FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For the transition period from to
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Commission File No.: 2-31610
INDUSTRIAL SERVICES OF AMERICA, INC.
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(Name of small business issuer in its charter)
Florida 59-0172746
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
7100 Grade Lane, P. 0. Box 32428, Louisville, Kentucky 40232
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(Address of principal executive offices)
Registrant's telephone number, including area code:
(502) 368-1661
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Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
Check whether the Registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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
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Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
<PAGE>
State issuer's revenues for its most recent fiscal year:
$30,545,142.
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The aggregate market value of the voting stock held by non-
affiliates of the Registrant is $4,495,725 as of March 27, 1996.
The number of outstanding shares of the Registrant's common stock
is 1,729,600 shares as of March 27, 1996.
Check whether the issuer filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by a court.
Yes X No
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State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock ($.01 Par Value) - 1,729,600 as of March 27, 1996
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Transitional Small Business Disclosure Format (check one):
Yes No X
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<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
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GENERAL
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Industrial Services of America, Inc. (the "Registrant") is
an integrated solid waste management consulting company engaged
in the business of retail and industrial waste management and
waste handling equipment sales and service. The Registrant is
able to offer a "total package" concept to retail and industrial
clients to cover their waste management needs. The Registrant
believes that it offers a more complete line of products and
services than its competitors and is better able to coordinate
these services on a nationwide basis. By offering competitively
priced waste handling equipment from a number of different
manufacturers, the Registrant is able to tailor equipment
packages for individual client needs. By carrying limited
inventory, the Registrant reduces overhead and passes the savings
to the customer. The waste management services offered by the
Registrant include locating a hauling company at a reasonable
cost for each respective location for any chain on the management
program. Because the Registrant is not a "waste transporter," it
is able to maintain a neutral position. The proprietary computer
software designed and developed by the Registrant for use in its
daily operations allows the Registrant access to relevant waste
information throughout the United States and puts relevant
customer information within reach of Registrant personnel. The
Registrant also manages a recycling operation for an affiliated
company, for which it retains a percentage of the profits from
said operation.
The Registrant plans to grow by expanding its marketing base
and seeking future joint ventures which can enhance its
marketability and visibility. The Registrant continues to target
industrial customers throughout the United States for the purpose
of increasing its industrial clientele. Although the number of
locations of each customer will generally be less than with large
retail chains, the Registrant believes that it can provide
substantial savings for each industrial location, thereby
justifying larger management fees. With industrial clients,
there is also a greater possibility of large equipment orders as
the solid waste output for each individual industrial location is
generally greater than for retail clients and the corresponding
need for appropriate equipment is greater.
The Registrant has developed nationwide coverage through its
computer system designed to integrate information pertinent to
its waste management services throughout the country. This
system provides the Registrant access to hauling and disposal
rates as well as equipment, installation, and shipping costs.
The Registrant has the ability to estimate cost savings to
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<PAGE>
potential customers by reviewing their current waste hauling
invoices nationwide or a regional sampling thereof.
The Registrant believes that opportunities for its continued
growth are enhanced by the increasingly stringent regulatory and
political constraints being placed on the waste hauling and
disposal industries on a federal, state and local level. These
more stringent regulations continue to drive prices higher
throughout the industry. With these ever-increasing costs
relating to solid waste disposal, retail and industrial customers
are realizing that waste disposal is quickly becoming one of
their biggest expense items and perhaps the most difficult to
contain. The Registrant believes these increased costs will
enhance the value of the Registrant's services.
In April 1992, the Registrant entered into a management
agreement (the "Management Agreement") with K & R Corporation ("K
& R"), a Kentucky corporation, and an affiliated company owned by
the Registrant's principal stockholder in which the Registrant is
responsible for the management of the scrap and corrugated paper
recycling for K & R. Under the terms of the Management
Agreement, the Registrant purchased certain rental equipment and
scrap metal inventories from K & R, manages K & R's operations
and in consideration thereof retains a percentage of the profits
generated from the operation(s). The Management Agreement
provides that the Registrant will retain 60% of the profits
generated from K & R's operations. During 1995 and 1994, revenue
derived under this arrangement resulted in income before
provision for income taxes to the Registrant totaling $728,391
and $236,330, respectively.
During the third quarter of 1993, the Registrant invested in
an online computer database, RecycleLine, which provides
recycling information to subscribers nationwide. The Registrant
decided to cease its investment in this venture. Accordingly, on
December 15, 1994, the Registrant assigned back its interest in
RecycleLine to Recycling Data Management Corporation ("RDMC") and
retained an option for five (5) years to re-acquire a 40%
interest in RecycleLine and/or a 40% equity interest in RDMC
based upon an exercise price equal to the book value of RDMC's
shares at such time.
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<PAGE>
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 reevaluated the Registrant's manner of conducting
business. Based on this reevaluation, the Registrant's pricing
process was modified. As a result, the majority of the
Registrant's 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.
REGISTRANT BACKGROUND
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The Registrant was incorporated in October, 1953 in Florida
under the name Alson Manufacturing, Inc. From the date of
incorporation through January 5, 1976, the Registrant was
involved in the designing and manufacturing of various forms of
electrical products. In 1979, the Board of Directors and the
shareholders of the Registrant approved a proposal to liquidate
Alson. In 1983, the Registrant commenced liquidation of all the
tangible assets of Alson. On October 27, 1983, Harry Kletter
acquired 419,500 shares of common stock of the Registrant. The
existing directors resigned and five new directors were elected.
On July 1, 1984, the Registrant began a solid waste handling
and disposal equipment sales organization under the name Waste
Equipment Sales and Service Company ("WESSCO"). On January 1,
1985, the Registrant merged with Computerized Waste Systems, Inc.
("CWS"), a Massachusetts corporation. CWS was a corporation
specializing in offering solid waste management consultations for
large multi-location companies involved in the retail, restaurant
and industrial sectors. At the time of the merger, CWS was
concentrating on large retail chains, but has changed its
emphasis to include industrial clients. This strategy created an
additional target market for the Registrant. Subsequent to the
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merger with CWS, the Registrant moved CWS headquarters from
Springfield, Massachusetts to Louisville, Kentucky. At the time
of the merger, much of the client base and marketing efforts were
concentrated in the Northeast. With the move to Louisville, the
Registrant began to expand its marketing efforts, which are now
nationwide and include most of Canada.
The Registrant operates primarily through WESSCO and CWS,
which work closely with each other in terms of present customer
care and proposals for new customers. WESSCO has expanded its
product line and presently offers a variety of equipment which
would be necessary for an efficient waste handling and/or
recycling system for an individual user. The prices WESSCO can
offer are competitive with most dealers since it purchases
equipment at dealer cost without having to pay dealer overhead.
The WESSCO program has attracted some customers planning
expansion programs. Some of these have designated WESSCO as
their exclusive waste equipment supplier and consultant. By
working with the customer from the time the initial building
plans are developed, WESSCO has input into the design,
development and implementation of the waste handling system.
CWS has developed a network of over 1000 vendors throughout
the United States which includes hauling companies, recycling
companies and equipment manufacturing and maintenance companies.
Through this network, the Registrant is able to provide pricing
estimates for potential customers in a timely fashion. CWS
customer representatives have access to this information through
the computer software designed and developed to accommodate the
daily needs of the Registrant. Through this information
retrieval system, customer representatives can review the
accuracy of customer concerns from recent billings to hauling
rates to the average monthly cost of service.
The Registrant derives a significant portion of its revenues
from a single customer. The Registrant is taking affirmative
action to counter its dependence on any one customer. The
potential negative effect of losing any single customer has been
lessened by the Registrant's expansion of its customer base.
However, there can be no assurance that if the Registrant were to
lose all or the substantial portion of the business with this one
customer that such loss would not have a material adverse effect
on the Registrant.
Although the expansion of the Registrant's marketing base
has been a gradual process, it appears that its efforts are
beginning to provide positive results. The Registrant has
cautiously studied new markets before engaging in business in
such markets. The Registrant has a number of proposals pending
at various industrial and retail locations throughout the United
States. Many of these proposals involve both equipment and
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<PAGE>
management service contracts. Management has no assurances that
any of these proposals will be accepted.
In addition to the Registrant's expanded marketing coverage,
the Registrant is in its third year of offering a new line of
services to customers. The new services consist mainly of
consulting services relating to recycling and waste stream
analysis. The main advantage to offering consulting services is
that the individual projects are priced on a substantial prepaid
individual basis. This allows the Registrant to collect an up-
front fee with the opportunity to "sell" the customer traditional
services after the consulting and/or any subsequent
implementation is complete. By offering consulting services, the
Registrant is able to pursue an additional customer base.
The Registrant's sales/marketing emphasis has shifted in the
last three years from the traditional management services offered
to multi-location retail customers to industrial/manufacturing
customers. The Registrant believes that the profitability of its
operations will be enhanced through the procurement of these
accounts. Once a new system or methodology has been initiated,
the need for the Registrant's traditional services continues.
These services can be offered on a discounted basis since the
consulting "retainer" is usually substantial. There is also an
opportunity to sell new equipment since many industrial clients
have obsolete or inappropriate systems in place.
INDUSTRY BACKGROUND
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The Registrant is involved in the management of non-
hazardous solid waste and recyclables for retail and industrial
customers. As such, the industry is actually driven by the solid
waste collection and disposal industry. The solid waste
collection and disposal industry is a multi-billion industry.
The size of this industry has increased for the past several
years and should continue to increase as landfill space becomes
more scarce, thereby reducing the supply of ultimate disposal
facilities with no corresponding decrease in demand for ultimate
disposal. Although society (and industry) has developed an
increased awareness of the environmental issues and recycling has
increased, waste production continues to increase. Because of
environmental concerns, new regulations and cost factors, it has
become difficult to obtain the necessary permits to build any new
landfills. Management believes that the landfill shortage will
become a greater national problem in the future.
