|
Increase in deferred tax asset valuation allowance
|
|
716
|
|
|
3,035
|
|
||
Valuation allowance, end of year
|
|
$
|
12,665
|
|
|
$
|
11,949
|
|
|
2015
|
|
2014
|
||||
Continuing operations:
|
(in thousands, except per share information)
|
||||||
Basic loss per share
|
|
|
|
|
|
||
Net loss
|
$
|
(9,085
|
)
|
|
$
|
(8,686
|
)
|
Weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Basic loss per share
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
Diluted loss per share
|
|
|
|
|
|
||
Net loss
|
$
|
(9,085
|
)
|
|
$
|
(8,686
|
)
|
Weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Add dilutive effect of assumed exercising of stock options and warrants
|
—
|
|
|
—
|
|
||
Diluted weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Diluted loss per share
|
$
|
(1.14
|
)
|
|
$
|
(1.15
|
)
|
|
2015
|
|
2014
|
||||
Discontinued operations:
|
(in thousands, except per share information)
|
||||||
Basic loss per share
|
|
|
|
|
|
||
Net loss
|
$
|
7,320
|
|
|
$
|
1,413
|
|
Weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Basic loss per share
|
$
|
0.92
|
|
|
$
|
0.19
|
|
Diluted loss per share
|
|
|
|
|
|
||
Net loss
|
$
|
7,320
|
|
|
$
|
1,413
|
|
Weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Add dilutive effect of assumed exercising of stock options and warrants
|
—
|
|
|
—
|
|
||
Diluted weighted average shares outstanding
|
7,989
|
|
|
7,559
|
|
||
Diluted loss per share
|
$
|
0.92
|
|
|
$
|
0.19
|
|
|
|
|
2015
|
|
2014
|
||||
K&R, LLC:
|
|
|
|
|
|
||||
Deposit amounts owed to the Company by K&R
|
(1)
|
|
$
|
74
|
|
|
$
|
74
|
|
Property deposit payable to K&R
|
(2)
|
|
500
|
|
|
500
|
|
||
Facility rent payable to K&R
|
(2)
|
|
821
|
|
|
462
|
|
||
Equipment rent payable to K&R
|
(2)
|
|
132
|
|
|
116
|
|
||
Facility rent expense to K&R
|
|
|
646
|
|
|
646
|
|
||
Equipment rent expense to K&R
|
|
|
126
|
|
|
126
|
|
||
|
|
|
|
|
|
||||
Algar, Inc.:
|
|
|
|
|
|
||||
Accounts receivable from Algar for scrap transactions
|
(1)
|
|
$
|
93
|
|
|
$
|
80
|
|
Accounts receivable from Algar for logistical services
|
(1)
|
|
19
|
|
|
5
|
|
||
Accounts payable to Algar
|
(2)
|
|
28
|
|
|
39
|
|
||
Bonus payable to Algar
|
(2)
|
|
189
|
|
|
428
|
|
||
Revenue from scrap sales to Algar
|
|
|
117
|
|
|
442
|
|
||
Revenue from logistical services to Algar
|
|
|
69
|
|
|
59
|
|
||
Revenue from IT services to Algar
|
|
|
23
|
|
|
7
|
|
||
Scrap material purchases from Algar
|
|
|
1,225
|
|
|
1,542
|
|
||
Management fee expense
|
|
|
250
|
|
|
250
|
|
||
Bonus expense to Algar
|
|
|
—
|
|
|
428
|
|
||
Other expenses to Algar
|
|
|
30
|
|
|
109
|
|
||
|
|
|
|
|
|
||||
Board of Directors: *
|
|
|
|
|
|
||||
Accounts payable to the Board of Directors for fees
|
(2)
|
|
$
|
250
|
|
|
$
|
55
|
|
Accounts payable to the Board of Directors for consulting fees
|
(2)
|
|
—
|
|
|
40
|
|
||
Board of director fee expense
|
|
|
180
|
|
|
100
|
|
||
Board of director consulting expense
|
|
|
25
|
|
|
15
|
|
||
|
|
|
|
|
|
||||
LK Property Investments, LLC:
|
|
|
|
|
|
||||
Lease deposit to LK Property
|
(1)
|
|
$
|
3
|
|
|
$
|
—
|
|
Accounts payable to LK Property
|
(2)
|
|
2
|
|
|
—
|
|
||
Loss on the sale of assets to LK Property
|
|
|
(102
|
)
|
|
—
|
|
||
Rent expense to LK Property**
|
|
|
24
|
|
|
—
|
|
||
|
|
|
|
|
|
||||
Metal X, LLC:
|
|
|
|
|
|
||||
Accounts receivable from Metal X
|
(1)
|
|
$
|
19
|
|
|
$
|
250
|
|
Revenue from product sales to Metal X
|
|
|
1,905
|
|
|
1,982
|
|
||
|
|
|
|
|
|
||||
SG&D Ventures, LLC:
|
|
|
|
|
|
||||
