FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
--------- ---------
Commission File Number 2-31610
INDUSTRIAL SERVICES OF AMERICA, INC.
------------------------------------
(Exact Name of Registrant as specified in its Charter)
Florida 59-0712746
------- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7100 Grade Lane, P.O. Box 32428
-------------------------------
Louisville, Kentucky 40232
---------------------------
(Address of principal executive offices)
(502) 368-1661
--------------
(Issuer's Telephone Number)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all Reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES
X NO
----- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act after the distribution of securities
under a plan confirmed by court. YES X NO
----- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
1,757,500
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
------------------------------
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
------
<TABLE>
<CAPTION>
JUNE 30 JANUARY 1
1995 1995
-----------------------
CURRENT ASSETS
--------------
<S> <C> <C>
Cash $ 882,296 $ 354,884
Receivables:
Trade, net of allowance for
doubtful accounts of $10,000 2,568,071 2,380,446
Other 13,621 3,057
---------- ---------
2,581,692 2,383,503
Net investment in sales-type leases 17,957 36,797
Inventories 176,836 161,211
Prepaid expenses 79,402 140,868
---------- ----------
Total current assets 3,738,183 3,077,263
Property and equipment, net 1,533,945 941,302
Other assets 74,884 74,884
---------- ----------
Total assets $5,347,012 $4,093,449
========== ==========
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30 JANUARY 1
1995 1995
-----------------------
<S> <C> <C>
Current liabilities
Note payable to bank $ 350,000 $ 50,000
Accounts payable 3,069,885 2,504,028
Income taxes payable 192,190 288,385
Current maturities of
long-term debt 16,629 14,141
Other current liabilities 146,977 137,307
---------- ----------
Total current liabilities 3,775,681 2,993,861
Long-Term Debt 31,924 13,152
Deferred revenue 90,000 -0-
Deferred tax liability 22,600 22,600
Stockholders' equity
Common stock, $.01 par value,
10,000,000 shares authorized;
1,757,500, shares issued 17,575 17,575
Additional paid-in capital 27,000 27,000
Retained earnings 1,390,232 1,027,261
Treasury stock, at cost,
27,900 shares (8,000) (8,000)
---------- ----------
Total stockholders' equity 1,426,807 1,063,836
---------- ----------
Total liabilities and stockholders'
equity $5,347,012 $4,093,449
========== ==========
</TABLE>
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-----------------------
<S> <C> <C>
Revenue
Net sales $7,882,521 $5,843,610
Rental income 58,062 50,054
---------- ----------
Total revenue 7,940,583 5,893,664
Cost and expenses
Cost of sales 6,367,060 5,015,353
Direct expenses applicable
to rental income 22,401 -0-
Selling, general and
administrative expenses 1,238,913 742,758
---------- ----------
Total cost and expenses 7,628,374 5,758,111
---------- ----------
Income (loss) from operations 312,209 135,553
Other income, net 20,579 15,098
---------- ----------
Income before provision for
income taxes 332,788 150,651
Provision for income taxes 130,000 50,000
---------- ----------
Net income $ 202,788 $ 100,651
========== ==========
Earnings per common share $ 0.12 $ 0.06
</TABLE>
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------------------
<S> <C> <C>
Revenue
Net sales $14,278,442 $10,354,780
Rental income 110,633 98,302
----------- -----------
Total revenue 14,389,075 10,453,082
Cost and expenses
Cost of sales 11,518,165 8,897,924
Direct expenses applicable
to rental income 45,936 -0-
Selling, general and
administrative expenses 2,261,779 1,437,753
----------- -----------
Total cost and expenses 13,825,880 10,335,677
----------- -----------
Income (loss) from operations 563,195 117,405
Other income, net 39,776 25,314
----------- -----------
Income before provision for
income taxes 602,971 142,719
Provision for income taxes 240,000 50,000
----------- -----------
Net income $ 362,971 $ 92,719
=========== ===========
Earnings per common share $ 0.21 $ 0.05
</TABLE>