The rising costs associated with solid waste disposal have
created additional opportunities for the Registrant. Because
waste disposal has begun to take an increasingly larger
percentage of the total monthly expenditures incurred by
commercial establishments, the Registrant believes that the
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<PAGE>
services offered by the Registrant will be in greater demand.
Many commercial establishments that never paid attention to the
costs associated with waste disposal in the past are now looking
for ways to reduce expenses in this area. The Registrant is able
to offer commercial establishments its expertise to lower waste
disposal bills and initiate recycling programs to generate
additional revenues and/or reduce costs and materials bound for
ultimate disposal.
In addition to increasing landfill costs, regulatory
measures and more stringent control of materials bound for
disposal ("flow control") are making the management of solid
waste an increasingly difficult problem. The United States
Environmental Protection Agency (the "EPA") is expected to
continue the present trend of restricting the amount of
"potentially" recyclable material bound for landfills. Most
states have passed, or are contemplating measures which would
require, commercial establishments to recycle a minimum
percentage of their waste stream and would restrict the
percentage of recyclable materials in any commercial load of
solid waste material. Most states have already passed
restrictive regulations requiring a plan for the reduction of
waste or the segregation of recyclable materials from the waste
stream at the source. Management of the Registrant believes that
these restrictions may create additional marketing opportunities
as waste disposal needs within commercial establishments become
more specialized. Some large commercial establishments have
hired in-house staff to handle the solid waste management and
recycling responsibilities, but have found that without adequate
resource and staff support, this may not be an effective
alternative. The Registrant offers these establishments a
possible solution to this increasingly burdensome task.
COMPETITION
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On a commercial/industrial waste management level, the
Registrant has competition from a variety of sources. Much of it
is from companies which concentrate their efforts on a regional
level. Some of these companies may be able to handle a small
national account, but most do not have the resources available to
handle accounts of national significance.
There has been increased competition from national hauling
companies. The large national hauling companies often attempt to
handle an entire chain of locations for a "national chain"
client. This scenario poses a potential conflict of interest
since these hauling companies can attain greater profitability
from increases in hauling and disposal revenues. In addition to
having an interest in raising hauling and disposal rates, the
national hauling companies do not have operations in every city
and do not, to the knowledge of management, have some of the
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billing and computer capabilities which the Registrant is able to
offer. Additionally, management has encountered evidence of some
reluctance from independent hauling companies to work with a
national hauling company.
There is also competition from some equipment manufacturers.
These companies have their primary interest in selling or leasing
equipment and offer management services in order to secure these
sales (or leases). There is a cost involved in "using" the
equipment and the money saved must justify the amount spent on
this equipment.
An important difference between the Registrant and the
majority of its competition is the Registrant's management
process. The systematic approach attempts to provide consistent
results for the customer. At the implementation stage, the
Registrant actively "bids out" every location that a new customer
requests. The Registrant repeats this bidding process at any
time that a client receives notice of an undocumented price
increase or at regular intervals as indicated in the contractual
relationship. At subsequent stages, the Registrant will evaluate
a customer's solid waste program and give suggested alternatives
for improvement.
The Registrant has developed a network of maintenance
companies and hauling companies throughout the country and due to
the volume of business awarded to them by the Registrant, often
these companies will offer discounted hauling and maintenance
rates to the Registrant. However, the Registrant is not
"affiliated" with any particular company or vendor in the hauling
and/or maintenance industries, but rather deals with those
companies and vendors that can supply quality service at a
favorable price. In addition to the volume of business handled
by some of these "vendors," the vendors understand that as long
as the accounts are well-serviced, they will be invited to bid on
future accounts.
Few, if any, of the Registrant's competitors have a national
network of vendors similar to the one the Registrant has
developed over its years of operation. The major hauling
companies are limited in the scope of services which they can
provide to commercial/industrial accounts. Although the major
hauling companies have operating companies in most major and
intermediate-sized cities, they do not have nationwide geographic
coverage. Therefore, for large commercial/industrial clients,
they must obtain bids from local hauling companies that may
perceive them to be future competitors.
Most of the direct competition is from small regional
companies that bid on regional accounts or national accounts on a
regional basis. Few of the Registrant's competitors appear to be
equipped to handle large national accounts nor do they seem to
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have the inclination to expand their geographic coverage. There
are numerous national companies in closely related businesses,
including national hauling companies, that have substantially
greater financial resources than does the Registrant. Should any
of these companies decide to compete directly with the
Registrant, it could have a material adverse effect on the
business of the Registrant.
EMPLOYEES
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The Registrant has approximately 78 full-time employees
and approximately [10] independent consultants which provide
professional services. Pursuant to the terms of the Management
Agreement between the Registrant and K & R, the Registrant
manages the operations of K & R.
PROPOSED PROJECTS
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In an effort to diversify and expand the number of products
and services offered to present and potential clients, the
Registrant has, over the course of the past five years, promoted
in-store recycling systems and has consulted with clients
regarding the implementation of recycling programs. Through its
experiences, the Registrant has developed cost effective waste
minimization and recycling systems for retail and industrial
clients designed to fit the needs of the individual client(s) .
By increasing the number of services offered, the Registrant can
offer existing clients additional services and can offer more
options to potential clients in the future. Rather than being
considered a waste management company, the Registrant perceives
its role to be that of an environmental management company
arranging for the handling of the solid waste and recycling
requirements of its clients.
CAPITAL IMPROVEMENTS
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During the year 1995, the Registrant committed approximately
$1,555,359 towards capital improvement with respect to its
facilities. A significant portion of such funds were for a Moros
Shear model H-L-500 and a Liebherr Crane model R932 HDSL.
The purchase of the Moros Shear is a major step in
modernizing the Registrant's facilities. The Moros Shear is used
to process ferrous scrap into specified sizes of material
acceptable at steel mills. It has decreased down time and made
the facilities more efficient, cost effective and able to handle
additional business.
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The Registrant also is involved in selling the Moros Shear.
A local scrap recycler recently purchased a Moros Shear for
approximately $1,500,000.
Other purchases made by the Registrant included material
handling equipment, conveyor systems, roll-off containers and
computer equipment.
EFFECT OF STATE AND FEDERAL ENVIRONMENTAL REGULATIONS
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Any environmental regulatory liability relating to the
Registrant's operations is generally borne by the customers with
which the Registrant contracts, and the third party vendors, in
their capacity as transporters. As a matter of Registrant's
policy, the Registrant uses its best efforts to secure
indemnification for environmental liability from its customers
and third party vendors. Although management of the Registrant
believes that for the most part its business does not subject it
to potential environmental liability, in any event, the
Registrant uses its best efforts to be in compliance with
federal, state and local environmental laws, including but not
limited to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Clean Air Act, as amended, and the
Clean Water Act. Such compliance in 1995 did not constitute a
material expense to the Registrant.
The collection and disposal of solid waste, and rendering of
related environmental services are subject to federal, state and
local requirements which regulate health, safety, the
environment, zoning and land-use. Federal, state and local
regulations vary, but generally govern disposal activities and
the location and use of facilities and also impose restrictions
to prohibit or minimize air and water pollution. In addition,
governmental authorities have the power to enforce compliance
with these regulations and to obtain injunctions or impose fines
in the case of violations, including criminal penalties. These
regulations are administered by the EPA and various other
federal, state and local environmental, health and safety
agencies and authorities, including the Occupational Safety and
Health Administration of the U.S. Department of Labor.
The Registrant strives to conduct its operations in
compliance with applicable laws and regulations. While such
amounts expended in the past or anticipated to be expended in the
future have not had and are not expected to have a materially
adverse effect on the Registrant's financial condition or
operations, the possibility remains that technological,
regulatory or enforcement developments, the results of
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environmental studies or other factors could materially alter
this expectation.
Each state in which the Registrant operates has its own laws
and regulations governing solid waste disposal, water and air
pollution and, in most cases, releases and cleanup of hazardous
substances and liability for such matters. Several states have
enacted laws that will require counties to adopt comprehensive
plans to reduce, through waste planning, composting, recycling,
or other programs, the volume of solid waste landfills have
recently been promulgated in several states. Legislative and
regulatory measures to mandate or encourage waste reduction at
the source and waste recycling also are under consideration by
Congress and the EPA.
Finally, various states have enacted, or are considering
enacting, laws that restrict the disposal within the state of
solid or hazardous wastes generated outside the state. While
laws that overtly discriminate against out of state waste have
been found to be unconstitutional, some laws that are less
overtly discriminatory have been upheld in court. Challenges to
other such laws are pending. The outcome of pending litigation
and the likelihood that other such laws will be passed and will
survive constitutional challenge are uncertain. In addition,
Congress is currently considering legislation authorizing states
to adopt such restrictions.
ITEM 2. DESCRIPTION OF PROPERTY
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The Registrant leases its corporate office facilities which
consist of approximately 4000 square feet of usable office space
for $3,750 per month. The leased office space is located at 7100
Grade Lane in Louisville, Kentucky.
The Registrant manages the scrap recycling operations of
K & R and pays $6,250 per month for the facilities used in this
operation. This property is located at 7100 Grade Lane in
Louisville, Kentucky in the same "industrial complex" as the
Registrant's corporate offices.
Certain of the property and equipment of the Registrant and
its subsidiaries are subject to liens securing payment of
portions of the Registrant's and its subsidiaries' indebtedness.
See Note 6 of Notes to Consolidated Financial Statements included
herein for information with respect to debt on these properties.