Gain on the sale of assets to SG&D
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Total Options
|
|
Number of shares (in thousands)
|
|
Weighted Average Exercise Price per Share
|
|
Weighted Average Remaining Contractual Term
|
|
Weighted Average Grant Date Fair Value
|
||||||
Outstanding at January 1, 2014
|
|
180
|
|
|
$
|
4.59
|
|
|
—
|
|
|
$
|
1.38
|
|
Granted
|
|
2,062
|
|
|
5.02
|
|
|
—
|
|
|
2.26
|
|
||
Exercised
|
|
(30
|
)
|
|
4.23
|
|
|
—
|
|
|
1.05
|
|
||
Expired
|
|
(60
|
)
|
|
4.23
|
|
|
—
|
|
|
1.05
|
|
||
Outstanding at December 31, 2014
|
|
2,152
|
|
|
$
|
5.02
|
|
|
2.7 years
|
|
|
$
|
2.23
|
|
Granted
|
|
20
|
|
|
$
|
5.71
|
|
|
—
|
|
|
$
|
3.01
|
|
Outstanding at December 31, 2015
|
|
2,172
|
|
|
$
|
5.02
|
|
|
1.7 years
|
|
|
$
|
2.24
|
|
Exercisable at December 31, 2015
|
|
1,302
|
|
|
4.95
|
|
|
1.9 years
|
|
|
$
|
2.25
|
|
|
Available for grant at December 31, 2015
|
|
1,603
|
|
|
|
|
|
|
|
Non-Vested Options
|
|
Number of shares (in thousands)
|
|
Weighted Average Grant Date Option Fair Value
|
|||
Outstanding at January 1, 2014
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
2,062
|
|
|
2.26
|
|
|
Vested
|
|
(1,072
|
)
|
|
2.21
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2014
|
|
990
|
|
|
$
|
2.31
|
|
Granted
|
|
20
|
|
|
3.01
|
|
|
Vested
|
|
(140
|
)
|
|
2.95
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2015
|
|
870
|
|
|
$
|
2.22
|
|
|
|
2015
|
2014
|
||||
Weighted average grant-date fair value of grants per option
|
|
$
|
3.01
|
|
$
|
2.26
|
|
Volatility
|
|
60.1
|
%
|
60.9
|
%
|
||
Risk-free interest rate
|
|
2.3
|
%
|
2.2
|
%
|
||
Expected life (in years)
|
|
5
|
3
|
||||
Expected dividend yield
|
|
—
|
%
|
—
|
%
|
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Revenue from services and product sales
|
$
|
7,402
|
|
|
$
|
7,313
|
|
Cost of sales for services
|
5,486
|
|
|
5,188
|
|
||
Selling, general, and administrative expenses
|
678
|
|
|
746
|
|
||
Gain on the sale of business
|
6,031
|
|
|
—
|
|
||
Gain on the sale of equipment
|
51
|
|
|
34
|
|
||
Net income
|
$
|
7,320
|
|
|
$
|
1,413
|
|
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||
Net income from discontinued operations
|
$
|
7,320
|
|
|
$
|
1,413
|
|
Adjustments to reconcile net loss to net cash from operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
402
|
|
|
436
|
|
||
Gain on sale of property and equipment
|
(51
|
)
|
|
(34
|
)
|
||
Gain on sale of business
|
(6,031
|
)
|
|
—
|
|
||
Change in assets and liabilities
|
|
|
|
|
|
||
Receivables
|
(103
|
)
|
|
223
|
|
||
Inventories
|
10
|
|
|
6
|
|
||
Other assets
|
12
|
|
|
168
|
|
||
Accounts payable
|
172
|
|
|
(352
|
)
|
||
Other current liabilities
|
52
|
|
|
(28
|
)
|
||
Net cash from operating activities
|
$
|
1,783
|
|
|
$
|
1,832
|
|
Cash flows from investing activities
|
|
|
|
|
|
||
Proceeds from sale of property and equipment
|
76
|
|
|
57
|
|
||
Proceeds from sale of business, net of disposal costs
|
7,000
|
|
|
—
|
|
||
Purchases of property and equipment
|
(432
|
)
|
|
(347
|
)
|
||
Net cash provided by (used in) investing activities
|
$
|
6,644
|
|
|
$
|
(290
|
)
|
|
2015
|
|
2014
|
||||
|
(in thousands, except per share data)
|
||||||
Total revenue
|
$
|
6,555
|
|
|
$
|
26,619
|
|
Net loss from continuing operations
|
(2,351
|
)
|
|
(6,503
|
)
|
||
Net income (loss)
|
3,680
|
|
|
(6,503
|
)
|
||
|
|
|
|
||||
Net loss from continuing operations per share
|
$
|
(0.29
|
)
|
|
$
|
(0.82
|
)
|
Net income (loss) per share
|
0.46
|
|
|
(0.82
|
)
|
1.