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------------------
<S> <C> <C>
Operating activities
Net Income $ 362,971 $ 92,719
Adjustments to reconcile net to net
cash provided by operating activities:
Depreciation and amortization 139,851 83,314
Increase (decrease) in cash
resulting from changes in:
Receivables (187,625) (297,668)
Inventories (15,625) (664)
Prepaid expenses 61,466 (95,558)
Accounts payable 565,857 81,252
Income taxes payable 90,000 -0-
Other current liabilities (96,195) 50,000
9,670 109,717
----------- -----------
Net cash provided by
operating activities 930,370 23,112
Investing activities
Investment in affiliate
Purchase of investment -0- 3,340
Advances to related parties (10,564) (25,000)
Payment for property and equipment (732,494) (207,545)
Additions to notes receivables -0- (37,138)
----------- -----------
Net cash used in investing activities (743,058) (266,343)
Financing activities
Payments on long-term debt -0- (12,953)
Proceeds from issuance of notes
payable to bank 300,000 -0-
Proceeds from issuance of
long-term debt 21,260 -0-
Investment in sales-type leases 18,840 (21,404)
----------- -----------
Net cash provided by
financing activities 340,100 (34,357)
----------- -----------
Net (decrease) increase in cash 527,412 (277,588)
Cash at beginning of year 354,884 747,747
Cash at end of year $ 882,296 $ 470,159
=========== ===========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
---------------------------------------------------------
Operation
---------
1. Liquidity and Capital Resources
-------------------------------
As of June 30, 1995, the Registrant held cash and cash
equivalents of $882,296.
The Registrant derives its revenues from a variety of
sources, including customer services, equipment sales, consulting
fees, and from its recycling operations. The recycling
operations comprised 56% and 48% of the Registrant's net income
for the years ended December 31, 1993 and 1994, respectively. In
the event the Registrant were to operate without revenue derived
from its recycling operations, the Registrant's liquidity would
be significantly decreased but would not materially impair the
Registrant's ability to continue its operations and business.
2. Results of Operations
---------------------
The Registrant currently manages the recycling operations of
K&R Corporation. The Registrant reports gross sales derived from
its recycling operations within its computation of total revenue.
The cost of purchasing recyclable materials is reported as a Cost
of Sales of the Registrant. The Registrant charges K&R
Corporation a management fee of 60% of net sales from the
recycling operations. The remaining 40% of net sales is remitted
to K&R Corporation and is reported in the Registrant's financials
as a Selling Expense.
Net income before provisions for income taxes for the six
months ended June 30, 1995 was $602,970, as compared to $142,719
for the comparable period of 1994.
Revenues for the six months ended June 30, 1995 was
$14,389,075, as compared to $10,453,082 for the comparable period
of 1994.
Costs and expenses for the six months ended June 30, 1995
were $13,825,880, as compared to $10,335,677 for the comparable
period of 1994.
Income (loss) from Operations for the six months ended June
30, 1995 was $563,195, as compared to $117,405 for the comparable
period of 1994.
The increase in net income, revenue and income from
operations of the Registrant was attributable to the following
factors: an increase in the market value of recyclable materials;
an increase in equipment sales and leasing of the Registrant; and
an increase in the volume of recyclable processing operations.
The increase in costs and expenses proportionately increased as
revenue increased.
The Registrant is currently expanding its operations. The
Registrant is currently undertaking certain capital improvements
and is in the process of expanding its sales and marketing staff.
The Registrant does not believe that the impact of inflation
on operations has been material. The Registrant believes that
any cost increase resulting from periods of high inflation can be
passed through to its customers without negative reactions.