The Registrant and its subsidiaries also lease certain of their
offices and equipment. See Notes 7 and 8 of Notes to Consolidated
Financial Statements included herein for information with respect
to leased properties. For additional information regarding properties
owned and operated by the Registrant, see "Business."
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ITEM 3. LEGAL PROCEEDINGS
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There are no material proceedings pending by, or against the
Registrant or any of its subsidiaries or affecting any of their
respective properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
- ------- ------------------------------------------------
MATTERS.
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There has been limited trading of the Registrant's stock
since Harry Kletter purchased 419,500 shares in October 1983. In
the fourth quarter of 1995, the Registrant's common stock began
trading on the Over the Counter Bulletin Board ("OTCBB") operated
by the National Association of Securities Dealers, Inc. ("NASD").
For the previous seven years, the stock was traded on a secondary
market basis and as a result, the Registrant did not believe it
could provide a meaningful range of high and low bid information
for the Registrant's stock. The following table sets forth, for
the periods indicated, the high and low closing sales prices for
the Registrant's common stock as quoted on the OTCBB.
<TABLE>
<CAPTION>
Quarter Ended 1995 1994
- ------------- ---- ----
<S> <C> <C> <C> <C>
High Low High Low
---- --- ---- ---
March 31 -- -- -- --
June 30 -- -- -- --
September 30 -- -- -- --
December 31 8 4 -- --
</TABLE>
There were approximately 438 shareholders of record as of
March 25, 1996.
The Registrant has never declared a cash dividend on its
Common Stock. The Board of Directors intends to retain all
earnings for investment into the Registrant's business and does
not anticipate paying any cash dividends in the foreseeable
future. The retention of these earnings will be used to help
finance the Registrant's expansion programs. Although there are
no restrictions on the Registrant's present or future ability to
pay dividends, the Board of Directors has the discretionary power
to make that determination.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
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OPERATION
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1. Liquidity and Capital Resources
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As of December 31, 1995 the Registrant held cash and cash
equivalents of $507,889.
The Registrant derives its revenues from a variety of
sources, including customer services, equipment sales, consulting
fees and from its scrap metal and recycling operations. The
scrap metal and recycling operations comprised approximately 30%
and 60% of the Registrant's income before provision for income
taxes for the years ended December 31, 1994 and 1995,
respectively. In the event the Registrant was to operate without
revenue derived from its scrap metal and 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 following table presents, for the years indicated, the
percentage relationship which certain captioned items in the
Registrant's Consolidated Statements of Operations bear to total
revenues and other pertinent data:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------
1995 1994
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STATEMENTS OF OPERATIONS DATA:
<S> <C> <C>
Revenue ......................... 100.0% 100.0%
Cost of Operations .............. 80.0% 85.2%
Selling, general and
administrative expenses ....... 16.2% 14.1%
Income from operations .......... 3.8% 0.7%
</TABLE>
REVENUE
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Revenue increased 31% from $23,379,994 in 1994 to
$30,545,142 in 1995. This increase was due to a combination of
volume increases involving the scrap recycling operations, the
corrugated paper recycling operations and the CWS operations.
COSTS OF OPERATIONS AND OPERATING INCOME
- ----------------------------------------
Cost of operations increased $4,497,080, or 23%, from
$19,927,790 in 1994 to $24,424,870 in 1995. As a percentage of
revenue, these costs were 85.2% and 80% in 1994 and 1995,
respectively. This increase was directly related to the volume
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increases involving the scrap recycling operations, the
corrugated paper recycling operations and the CWS operations.
Selling, general and administrative expenses increased from
$3,295,333 in 1994 to $4,958,077 in 1995. These expenses
increased from 14.1% to 16.2% of revenue in 1994 and 1995,
respectively. This increase was attributable to the promotion of
sales growth and the increased cost associated with the continued
improvement of the computer systems of the Registrant. The
Registrant constantly reviews its selling, general and
administrative costs throughout its businesses in an effort to
maintain control of the level of spending for such costs.
INTEREST EXPENSE
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Interest expense increased from approximately $2,336 in 1994
to $36,760 in 1995. This increase is primarily attributable to
increased borrowing to finance operating equipment acquisitions
during 1995.
INCOME TAXES
- ------------
Provision for income taxes consists of the following for the
years ended December 31, 1995 and 1994:
<TABLE>
1995 1994
-------- --------
<S> <C> <C>
Current:
Federal $ 386,700 $ 196,400
State and local 92,700 60,600
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Current provision 479,400 257,000
Deferred:
Federal $ 31,900 $ 29,300
State and local 5,700 -0-
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Deferred provision 37,600 29,300
--------- ---------
Provision for income taxes $ 517,000 $ 286,300
========= =========
</TABLE>
INCOME AND EARNINGS PER SHARE
- -----------------------------
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The following table sets forth certain components of income
from continuing and related earnings per share:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
Income from continuing
operations .................... $1,162,195 $ 156,871
Net Income ...................... 704,159 489,417
Earnings per share .............. .41 .28
Weighted average shares
outstanding ................... 1,729,600 1,729,600
</TABLE>
Income from continuing operations increased considerably
from $156,871 in 1994 to $1,162,195 in 1995. Earnings per share
from continuing operations are attributable to the increase in
the Registrant's revenue and continued cost control efforts.
INFLATION AND PREVAILING ECONOMIC CONDITIONS
- --------------------------------------------
To date, inflation has not and is not expected to have a
significant impact on the Registrant's operations in the near
term. The Registrant has no long-term fixed-price contracts and
the Registrant believes it will be able to pass through most cost
increases resulting from inflation to its customers.
FINANCIAL CONDITION AT DECEMBER 31, 1995 COMPARED TO DECEMBER 31,
- -----------------------------------------------------------------
1994
- ----
Accounts receivable increased from $2,383,503 as of December
31, 1994 to $3,241,290 as of December 31, 1995 due to the
increase in the Registrant's revenues.
The increase in accounts payable from $2,504,028 as of
December 31, 1994 to $3,600,857 as of December 31, 1995 is
attributable to the increase in the Registrant's operations in
1995. This increase was due to a combination of volume increases
involving the scrap recycling operations, the corrugated paper
recycling operations and the CWS operations.
-15-
<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 $750,000. Indebtedness under this
credit facility earns interest based on the Bank's prime rate as
promulgated from time to time. The maturity date under this
credit facility is June 30, 1997. As of December 31, 1995,
$350,000 was outstanding under this credit facility.
ITEM 7. FINANCIAL STATEMENTS
- ------- --------------------
The response to this Item is submitted as a separate section
of this report beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
The Registrant did not change accounting firms for the audit
of the 1995 financial statements. There were no disagreements
with the accountants in accounting and/or financial disclosure
matters.
-16-<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
----------------------------------------------------
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
------------------------------------------------------
ACT
---
EXECUTIVE OFFICERS AND DIRECTORSHIPS
- ------------------------------------
The following is a list of the names of the directors and
executive officers of the Registrant as of March 25, 1996, their
respective ages, and their respective positions with the
Registrant, as well as the dates of their terms.
Name Age Position
---- --- --------
Harry Kletter 69 Chairman of the Board, Chief
Executive Officer, Chief
Financial Officer, President
and Director
Matthew Kletter 36 Secretary and Director
Roberta Kletter 62 Vice President and Director
There are no arrangements or understandings pursuant to
which the above-named persons were selected/elected to the
respective positions held.
BUSINESS EXPERIENCE AND FAMILY RELATIONSHIPS
- --------------------------------------------
HARRY KLETTER has been a director of the Registrant since 1983.
- -------------
In October, 1983 he was elected Chairman of the Board and Chief
Executive Officer. Mr. Kletter served as President of the
Registrant from October, 1983 until January, 1988 and again from
January, 1990 until July, 1991. Mr. Kletter resumed the position
of President in July 31, 1992 subsequent to Edward List's
resignation. Prior to his involvement with the Registrant, Mr.
Kletter was President and Chief Executive Officer of K & R
Corporation, a waste handling manufacturing company. Mr. Kletter
currently owns 50% of the stock in K & R Corporation which is now
a real estate holding company and materials processing company.
Prior thereto, Mr. Kletter was the President of Tri-City
Industrial Services, Inc., which corporation was involved in the
transportation, disposal and management of solid waste. From
1980 to present, Mr. Kletter had been an investor in various
-17-
<PAGE>
other business ventures including Outer Loop Business Park and
Outer Loop Industrial Park which are each real estate ventures in
the Louisville, Kentucky area.
ROBERTA KLETTER has been a Director and Secretary of the
- ---------------
Registrant since 1983. Since 1989, Ms. Kletter has served as
Marketing Director for the Registrant. As such, she is
responsible for public relations, advertising and promotional
material. Prior to her current position with the Registrant, Ms.
Kletter served as a manager for Waste Equipment Sales and Service
Company. Roberta Kletter is the wife of Harry Kletter.
MATTHEW L. KLETTER is an attorney who practices law primarily in
- ------------------
New York City. Mr. Kletter has provided services, on an
independent contractor basis, for the Registrant since 1989. Mr.
Kletter received a Bachelor of Arts from the University of
Michigan in 1981 and a Juris Doctor Degree from Brooklyn Law
School in 1984. Prior to 1989, Mr. Kletter served as the
Director of Legal and Business Affairs for Magera Management
Corporation, a financial and administrative company within the
motion picture industry. Mr. Kletter also maintains an
independent legal practice in New York City specializing in
Entertainment Law. Mr. Kletter is admitted to the bars of New
York State and the Commonwealth of Kentucky. Mr. Kletter is the
nephew of Harry Kletter. Mr. Kletter is a member of the New York
State Bar Association, the Kentucky Bar Association and the
Association of the Bar of The City of New York.