|
Rate of Interest
. The outstanding principal balance of this Note will bear interest at a rate per annum of five and 0/100
percent (5.00%). In no event will the rate of interest hereunder exceed the highest rate permitted by applicable law.
|
2.
|
Payments and Application of Payments
. On the date of the sale of the real property located at 7110 Grade Lane, Louisville, Kentucky, Borrower shall make a principal payment in the amount of $500,000. Beginning on April 30, 2017, and on the last day of each month thereafter until December 31, 2020 (the “Maturity Date”), accrued interest will be due and payable monthly. On the Maturity Date, the entire outstanding principal balance hereunder and all accrued and unpaid interest will be due and payable.
|
3.
|
Security
. This Note shall be unsecured.
|
4.
|
Events of Default
. Immediately and automatically upon (i) Borrower’s failure to pay any amounts hereunder when due, or (ii) the filing by or against Borrower of a petition in bankruptcy, for a reorganization, arrangement or debt adjustment, or for a receiver, trustee, or similar creditors’ representative for its, his or her property or any part thereof, or of any other proceeding under any federal or state insolvency or similar law (and if such petition or proceeding is an involuntary petition or proceeding filed against Borrower without its acquiescence therein or thereto at any time, the same is not promptly contested and, within 60 days of the filing of such involuntary petition or proceeding, dismissed or discharged), or (iii) the making of any general assignment by Borrower for the benefit of creditors, or
|
5.
|
Miscellaneous
.
|
5.1
|
This Note will bind Borrower and the heirs, executors, administrators, successors, and assigns of Borrower, and the benefits hereof will inure to the benefit of Lender and its successors and assigns. All references herein to the “Borrower” and “Lender” will include the respective successors, and assigns thereof; provided, however, that Borrower may not assign, delegate, or transfer its obligations under this Note in whole or in part without the prior written consent of Lender and Lender at any time may assign this Note in whole or in part (but no assignment by the Lender of less than all of this Note will operate to relieve Borrower from any duty to Lender with respect to the unassigned portion of this Note). Any purported assignment, delegation, or transfer in violation of this Section is void.
|
5.2
|
If any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision and without invalidating any other provision in this Note; provided, however, that if the provision that is the subject of such prohibition or invalidity pertains to repayment of this Note, then, at the option of Lender, all of the obligations hereunder will become immediately due and payable.
|
5.3
|
Without limiting the generality of the foregoing, if from any circumstances whatsoever the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law with regard to obligations of like character and amount, then the obligation to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event will any exaction of interest be possible under this Note in excess of the limit of such validity and the right to demand any such excess is hereby expressly waived by Lender. As used in this paragraph, “applicable usury statute” and “applicable law” mean such statute and law in effect on the date hereof, subject to any change therein that results in a higher permissible rate of interest.
|
5.4
|
No delay or failure on the part of Lender to exercise any right, remedy, or power hereunder or under applicable law will impair or waive any such right, remedy, or power (or any other right, remedy or power), be considered a waiver of or an acquiescence in any breach, Default, or Event of Default or affect any other or
|
5.5
|
No single or partial exercise of any right or remedy by Lender will preclude any other or further exercise thereof or the exercise of any other right or remedy. All remedies hereunder or now or hereafter existing at law or in equity are cumulative and none of them will be exclusive of the others or of any other right or remedy. All such rights and remedies may be exercised separately, successively, concurrently, independently, or cumulatively from time to time and as often and in such order as Lender may deem appropriate.