<PAGE>
The Registrant currently maintains a working capital line of
credit with The Mid-America Bank of Louisville and Trust Company
(the "Bank") in the amount of $500,000. Indebtedness under this
credit facility earns interest at the Bank's prime rate as
promulgated from time to time. As of June 30, 1995,
approximately $350,000 was outstanding under this credit
facility.
The Registrant provides waste management consulting services
to its customers. Prior to 1994, the Registrant's service and
consulting revenue was derived principally from management fees
paid by its customers. The Registrant collected funds from its
customers for services rendered, retained its management fee, and
remitted the remaining funds to third party vendors who performed
the waste removal and maintenance services. In 1994, because of
certain market dynamics, changes in the industry and changes
related to the Registrant's operations, management re-evaluated
the Registrant's manner of conducting business. Based on this
re-evaluation, the Registrant's pricing process was modified. As
a result, the majority of the Registrant's current customers pay
a negotiated fee for their waste service needs, and in turn the
Registrant subcontracts the necessary work to third party vendors
and pays those vendors for their services. Accordingly, the 1994
and 1993 consolidated financial statements reflect accounting
treatment consistent with the Registrant's current operations.
These reclassifications and certain other reclassifications
necessary to conform the consolidated financial statements with
the 1994 presentation had no effect on net income.
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
---------
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial reporting. They do not include
all information and footnotes required by generally accepted
accounting principles for complete financial statements. The
information furnished includes all adjustments which are, in the
opinion of management, necessary to present fairly the
Registrant's financial position as of June 30, 1995 and the
results of its operations and changes in cash flows for the
periods ended June 30, 1995 and 1994. Results of operations for
the period ended June 30, 1995 are not necessarily indicative of
the results that may be expected for the entire year.
2. Additional Information
----------------------
Additional information, including the audited 1994 Financial
Statements and the Summary of Significant Accounting Policies, is
included in the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1994 on file with the Securities and
Exchange Commission.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
---------------------------
None
Item 2. Changes in Securities
-------------------------------
None
Item 3. Defaults upon Senior Securities
-----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
At the Annual Meeting of Stockholders of the Registrant
held on June 20, 1995, the holders of the majority of the voting
power of the shares of the Registrant re-elected Harry Kletter
and Roberta Kletter for a one-year term on the Board of
Directors. The holders of shares of Common Stock also elected
Matthew L. Kletter for a one-year term on the Board of Directors.
The votes were cast as follows:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld Votes Abstained
---- --------- -------------- ---------------
<S> <C> <C> <C>
Harry Kletter 1,513,187 0 0
Roberta Kletter 1,513,187 0 0
Matthew Kletter 1,513,187 0 0
</TABLE>
The holders of shares of Common Stock also confirmed Mather,
Hamilton & Co., LLP as the Registrant's independent auditors for
the fiscal year ended December 31, 1995.
Item 5. Other Information
---------------------------
None
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INDUSTRIAL SERVICES OF AMERICA, INC.
DATE: August 10, 1995 /s/ Harry Kletter
--------------- --------------------------------------
President and Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000004187
<NAME> INDUSTRIAL SERVICES OF AMERICA, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 882,296
<SECURITIES> 0
<RECEIVABLES> 2,591,692
<ALLOWANCES> 10,000
<INVENTORY> 176,836
<CURRENT-ASSETS> 3,738,183
<PP&E> 2,228,643
<DEPRECIATION> 694,698
<TOTAL-ASSETS> 5,347,012
<CURRENT-LIABILITIES> 3,775,681
<BONDS> 31,924
<COMMON> 17,575
0
0
<OTHER-SE> 1,409,232
<TOTAL-LIABILITY-AND-EQUITY> 5,347,012
<SALES> 14,278,442
<TOTAL-REVENUES> 14,389,075
<CGS> 11,518,165
<TOTAL-COSTS> 11,564,101
<OTHER-EXPENSES> 2,261,779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 602,971
<INCOME-TAX> 240,000
<INCOME-CONTINUING> 362,971
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 362,971
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