Each director serves until the next annual meeting of
stockholders and until his successor has been duly elected and
has qualified. Officers serve at the discretion of the Board of
Directors.
None of the directors hold another directorship in a company
with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended, or subject to
the requirements of Section 15(d) of that Act or in a company
registered as an investment company under the Investment Company
Act of 1940, as amended.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
- ----------------------------------------
Not Applicable
IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
- -----------------------------------------------
NAME AGE TITLE
---- --- -----
-18-
<PAGE>
Charles Hulsman 40 Divisional Manager
Tim Myers 44 Divisional Manager
Alan Schroering 31 Director of Finance and
Accounting
CHARLES HULSMAN has been with the Registrant since 1983 and has
- ---------------
served in various management capacities throughout his years with
the Registrant. Mr. Hulsman is presently serving as manager for
the Registrant's CWS division and as such is responsible for the
daily operations of this division. Prior to taking on the
management responsibilities in December 1991, Mr. Hulsman was a
sales representative for the Registrant's WESSCO division.
TIM MYERS has been employed by the Registrant and/or predecessor
- ---------
companies since 1973. Mr. Myers has served in various
operational capacities of waste hauling companies, landfills, a
waste equipment manufacturer, transfer stations, recycling
facilities, and scrap metal and paper operations.
ALAN SCHROERING has been with the Registrant since 1984 and has
- ---------------
served in various accounting capacities throughout his years with
the Registrant. Mr. Schroering received a Bachelor of Science in
Business from Indiana University in 1995. Mr. Schroering is
presently serving as controller for the Registrant.
ITEM 10. EXECUTIVE COMPENSATION
- -------- ----------------------
Set forth below is information concerning the annual
compensation for services in all capacities to the Registrant of
the Chief Executive Officer of the Registrant for the last three
fiscal years ending December 31.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation
-------------------------------------------------------
Other
Name and Annual Total
Principal Compensation Compensation
Position Year Salary ($) Bonus ($) ($) ($)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harry Kletter, 1995 $100,000 $ 975** $100,975
President 1994 $200,000 $ 975** $200,975
-19-<PAGE>
and CEO 1993 $ 50,000 $ 975** $ 50,975
</TABLE>
*Long Term Compensation, Awards and all other Compensation are
not applicable.
** - Includes taxable use of company vehicle.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- -------- ---------------------------------------------------
MANAGEMENT
----------
(a) Insofar as is known to the Registrant, no person owns
of record or beneficially five (5%) percent or more of the voting
shares of the Registrant's outstanding Common Stock, except as
set forth below:
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Beneficial of Beneficial Percent
of Class Owner Ownership of Class
- -------- ---------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Harry Kletter Record and 23.3%
$.01 Par 1208 Park Hills Ct. Beneficial
Value Louisville, KY 40207 409,500
Common Stock K & R Corporation 500,000 28.4%
$.01 Par 7100 Grade Lane
Value Louisville, KY 40213
Common Stock Roberta Kletter Record and 11.4%
$.01 Par 1208 Park Hills Ct. Beneficial
Value Louisville, KY 40207 200,000
</TABLE>
(b) As of March 25, 1996, the total number of shares
beneficially owned by all directors of the Registrant is as set
forth below.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Beneficial of Beneficial Percent
of Class Owner Ownership of Class
- -------- ---------------- ----------------- --------
<S> <C> <C> <C>
Common Stock All Directors and Record and 66.6%
$.01 par Officers as a Beneficial
Value Group 1,170,600
</TABLE>
-20-
<PAGE>
(c) There are no contractual arrangements known to the
Registrant, including any pledge of securities by the Registrant,
by which the operation of its term may at a subsequent date
result in a change in control of the Registrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
TRANSACTIONS WITH MANAGEMENT AND OTHERS
- ---------------------------------------
The Registrant leases certain facilities from K & R in which
Mr. Kletter is the President and principal shareholder. The
Registrant enters into business transactions with K & R when the
terms are beneficial to both parties [and not necessarily on
terms that are equal to transactions that would be negotiated at
arm's length].
In April 1992, the Registrant entered into a Management
Agreement with K & R and an affiliated company owned by the
Registrant's principal stockholder in which the Registrant is
responsible for the management of the scrap and corrugated paper
recycling for K & R. Under terms of the Management Agreement,
the Registrant purchased certain rental equipment and scrap metal
inventories from K & R, manages K & R's operations and in
consideration thereof retains a percentage of the profits
generated from the operations. The Management Agreement is
renewable on a bi-annual basis and may be cancelled by either
party upon 60 days written notice by the Registrant. The
Management Agreement provides that the Registrant will retain 60%
of the profits generated from K & R's operations rather than 90%.
During 1994 and 1995, income derived under the Management
Agreement resulted in income before provision for income taxes of
$236,330 and $728,391, respectively, to the Registrant.
In July, 1993 the Registrant entered into an agreement with
Recycling Data Management Corporation ("RDMC") to purchase a 50%
joint venture interest in an online bulletin board service
designed for the recycling industry. For the year ended December
31, 1994 the RecycleLine reported a loss of $37,135. The
Registrant decided to cease its involvement in this venture. On
December 15, 1994 the Registrant assigned its interest in
RecycleLine to RDMC. In addition, the Registrant loaned RDMC
$25,000. The outstanding principal of this loan bears interest
at the prime rate of interest as quoted by the Bank from time to
time and is secured by RDMC's stock. The principal of this loan
and accrued interest is payable on December 31, 1999. In
exchange for the assignment and the loan, the Registrant received
an option to purchase (i) a 40% joint venture interest in
RecycleLine and/or (ii) stock of RDMC equal to 40% of the then
outstanding stock of RDMC based on the book value of RDMC shares
at the exercise date. The option exercise period extends through
December 31, 1999.
-21-
<PAGE>
CERTAIN BUSINESS RELATIONSHIPS
- ------------------------------
See above
INDEBTEDNESS OF MANAGEMENT
- --------------------------
Not Applicable
TRANSACTIONS WITH PROMOTERS
- ---------------------------
Not Applicable
-22-<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
- -------- --------------------------------
(a) Exhibits. See Index to Exhibits. The following Financial
--------
Statements are filed as a part of this report on the pages
indicated.
FINANCIAL STATEMENTS
- --------------------
PAGE
Report of Independent Auditors F-1
Consolidated Balance Sheets as of December 31, 1995
and 1994 F-2
Consolidated Statements of Operations for the
years ended December 31, 1995 and 1994 F-4
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1995 and 1994 F-5
Consolidated Statements of Cash Flows for the
years ended December 31, 1995 and 1994 F-6
Notes to Consolidated Financial Statements F-7
(b) Reports on Form 8-K The Registrant did not file any Reports
-------------------
on Form 8-K during the last quarter of the fiscal year of the
Registrant ended December 31, 1995.
-23-<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Industrial Services of America, Inc.
and subsidiary
We have audited the accompanying consolidated balance sheets of
Industrial Services of America, Inc. and subsidiary as of
December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows
for the years then ended. These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Industrial Services of America, Inc. and subsidiary
as of December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Mather, Hamilton & Co.
MATHER, HAMILTON & CO.
Louisville, Kentucky
February 9, 1996
F-1
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
========================================================================
<TABLE>
<CAPTION>
ASSETS
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 507,889 $ 354,884
Receivables:
Trade, net of allowance for doubtful
accounts of $16,000 in 1995 and
$10,000 in 1994 3,241,290 2,380,446
Other - 3,057
----------- -----------
Total receivables 3,241,290 2,383,503
Net investment in sales-type leases 29,273 36,797
Inventories 138,503 161,211
Deferred tax asset 6,400 -
Other 168,773 140,868
----------- -----------
Total current assets 4,092,128 3,077,263
Net property and equipment 1,961,381 941,302
Other assets 155,852 74,884
----------- -----------
TOTAL ASSETS $6,209,361 $4,093,449
</TABLE>
=========== ===========
See accompanying notes.
- ------------------------------------------------------------------------
F-2
<PAGE>
========================================================================
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Note payable to bank $ - $ 50,000
Accounts payable 3,600,857 2,504,028
Income taxes payable 184,126 288,385
Current maturities of long-term debt 19,797 14,141
Other current liabilities 202,555 137,307
----------- -----------
Total current liabilities 4,007,335 2,993,861
Long-term debt 367,431 13,152
Deferred tax liability 66,600 22,600
Commitments
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 1,731,420 1,027,261
Treasury stock, at cost, 27,900 shares (8,000) (8,000)
----------- -----------
Total stockholders' equity 1,767,995 1,063,836
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,209,361 $4,093,449
=========== ===========
</TABLE>
-------------------------------------------------------------------------
F-3
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
==========================================================================
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
REVENUE
Net sales $30,248,460 $23,174,452
Rental income 296,682 205,542
------------ ------------
Total revenue 30,545,142 23,379,994
COST AND EXPENSES
Cost of sales 24,308,299 19,842,937
Direct expenses applicable to
rental income 116,571 84,853
Selling, general and administrative
expenses 4,958,077 3,295,333
------------ ------------
Total cost and expenses 29,382,947 23,223,123
------------ ------------
Income from operations 1,162,195 156,871
Other income, net 58,964 618,846
------------ ------------
Income before provision for income taxes 1,221,159 775,717
Provision for income taxes 517,000 286,300
------------ ------------
NET INCOME $ 704,159 $ 489,417
============ ============
EARNINGS PER COMMON SHARE $ .41 $ .28
============ ============
</TABLE>
See accompanying notes.