|
5.6
|
If at any time all or any part of any payment or transfer of any kind received by Lender with respect to all or any part of this Note is repaid, set aside or invalidated by reason of any judgment, decree, or order of any court or administrative body, or by reason of any agreement, settlement, or compromise of any claim made at any time with respect to the repayment, recovery, setting aside, or invalidation of all or any part of such payment or transfer, Borrower’s obligations under this Note will continue (and/or be reinstated) and Borrower will be and remain liable, and will indemnify, defend and hold harmless Lender for, the amount or amounts so repaid, recovered, set aside, or invalidated and all other claims, demands, liabilities, judgments, losses, damages, costs, and expenses incurred in connection therewith. The provisions of this Section will be and remain effective notwithstanding any contrary action which may have been taken by Borrower in reliance upon such payment or transfer, and any such contrary action so taken will be without prejudice to Lender’s rights hereunder and will be deemed to have been conditioned upon such payment or transfer having become final and irrevocable. The provisions of this Section will survive any termination, cancellation or discharge of this Note.
|
5.7
|
Time is of the essence in the performance of this Note.
|
5.8
|
This Note has been delivered to and accepted by Lender and will be deemed to be made in the Commonwealth of Kentucky (the “State”). This Note will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State, excluding its conflict of laws rules, and will include all matters arising out of or relating to this Note, including without limitation claims as to its validity, interpretation, construction, performance, and all claims sounding in tort, and will include all matters arising out of or relating to this Note, including without limitation claims as to its validity, interpretation, construction, performance, and all claims sounding in tort. Borrower hereby irrevocably consents to the exclusive
|
5.9
|
THE PARTIES HERETO EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE PARTIES HERETO EACH ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
|
1.
|
Rate of Interest
. The outstanding principal balance of this Note will bear interest at a rate per annum of five and 0/100
percent (5.00%). In no event will the rate of interest hereunder exceed the highest rate permitted by applicable law.
|
2.
|
Payments and Application of Payments
. Beginning on April 30, 2017, and on the last day of each month thereafter until December 31, 2020 (the “Maturity Date”), accrued interest will be due and payable monthly. On the Maturity Date, the entire outstanding principal balance hereunder and all accrued and unpaid interest will be due and payable.
|
3.
|
Security
. This Note shall be unsecured.
|
4.
|
Events of Default
. Immediately and automatically upon (i) Borrower’s failure to pay any amounts hereunder when due, or (ii) the filing by or against Borrower of a petition in bankruptcy, for a reorganization, arrangement or debt adjustment, or for a receiver, trustee, or similar creditors’ representative for its, his or her property or any part thereof, or of any other proceeding under any federal or state insolvency or similar law (and if such petition or proceeding is an involuntary petition or proceeding filed against Borrower without its acquiescence therein or thereto at any time, the same is not promptly contested and, within 60 days of the filing of such involuntary petition or proceeding, dismissed or discharged), or (iii) the making of any general assignment by Borrower for the benefit of creditors, or Borrower dissolves or is the subject of any dissolution, winding up or liquidation or, (iv) at the option of Lender, immediately upon the occurrence of any other event of default, in any
|
5.
|
Miscellaneous
.
|
5.1
|
This Note will bind Borrower and the heirs, executors, administrators, successors, and assigns of Borrower, and the benefits hereof will inure to the benefit of Lender and its successors and assigns. All references herein to the “Borrower” and “Lender” will include the respective successors, and assigns thereof; provided, however, that Borrower may not assign, delegate, or transfer its obligations under this Note in whole or in part without the prior written consent of Lender and Lender at any time may assign this Note in whole or in part (but no assignment by the Lender of less than all of this Note will operate to relieve Borrower from any duty to Lender with respect to the unassigned portion of this Note). Any purported assignment, delegation, or transfer in violation of this Section is void.
|
5.2
|
If any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision and without invalidating any other provision in this Note; provided, however, that if the provision that is the subject of such prohibition or invalidity pertains to repayment of this Note, then, at the option of Lender, all of the obligations hereunder will become immediately due and payable.
|
5.3
|
Without limiting the generality of the foregoing, if from any circumstances whatsoever the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law with regard to obligations of like character and amount, then the obligation to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event will any exaction of interest be possible under this Note in excess of the limit of such validity and the right to demand any such excess is hereby expressly waived by Lender. As used in this paragraph, “applicable usury statute” and “applicable law” mean such statute and law in effect on the date hereof, subject to any change therein that results in a higher permissible rate of interest.