- -------------------------------------------------------------------------
F-4
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
============================================================================
<TABLE>
<CAPTION>
Common Stock Additional
------------ Paid-in Retained Treasury
Shares Amount Capital Earnings Stock Total
------ ------ ------- -------- -------- -----
<C> <C> <C> <C> <C> <C> <C>
Balance as of
January 1,
1994 1,729,600 $ 17,575 $ 27,000 $ 537,844 $ (8,000) $ 574,419
Net income - - - 489,417 - 489,417
---------- -------- -------- ---------- -------- ----------
Balance as of
December 31,
1994 1,729,600 17,575 27,000 1,027,261 (8,000) 1,063,836
Net income - - - 704,159 - 704,159
---------- -------- -------- ---------- -------- -----------
BALANCE AS OF
DECEMBER 31,
1995 1,729,600 $ 17,575 $ 27,000 $1,731,420 $ (8,000) $1,767,995
========== ======== ======== ========== ======== ==========
</TABLE>
See accompanying notes.
- ----------------------------------------------------------------------------
F-5
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
=================================================================
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 704,159 $ 489,417
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 329,481 189,501
Provision for doubtful accounts 33,200 -
Deferred income taxes 37,600 29,300
Special charge - 108,006
Gain on sale of property and
equipment (42,287) (10,091)
Increase (decrease) in cash
resulting from changes in:
Receivables (863,787) (176,332)
Inventories 22,708 (88,564)
Prepaid expenses 72,095 (106,573)
Accounts payable 1,096,829 (419,286)
Income taxes payable (104,259) 146,585
Other current liabilities 65,248 (36,903)
------------ ------------
Net cash provided by operating
activities 1,350,987 125,060
INVESTING ACTIVITIES
Purchase of restricted investment (100,000) -
Proceeds from sale of investment - 3,340
Increase in notes receivable to
affiliated company - (37,135)
Payments on notes receivable -
affiliated company - 109,000
Notes receivable (2,200) (25,000)
Proceeds from sale of property
and equipment 119,580 29,888
Payments and deposits for property
and equipment (1,555,359) (609,639)
------------ ------------
Net cash used in investing
activities (1,537,979) (529,546)
FINANCING ACTIVITIES
Payments on long-term debt (21,590) (24,507)
<PAGE>
Net proceeds from issuance of
note payable to bank 300,000 50,000
Proceeds from issuance of
long-term debt 31,525 -
Investment in sales-type leases (6,875) (43,647)
Proceeds from sales-type leases 36,937 29,777
------------ ------------
Net cash provided by financing
activities 339,997 11,623
------------ ------------
Net increase (decrease) in cash 153,005 (392,863)
Cash at beginning of year 354,884 747,747
------------ ------------
CASH AT END OF YEAR $ 507,889 $ 354,884
============ ============
</TABLE>
See accompanying notes.
- ------------------------------------------------------------------
F-6
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
=================================================================
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
NATURE OF BUSINESS - Industrial Services of America, Inc.
(the Company) is engaged in providing products and services
to meet the waste management needs of its customers related
to waste equipment sales and rental, scrap recycling,
service and consulting, and solid waste disposal. The
Company's customers are located throughout the United States
and Canada.
CONSOLIDATION - The consolidated financial statements
include IES of America, Inc., an inactive wholly-owned
subsidiary. All significant intercompany transactions have
been eliminated.
ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
ACCOUNTS RECEIVABLE - Credit is extended based on an
evaluation of the customer's financial condition, and
generally collateral is not required.
INVENTORIES - Inventories consist principally of waste
equipment machinery and parts, and scrap materials held for
resale and are stated at the lower of cost (first-in, first-
out method) or market.
PROPERTY AND EQUIPMENT - Property and equipment are stated
at cost. Depreciation and amortization is provided using
the straight-line method over the estimated useful lives of
the respective assets which range from three to ten years.
Accelerated depreciation methods are used for income tax
purposes.
INCOME TAXES - The Company recognizes deferred tax
liabilities and assets for the expected future tax
consequences of events that have been included in the
<PAGE>
financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to
reverse. The significant components of deferred tax
provision for income taxes are based on income and expenses
included in the accompanying statement of operations.
Differences between taxes so computed and taxes payable
under applicable statutes and regulations, when material,
are classified as deferred taxes arising from timing
differences.
- -----------------------------------------------------------------
F-7
<PAGE>
EARNINGS PER COMMON SHARE - Earnings per common share data
is based on 1,729,600 weighted shares outstanding during
1995 and 1994.
2. INVENTORIES
Inventories as of December 31, 1995 and 1994 consist of the
following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Equipment and parts $ 61,608 $ 73,159
Scrap materials 76,895 88,052
--------- ---------
$138,503 $ 161,211
========= =========
</TABLE>
3. LEASES
The Company is the lessor of equipment under sales-type
leases having terms of three to five years, with the lessees
having the option to acquire the equipment at the
termination of the leases. All costs associated with this
equipment are the responsibility of the lessees.
Future minimum lease payments receivable for sales-type
leases as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 37,439
1997 15,534
1998 12,127
1999 4,538
2000 1,537
---------
Net minimum lease payments receivable 71,175
Less unearned income 14,556
---------
Net investment in sales-type leases 56,619
Less current portion 29,273
---------
Long-term portion $ 27,346
=========
</TABLE>
<PAGE>
The Company also is the lessor of equipment under operating
leases having terms of one to five years. All costs
associated with this equipment are the responsibility of the
lessees. The net investment in equipment leased to
customers under noncancelable operating leases as of
December 31, 1995 is as follows:
- -----------------------------------------------------------------
F-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Rental equipment $ 633,285
Less accumulated depreciation 298,914
---------
Net rental equipment $ 334,371
=========
</TABLE>
Future minimum rentals receivable under noncancelable
operating leases as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 186,241
1997 128,931
1998 63,352
1999 36,166
2000 14,178
---------
$ 428,868
=========
</TABLE>
4. NET PROPERTY AND EQUIPMENT
Property and equipment, net as of December 31, 1995 and 1994
consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Equipment and vehicles $1,763,696 $ 858,818
Office equipment 335,883 235,828
Rental equipment 633,285 421,683
Leasehold improvements 68,634 13,535
----------- -----------
2,801,498 1,529,864
Less accumulated depreciation
and amortization 840,117 588,562
----------- -----------
Net property and equipment $1,961,381 $ 941,302
=========== ===========
</TABLE>
<PAGE>
5. INVESTMENT IN AFFILIATE
In December 1994, the Company entered into an agreement with
Recycling Data Management Corporation (RDMC) regarding the
Company's 50% equity interest in Recycleline, Inc. Under
this agreement, the Company agreed to assign its interest in
Recycleline to RDMC. As part of the agreement, the Company
absorbed all expenses incurred on behalf of Recycleline
during 1994 which totaled $37,135. In addition, the Company
loaned Recycleline $25,000. The loan bears interest at
prime (prime was 8.5% at December 31, 1995) and is secured
by all RDMC outstanding stock. The loan and accrued
interest is payable on December 31, 1999. In exchange for
the assignment and the loan, the
- -----------------------------------------------------------------
F-9
<PAGE>
Company received an option to acquire 40% equity interest in
Recycleline based on its book value at the exercise date.
The option exercise period extends through December 31,
1999.
During December 1994, the Company wrote off a note
receivable from Recycleline totaling $78,877 and its
remaining investment in Recycleline totaling $29,129. These
amounts are included in other income, net on the Statement
of Operations.
6. LONG-TERM DEBT
Long-term debt as of December 31, 1995 and 1994 consists of
the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Note payable to bank $ 350,000 $ -
Notes payable; interest ranging
from 6% to 10.99%; due in monthly
installments of principal and
interest totaling $2,040 with
various maturity dates through
May 1997; secured by automobiles
with a net book value of
approximately $29,300 37,228 25,293
Note payable; non-interest
bearing; unsecured - 2,000
---------- ----------
Total long-term debt 387,228 27,293
Less current maturities 19,797 14,141
---------- ----------
Long-term maturities $ 367,431 $ 13,152
========== ==========
</TABLE>
As of December 31, 1995, the Company had borrowed $350,000
under its $500,000 revolving credit agreement with a
financial institution. This agreement is secured by certain
assets owned by the Company and affiliated companies,
certain rent assignments, certain shares of the Company's
stock, a life insurance policy on the Company's principal
stockholder, and any assets held by the financial
institution on behalf of the Company.
<PAGE>
In January 1996 the agreement was modified and the available
revolving credit was increased to $750,000. Interest under
the agreement, as amended, is payable monthly at the bank's
prime rate plus .5%. This agreement is secured by the
collateral identified above and is guaranteed by the
Company's principal stockholder. This new agreement expires
June 30, 1997. Accordingly, this note is presented on the
Balance Sheet as a long-term liability as of December 31,
1995.
- -----------------------------------------------------------------
F-10
<PAGE>
As of December 31, 1995, aggregate maturities of long-term
debt are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 19,797
1997 362,075
1998 5,356
--------
$ 387,228
========
</TABLE>
7. COMMITMENTS
The Company has a noncancelable operating lease agreement
for certain facilities through 1998. The lease may be
renewed by the Company for one successive three year period.
Rent expense for 1995 and 1994 under this agreement totaled
$18,442 and $18,000, respectively. Future minimum rental
payments under this agreement as of December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $19,327
1997 19,327
1998 14,496
-------
$53,150
=======
</TABLE>
In November 1995 the Company entered into a contract to
purchase certain equipment for $245,000. As of December 31,
1995, the Company's remaining commitment totaled $120,000.
8. RELATED PARTY TRANSACTIONS
The Company enters into various transactions with related
parties including the Company's principal stockholder and
affiliated companies which are controlled by the Company's
principal stockholder. These transactions primarily involve
advances from the Company, notes receivable, and leasing of
Company facilities and vehicles. A summary of these
transactions is as follows:
<PAGE>
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Prepaid rent $ - $ 29,254
========= =========
Accounts payable -
affiliated company $ 226,446 $ -
========= =========
Rent expense $ 268,279 $ 249,361
========= =========
</TABLE>
The Company advanced $37,135 in 1994 to Recycleline. During
December 1994, the Company wrote off these amounts (see
Note 5).
- -----------------------------------------------------------------
F-11
<PAGE>
The Company has an agreement with an affiliated company
owned by the Company's principal stockholder, enabling the
Company to manage all aspects of the affiliated company's
scrap recycling operations. The agreement provides that the
Company shall retain 60% of the profits from the management
of the scrap recycling operations commencing July 1, 1994.
The Company includes revenue from the scrap recycling
operations and the related 40% management fee in the
Statement of Operations in net sales and costs of sales,
respectively. The scrap recycling operations generated
income before provision for income taxes to the Company
totaling $728,391 in 1995 and $236,330 in 1994. This
agreement may be canceled by either party upon prior written
notice.
Under certain operating lease agreements with an affiliated
company owned by the Company's principal stockholder, the
Company pays monthly payments of $3,750 to lease the
Company's main office facility, $6,250 for facilities used
in the scrap recycling operations, and $12,356 for equipment
and vehicles used in the scrap recycling operations.
9. INCOME TAXES
Provision for income taxes consist of the following for the
years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current:
Federal $ 386,700 $ 196,400
State and local 92,700 60,600
--------- ---------
Current provision 479,400 257,000
Deferred:
Federal 31,900 29,300
State and local 5,700 -
--------- ---------
Deferred provision 37,600 29,300
--------- ---------
Provision for income taxes $ 517,000 $ 286,300
========= =========
</TABLE>
<PAGE>
The difference between the actual provision for income taxes
and the tax provision computed by applying the statutory
Federal income tax rate to income before provision for
income taxes is attributable to the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Federal income tax at
statutory rate $ 415,200 $ 263,700
Equity in loss of affiliate - (7,100)
</TABLE>
- -----------------------------------------------------------------
F-12
<PAGE>
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
State and local income taxes,
net of federal income
tax effect $ 63,000 $ 40,000
Effect of tax rate change on
deferred tax assets 13,500 (12,200)
Other differences, net 25,300 1,900
--------- ---------
Provision for income taxes $ 517,000 $ 286,300
========= =========
</TABLE>
Deferred tax (liabilities) assets consist of the following
as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Provisions for estimated
liabilities $ 17,300 $ -
Depreciation (77,500) (22,600)
--------- ---------
Net deferred tax liabilities $ (60,200) $ (22,600)
========= =========
</TABLE>
10. OTHER INCOME, NET
Other income, net includes approximately $650,000 in 1994
resulting from changes in estimates related to costs
associated with waste collection and disposal services.
11. CONCENTRATION OF CREDIT RISK
As of December 31, 1995 the Company maintains cash deposits
at a single financial institution of approximately $800,000
in excess of federally insured limits.
<PAGE>
12. MAJOR CUSTOMER
Sales to a single customer were approximately 44% and 41% of
net sales for the years ended December 31, 1995 and 1994,
respectively.
13. RETIREMENT PLAN
During 1995, the Company sponsored a defined contribution
retirement plan under Section 401(k) of the Internal Revenue
Code which covers substantially all employees. Eligible
employees may contribute up to 15% of their annual
compensation. Under the plan, the Company matches 10% of
each employee's
- -----------------------------------------------------------------
F-13
<PAGE>
voluntary contributions. Any additional annual matching
amounts made by the Company are determined by management.
The Company's matching contributions totaled $31,111 for the
year ended December 31, 1995.
14. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Interest $ 36,760 $ 2,336
Taxes 583,659 124,934
</TABLE>
- -----------------------------------------------------------------
F-14
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15 (d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
INDUSTRIAL SERVICES OF AMERICA INC.
- -----------------------------------
By: /s/ Harry Kletter
-------------------------------
Harry Kletter
President
Date: March 28, 1996
------------------------------
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
SIGNATURE DATE TITLE
- ---------------------- ------- --------------------------
/s/ Harry Kletter 3-28-96 Director, Chief Executive
- ----------------------
Harry Kletter Officer and Chief Financial
Officer
/s/ Roberta Kletter 3-28-96 Director and Executive Vice
- ----------------------
Roberta Kletter President
/s/ Matthew L. Kletter 3-28-96 Director
- ----------------------
Matthew L. Kletter
/s/ Alan Schroering 3-28-96 Controller (Principal
- ---------------------- Accounting Officer)
Alan Schroering
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT
BY NON-REPORTING ISSUERS
The Registrant has furnished neither an annual report to
shareholders covering the fiscal year of the Registrant ended
December 31, 1995, nor a proxy statement, form of proxy, on other
proxy soliciting material for 1996 to its shareholders. The
Registrant intends to furnish to its shareholders such an annual
report and proxy statement subsequent to the filing of this Form
10-KSB with the Commission, at which time the Registrant will
furnish four (4) copies of such materials to the Commission.
<PAGE>
EXHIBITS
TO
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
INDUSTRIAL SERVICES OF AMERICA, INC.
FOR FISCAL YEAR ENDED
DECEMBER 31, 1995
<PAGE>
EXHIBIT INDEX
Exhibit
Number Page
- ------- ----
3.1 Certificate of Incorporation and Amendments
of the Registrant
3.2 By-Laws of the Registrant
27 Financial Data Schedule
Exhibit Index Page 1
<PAGE>
CERTIFICATE OF INCORPORATION
----------------------------
We, the undersigned, desiring to form a corporation under
the provisions of Chapter 10096, Acts of the Legislature of the
State of Florida, 1925, and all Acts amendatory thereto, hereby
make, subscribe and acknowledge before a Notary Public and file
with the Secretary of State of the State of Florida certificate
of incorporation as follows:
ARTICLE I.
The name of the proposed corporation shall be ALSON MFG.
CO., its business may be carried on throughout the State of
Florida and the United States of America as may be authorized by
its Board of Directors.
ARTICLE II.
The general nature of the business of the corporation shall
be as follows:
To manufacture, erect and install prefabricated porches; to
manufacture, erect and install kitchen cabinets and all types of
steel shelving and other metal cabinets; to manufacture, assemble
and install air conditioners and to repair and service all of the
above and to sell the above, and to act as consultants on any of
the above, both in the upkeep and servicing of all kinds of
equipment, mechanical, electrical, hydraulic and other kindred
items; to buy and sell land and buildings; to erect buildings
thereon, to acquire leases, and otherwise acquire, own, use and
dispose of property of all kinds, real, personal or mixed; to
borrow money and give security for same, to give mortgages upon
the assets of this corporation when deemed by the Board of
Directors expedient so to do and for the performance of such
other things as the Board of Directors may deem necessary and
proper for the furtherance of the interests of this corporation
in the exercise of the powers herein enumerated.
ARTICLE III
The maximum number of shares of stock which this
corporation shall have outstanding at any time shall be fifty
(50) shares, each of which shall be of no par value, and each of
which shall be issued fully paid and non-assessable, and shall be
payable in lawful money of the United States of America or in
services or property at a just valuation to be fixed by the
Directors of the corporation, at the organization meeting, or any
other meeting held for that purpose.
ARTICLE IV
The amount of capital with which this corporation shall
begin business will be FIVE HUNDRED ($500.00) DOLLARS.
ARTICLE V
This corporation shall have perpetual existence.
ARTICLE VI.
The principal place of business of this corporation shall
be in the City of Miami, Dade County, Florida, or any other City,
County or State which the Board of Directors may authorize.
ARTICLE VII
The Board of Directors of this corporation shall consist of
not less than three (3) and not more than five (5) directors.
<PAGE>
ARTICLE VIII
The names and post office addresses of the officers and of
the First Board of Directors of this corporation, who shall hold
office for the first year of its existence, or until their
successors are elected and qualified, are as follows:
Secretary -- DANIEL NEAL HELLER; 239 Shoreland Bldg., Miami, Fla.
CATHERINE P. O'BRIEN, 239 Shoreland Bldg., Miami, Fla.
HERBERT M. KLEIN, 239 Shoreland Bldg., Miami, Fla.
Treasurer -- Ralph Garbett President -- Allen Garbett
ARTICLE IX
The names and post office addresses of the subscribers to this
Certificate of Incorporation, and the number of shares each
agree to take are as follows:
DANIEL NEAL HELLER, 239 Shoreland Bldg., Miami, Fla. 18 shares
CATHERINE P. O'BRIEN, 239 Shoreland Bldg., Miami, Fla. 16 shares
HERBERT M. KLEIN, 239 Shoreland Bldg., Miami, Fla. 16 shares
ARTICLE X
The management and control of the business of the
corporation shall be conducted under the direction of the Board
of Directors of the following officers, who shall be elected by
the Board of Directors, to wit, a President, one or more Vice-
Presidents, a Treasurer and a Secretary, provided that any one or
more of said offices may be held by the same person, except that
the office of President shall not be held by the Secretary, or
Assistant Secretary of the corporation.
IN WITNESS WHEREOF, the incorporators have hereunto set
their respective hands and seals this 30th day of September,
1953.
/s/ Daniel Neal Heller (SEAL)
-----------------------------
/s/ Catherine P. O'Brien (SEAL)
-----------------------------
/s/ Herbert M. Klein (SEAL)
-----------------------------
STATE OF FLORIDA )
SS
COUNTY OF DADE )
I HEREBY CERTIFY that on this day personally appeared
before me, an office duly authorized to administer oaths and take
acknowledgements, DANIEL NEAL HELLER, CATHERINE P. O'BRIEN, and
HERBERT M. KLEIN, to me well known to be the persons described in
and who executed the foregoing instrument, and they acknowledged
before me that they executed the same freely and voluntarily for
the purposes therein expressed.