|
5.4
|
No delay or failure on the part of Lender to exercise any right, remedy, or power hereunder or under applicable law will impair or waive any such right, remedy, or power (or any other right, remedy or power), be considered a waiver of or an acquiescence in any breach, Default, or Event of Default or affect any other or subsequent breach, Default, or Event of Default of the same or a different nature. No waiver of any breach, Default, or Event of Default, nor any modification, waiver,
|
5.5
|
No single or partial exercise of any right or remedy by Lender will preclude any other or further exercise thereof or the exercise of any other right or remedy. All remedies hereunder or now or hereafter existing at law or in equity are cumulative and none of them will be exclusive of the others or of any other right or remedy. All such rights and remedies may be exercised separately, successively, concurrently, independently, or cumulatively from time to time and as often and in such order as Lender may deem appropriate.
|
5.6
|
If at any time all or any part of any payment or transfer of any kind received by Lender with respect to all or any part of this Note is repaid, set aside or invalidated by reason of any judgment, decree, or order of any court or administrative body, or by reason of any agreement, settlement, or compromise of any claim made at any time with respect to the repayment, recovery, setting aside, or invalidation of all or any part of such payment or transfer, Borrower’s obligations under this Note will continue (and/or be reinstated) and Borrower will be and remain liable, and will indemnify, defend and hold harmless Lender for, the amount or amounts so repaid, recovered, set aside, or invalidated and all other claims, demands, liabilities, judgments, losses, damages, costs, and expenses incurred in connection therewith. The provisions of this Section will be and remain effective notwithstanding any contrary action which may have been taken by Borrower in reliance upon such payment or transfer, and any such contrary action so taken will be without prejudice to Lender’s rights hereunder and will be deemed to have been conditioned upon such payment or transfer having become final and irrevocable. The provisions of this Section will survive any termination, cancellation or discharge of this Note.
|
5.7
|
Time is of the essence in the performance of this Note.
|
5.8
|
This Note has been delivered to and accepted by Lender and will be deemed to be made in the Commonwealth of Kentucky (the “State”). This Note will be interpreted and the rights and liabilities of the parties hereto determined in accordance with the laws of the State, excluding its conflict of laws rules, and will include all matters arising out of or relating to this Note, including without limitation claims as to its validity, interpretation, construction, performance, and all claims sounding in tort, and will include all matters arising out of or relating to this Note, including without limitation claims as to its validity, interpretation, construction, performance, and all claims sounding in tort. Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in Jefferson County, Kentucky; provided that nothing contained in this Agreement will prevent Lender from bringing any
|
5.9
|
THE PARTIES HERETO EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE PARTIES HERETO EACH ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
|
By:
|
Industrial Services of America, Inc., its Sole Member
|
By:
|
Algar, Inc., its Manager
|
A.
|
The Company has adopted the Industrial Services of America, Inc. 2009 Long Term Incentive Plan (the “
Plan
”), which provides for the issuance of equity incentive awards, such as stock options, restricted stock, restricted stock units and stock appreciation rights, in order to retain qualified personnel. The Plan is administered by the Compensation Committee of the Board of Directors (the “
Committee
”).
|
B.
|
The Committee has designated the Grantee as a Participant in the Plan to recognize the Grantee for his hard work and significant efforts in leading the Company through a difficult period, and wishes to set forth in this Agreement the Grantee's right to receive up to that number of RSUs set forth herein in lieu of a cash bonus. Each RSU represents the right to receive one share of the Company's common stock (“
Common Stock
”), subject to the terms and conditions set forth in this Agreement and the Plan.
|
NAME OF ENTITY
|
STATE OF INCORPORATION
|
|
|
ISA Indiana, Inc.
|
Indiana
|
ISA Indiana Real Estate, LLC
|
Indiana
|
ISA Logistics LLC
|
Kentucky
|
ISA Real Estate, LLC
|
Kentucky
|
7021 Grade Lane LLC
|
Kentucky
|
7124 Grade Lane LLC
|
Kentucky
|
7200 Grade Lane LLC
|
Kentucky
|
1.
|
I have reviewed this Form 10-
K
for the
year
ended
December 31, 2015
of Industrial Services of America, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
March 25, 2016
|
/s/ Orson Oliver
|
Date
|
Orson Oliver, Chairman of the Board and Interim Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Form 10-
K
for the
year
ended
December 31, 2015
of Industrial Services of America, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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March 25, 2016
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/s/ Todd Phillips
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Date
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Todd Phillips, Chief Financial Officer
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(Principal Financial and Accounting Officer)
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/s/ Orson Oliver
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Orson Oliver, Chairman of the Board and Interim Chief Executive Officer
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|
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/s/ Todd Phillips
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Todd Phillips, Chief Financial Officer
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