<PAGE>
WITNESS my hand and official seal at Miami, County of Dade
and State of Florida, this 30th day of September, 1953.
/s/ Lisa M. Perry
----------------------------------
NOTARY PUBLIC
State of Florida at Large
My commission expires: 9-16-56
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALSON MFG. CO.
----------------------------
ALSON MFG. CO., a Florida corporation, under its corporate
seal and the hands of its President, LARRY GARBETT, and
Secretary, ANNE COWLEY, hereby certifies that:
I.
The Board of Directors of said corporation at a meeting
called and held on July 17, 1961, adopted the following
resolutions:
BE IT RESOLVED by the Board of Directors of ALSON MFG. CO.,
that said Board deems it advisable and hereby declares it to be
advisable that Article III of the Certificate of Incorporation be
amended so as to read as follows:
The maximum number of shares of stock that
this corporation is authorized to have
outstanding at any one time is Five Hundred
Thousand (500,000) shares of Common voting
stock of the par value of $.01 per share.
BE IT FURTHER RESOLVED by the Board of Directors of ALSON
MFG. CO., that said Board deems it advisable and hereby declares
it to be advisable that Article VII of the Certificate of
Incorporation be amended so as to read as follows:
The number of its directors shall be not
less than three but the bylaws may provide
for an increase in the number of directors.
BE IT FURTHER RESOLVED by the Board of Directors of ALSON
MFG. CO., that the said Board deems it advisable and hereby
declares it to be advisable to amend the Certificate of
Incorporation of the corporation by the addition of Articles XI,
XII and XIII, each Article reading as follows:
ARTICLE XI: No stockholder shall be entitled as a
matter of right to subscribe for or receive additional
shares of any class of stock of the corporation,
whether now or hereafter authorized, or any bonds,
debentures or other securities convertible into stock,
but such additional shares of stock or other
securities convertible into stock may be issued or
disposed of by the Board of Directors to such persons
and on such terms as in its discretion it shall deem
advisable.
ARTICLE XII: The corporation shall indemnify any and
all of its directors or officers or former directors
or officers or any person who may have served at its
request as a director or officer of another
corporation in which it owns shares of capital stock
or of which it is a creditor against expenses actually
<PAGE>
and necessarily incurred by them in connection with
the defense of any action, suit or proceeding in which
they, or any of them, are made parties, or a party by
reason of being or having been directors or officers
or a director or officer of the corporation, or of
such other corporation, except in relation to matters
as to which any such director or officer or former
director or officer of person shall be adjudged in
such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty.
Such indemnification shall not be deemed exclusive of
any other rights to which those indemnified may be
entitled, under any by-laws, agreement, vote of
stockholders, or otherwise. The right of
indemnification hereinabove stated shall under no
circumstances extend to or include indemnification for
liabilities arising under the Securities Act of 1933,
as amended.
ARTICLE XIII: No contract or other transaction
between the corporation and any other corporation,
firm or individual shall be affected or invalidated by
the fact that any one or more of the directors or
officers of this corporation is or are interested in
or is a director or officer, or are directors or
officers of such other corporation, or a member of
such firm, and any director or directors, or officer
or officers, individually or jointly, may be a party
or paries to or may be interested in any contract, or
transaction, of this corporation or in which this
corporation is interested, and no contract, act or
transaction of this corporation with any person or
persons, firms or corporations, shall be affected or
invalidated by the fact that any director or
directors, or officer or officers, of this corporation
is a party, or are parties, to or interested in such
contract, act or transaction, or in any way connected
with such person or persons, firm or corporation, and
each and every person who may become a director or
officer of this corporation is hereby relieved from
any liability that might otherwise exist from
contracting with the corporation for the benefit of
himself or any firm or corporation in which he may be
in anywise interested.
BE IT FURTHER RESOLVED by the Board of Directors that a
special meeting of the stockholders of record entitled to vote
for the consideration of said amendments be, and the same is
hereby called to be held in Miami, Florida, on August 14, 1961 at
10 o'clock in the forenoon.
II.
The meeting of the stockholders of the corporation called
to be held by the Board of Directors, as aforesaid, was held on
August 2, 1961, and at said meeting of the stockholders said
amendments to the Certificate of Incorporation were duly adopted
by the unanimous vote of all the stockholders.
<PAGE>
IN WITNESS WHEREOF, said corporation has caused this
Certificate to be signed in its name by its President and its
corporate seal to be hereunto affixed and attested by its
Secretary, this, the 16 day of August, 1961.
ALSON MFG. CO.
By /s/ Larry Garbett
-------------------------------
President
ATTEST:
/s/ Anne Cowley Garbett
- --------------------------
Secretary
STATE OF FLORIDA )
SS:
COUNTY OF DADE )
On this day personally appeared before me, the undersigned
officer duly authorized by the laws of the State of Florida to
take acknowledgments, LARRY GARBETT, President of ALSON MFG. CO.,
a Florida corporation, and acknowledged that he executed the
above and foregoing Certificate of Amendment as such officer for
and on behalf of such corporation after having been duly
authorized to do so; also personally appeared before me, at the
same time, ANNE COWLEY GARBETT, Secretary of said corporation,
and acknowledged that she attested the foregoing Certificate of
Amendment as such officer for and on behalf of said corporation
after having been duly authorized to do so.
WITNESS my hand and official seal at Miami, Dade County,
Florida, this 16 day of August, 1961.
/s/
----------------------------------
Notary Public, State of Florida at
Large
My Commission expires: 1-15-65
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
ALSON MFG. CO.
-------------------------------
ALSON MFG. CO., a Florida corporation, under its corporate
seal and the hands of its President, LAWRENCE GARBETT, and its
Secretary, DONALD GARBETT, hereby certifies that:
The Board of Directors and all Stockholders of said
Corporation, at a Joint Meeting duly called in Miami, Florida, on
January 13, 1969, unanimously adopted the following resolutions:
RESOLVED: That Article I of the Certificate
of Incorporation of ALSON MFG. CO. be
deleted in its entirety and the following be
substituted therefor:
ARTICLE I
"That the name of this corporation is:
ALSON MFG. CO., INC.
RESOLVED: That Article II of the
Certificate of Incorporation be deleted in
its entirety and the following be
substituted therefor:
ARTICLE II
"That the general nature of the business to be
transacted by this Corporation shall be as follows:
A. To design, manufacture, fabricate, acquire,
buy, sell, and in any manner dispose of,
lease, repair, erect, connect, install and
generally deal and trade in and with
lighting fixtures, electrical fixtures,
electrical lighting fixtures, electric
machinery, electric devices and general
electric equipment, appliances, specialties,
merchandise, parts, supplies and materials
of every nature and description, and to
design, manufacture, fabricate, acquire,
buy, sell and dispose of in any manner, and
generally deal in any and all machinery,
equipment, apparatus, articles, goods, wares
and merchandise suitable in connection with
the foregoing objects.
B. To acquire, by purchase or otherwise, for
investment or resale, and to own, operate,
subdivide, map or plat, lease, let, mortgage
and sell, or otherwise dispose of, for cash
or on credit, by conveyance, agreement for
deed, or other appropriate instrument, and
generally, to deal and traffic as the owner,
or as agent or broker, in real, personal and
mixed property, and any interest or estate
therein, including subdivisions, hotels,
<PAGE>
apartment houses or business houses,
factories and warehouses, residences,
estates and manufacturing sites and any lot
or parcel of land upon which they are
located; and to create, own, lease, sell,
operate and deal in freehold and leasehold
estates of any and all character whatsoever,
and in connection therewith, to own, lease
and operate auto-bus lines or other means of
conveyance; and to manufacture, buy, sell,
exchange, and generally, for cash or on
credit, to deal at wholesale or at retail,
as agent, broker or owner, in goods, wares,
and merchandise, and other personal property
of all description whatsoever.
C. To engage in the business of a contractor
and builder, and to erect, plan, outline and
conceive of all manner of structures, and to
do all and every act necessary and
consistent with the work of a contractor and
builder.
D. To carry on business in the United States or
elsewhere, as factors, agents, commission
merchants or merchants to buy, sell,
manipulate and deal in, at wholesale or at
retail, any merchandise, goods, wares,
products and commodities of every sort, kind
or description, and to carry on any other
business, whether manufacturing or
otherwise, which can be conveniently carried
on with any of the corporation's objects; to
open stores, offices or agencies throughout
the United States or elsewhere, or to allow
or cause the legal estate and interest in
any properties or business required,
acquired, established or carried on by the
corporation to remain in or to be vested in
the name of, or carried on by any other
corporation formed or to be formed, and
either upon trust for, or as agents or
nominees of this corporation, and to manage
the affairs or take over and carry on the
business of any such other corporation
formed or to be formed, and to exercise all
or any of the powers of any such
corporation, or of holders of shares of
stock or securities thereof, and to receive
and to distribute as profits the dividends
and interest on such shares of stock and
securities; to purchase or otherwise acquire
and undertake, all or any part of the
business, property and liabilities of any
persons or corporations, to carry on any
kind of business which this corporation is
authorized to carry on; to enter into
partnership or take or make any arrangement
for sharing profits, union of interests,
<PAGE>
reciprocal concessions, or cooperate with
any person or corporation carrying on or
about to carry on any business which this
corporation is authorized to carry on, or
any business or transaction capable of being
conducted so as, directly or indirectly, to
benefit this corporation.
E. To guarantee, to acquire by purchase,
subscription, or otherwise, hold for
investment, or otherwise, sell, assign,
transfer, mortgage, pledge or otherwise
dispose of the shares of the capital stock
of, or any bonds, securities or evidences of
indebtedness created by any other
corporation or corporations of the State of
Florida, or any other state or government,
domestic or foreign; and while the owner of
any such stocks, bonds, securities and
evidences of indebtedness, to exercise all
the rights, powers and privileges of
ownership, including the right to vote
thereon for any and all purposes; to aid by
loan, subsidy, guaranty or in any other
manner whatsoever so far as the same may be
permitted in the case of corporations
organized under the General Corporation Laws
of the State of Florida, any corporation
whose stocks, bonds, securities or other
obligations are or may be in any manner and
at any time owned, held or guaranteed, and
to do any and all other acts or things for
the preservation, protection, improvement or
enhancement in value of any such stocks,
bonds, securities or other obligations; and
to do all and any such act or things
designed to accomplish any such purpose.
F. To acquire in any manner, enjoy, utilize,
hold, sell, assign, lease, mortgage or
otherwise dispose of, letters patent of the
United States or of any foreign country,
patents, patent rights, licenses and
privileges, inventions, improvements and
processes, copyrights, trademarks and trade
names or pending applications therefor,
relating to or useful in connection with any
business of the corporation or any other
corporation in which the corporation has or
may have an interest as a stockholder or
otherwise.
G. To borrow money and contract debts when
necessary for the transaction of its
business or for the exercise of its
corporate rights, privileges or franchises,
or for any other lawful purpose of its
incorporation; to issue bonds, promissory
notes, bills of exchange, debentures and
<PAGE>
other obligations and evidences of
indebtedness payable at a specified time or
times, or payable upon the happening of a
specified event or events, secured or
unsecured, from time to time, for moneys
borrowed, or in payment for property
acquired, for any of the other objects or
purposes of the corporation or for any of
the objects of its business; to secure the
same by mortgage or mortgages, or deed or
deeds of trust, or pledge or other lien upon
any or all of the property, rights,
privileges or franchises of the corporation,
wheresoever situated, acquired or to be
acquired; and to confer upon the holders of
any debentures, bonds or other evidences of
indebtedness of the corporation, secured or
unsecured, the right to convert the
principal thereof into any preferred or
common stock of the corporation now or
hereafter authorized, upon such terms and
conditions as shall be fixed by the Board of
Directors; to sell, pledge or otherwise
dispose of any or all debentures or other
bonds, notes and other obligations in such
manner and upon such terms as the Board of
Directors may deem judicious, subject,
however, to the provisions of the By Laws of
the corporation."
RESOLVED: That Article III of the Certificate of
Incorporation of the Corporation be deleted in its
entirety and the following be substituted therefor:
ARTICLE III
"The corporation is authorized to issue two million
(2,000,000) shares of common voting stock of the par value
of one cent ($.01) per share. The corporation is
prohibited from the issuance of any non-voting stock.
"The corporation shall have the full power and lawful
authority to accept property, real, personal and mixed,
labor and services, in payment of shares of its capital
stock, in lieu of cash, at a just valuation, to be fixed by
its Board of Directors.
"The shares of the capital stock of the corporation,
when certificates thereof shall be issued, shall be fully
paid and non-assessable.
"Shares of the capital stock of the corporation shall
be transferred only on the books of the corporation by the
holder thereof in person, or by his attorney, upon the
surrender and cancellation of a certificate or certificates
for like number of shares."
RESOLVED: That Article VII of the Certificate of
Incorporation be deleted in its entirety and the
following substituted therefor:
<PAGE>
ARTICLE VII
"That the business of the corporation shall be
conducted by a Board of Directors which shall consist of
not less than three (3) nor more than nine (9) members, as
the same may be provided by the By Laws of the corporation."
IN WITNESS WHEREOF, said corporation has caused this
Certificate of Amendment to be signed in its name by its
President and its corporate seal to be hereunto affixed and
attested by its Secretary, this 13th day of January, 1969.
(CORPORATE SEAL) ALSON MFG. CO.
ATTEST: /s/ Donald Garbett By: /s/ Lawrence Garbett
----------------------- -------------------------
- -
Donald Garbett, Lawrence Garbett, President
Secretary
STATE OF FLORIDA )
: ss.
COUNTY OF DADE )
On this day personally appeared before me, the undersigned
officer, duly authorized by the laws of the State of Florida to
take acknowledgments of deeds, LAWRENCE GARBETT and DONALD
GARBETT, President and Secretary, respectively, of ALSON MFG.
CO., a Florida corporation, and acknowledged that they executed
the above and foregoing Certificate of Amendment of the
Certificate of Incorporation of ALSON MFG. CO., as such officers,
for and on behalf of said corporation, after having been duly
authorized to do so.
WITNESS my hand and official seal at Miami, Dade County,
Florida, this 13th day of January, 1969.
/s/
----------------------------------
NOTARY PUBLIC
State of Florida at Large
My commission expires: 9-4-69<PAGE>
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF ALSON MFG. CO., INC.
----------------------------
ALSON MFG. CO., INC., a Florida corporation, under its
corporate seal and the hands of its President, Lawrence Garbett,
and its Secretary, Donald Garbett, hereby certifies that:
1. The Board of Directors of said corporation, at a
Special Meeting duly called in Miami, Florida, on May 15, 1970,
unanimously adopted the following resolution:
RESOLVED: That Article I of the Certificate of
Incorporation of Alson Mfg. Co., Inc. be deleted in its
entirety and the following be substituted therefor:
"ARTICLE I
"That the name of this corporation is: ALSON INDUSTRIES,
INC."
2. The Annual Meeting of Stockholders of the corporation
was called and held on July 24, 1970, to consider the resolution
hereinabove set forth and at said Annual Meeting of Stockholders
the said amendment to the Certificate of Incorporation was
adopted by the unanimous vote of all stockholders present in
person and by proxy, who represented a majority of the issued and
outstanding common stock of said corporation.
IN WITNESS WHEREOF, said corporation has caused this
Certificate to be signed in its name by its President and its
corporate seal to be hereunto affixed and attested by its
Secretary this 24th day of July, 1970.
ALSON MFG. CO., INC.
By /s/ Lawrence Garbett
-------------------------------
Lawrence Garbett
President
[CORPORATE SEAL]
Attest: /s/ Donald Garbett
-----------------------
Donald Garbett
Secretary
STATE OF FLORIDA )
: ss.
COUNTY OF DADE )
BEFORE ME, the undersigned authority, on this 24th day of
July, 1970, personally appeared LAWRENCE GARBETT and DONALD
GARBETT, President and Secretary, respectively, of ALSON MFG.
CO., INC., who, being first duly sworn, acknowledged that they
executed the foregoing Certificate of Amendment to Certificate of
Incorporation of Alson Mfg. Co., Inc., as such officers, for and
on behalf of said corporation, after having been duly authorized
to do so.
<PAGE>
WITNESS my hand and seal at Miami, Dade County, Florida,
this 24th day of July, 1970.
/s/
--------------------------------
NOTARY PUBLIC
State of Florida at Large
My commission expires:
September 4, 1978
<PAGE>
ARTICLES OF AMENDMENT
---------------------
TO THE
------
ARTICLES OF INCORPORATION
-------------------------
OF
--
ALSON INDUSTRIES, INC.
----------------------
Pursuant to the provisions of Sections 607.177, 607.181, and
607.187 of the Florida General Corporation Act (Chapter 607 of
the Florida Statutes), the Articles of Amendment to the Articles
of Incorporation of Alson Industries, Inc. ("Corporation") are
hereby adopted:
1) The name of the Corporation is Alson Industries, Inc.
2) The Amendments to the Articles of Incorporation adopted
are as follows:
ARTICLE I
---------
Article I of the Articles of Incorporation is amended so
that the name of the Corporation is now and hereafter Industrial
Services of America, Inc.
ARTICLE II
----------
Article II of the Articles of Incorporation of the
Corporation are amended to include the additional business
purposes of the Corporation as follows:
To engage in the business of consulting with large
corporations for their waste management problems; to
manufacture, purchase, and resell various types of waste
management equipment; the leasing, servicing, manufacturing,
and purchase and reselling of parts for said equipment; to
buy and sell land and buildings; to erect buildings thereon,
to acquire leases, and otherwise acquire, own, use, and
dispose of property of all kinds, real, personal, or mixed;
to borrow money and give security for same, to give
mortgages upon the assets of this Corporation when deemed by
the Board of Directors expedient so to do for the
performance of such other things as the Board of Directors
may deem necessary or proper for the furtherance of the
interests of this Corporation in the exercise of the powers
enumerated; and to engage in any and all other business
activities authorized by law.
<PAGE>
ARTICLE III
-----------
Article III of the Articles of Incorporation of the
Corporation is amended as follows:
The maximum number of shares of Common Voting Stock that
this Corporation is authorized to have outstanding at any
one time is ten million (10,000,000) shares of the par value
of one cent ($.01) per share.
The Corporation is also authorized to issue two hundred
thousand (200,000) shares of Non-Voting Preferred Stock
having a par value of Ten Dollars ($10.00) per share.
The Preferred shares may be issued from time to time in one
or more series.
The Board of Directors is hereby authorized to fix or alter
the designations, preferences, and relative, participating,
optional, or other special rights and qualifications,
limitations, or restrictions of such preferred shares,
including, without limitation of the generality of the
foregoing, dividend rights, dividend rates, conversion
rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or
prices and liquidation preferences of any wholly unissued
series of preferred shares, and the number of shares
constituting any such series and the designation thereof, or
any of them; and to increase or decrease the number of
shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares
of any series shall be so decreased, the shares constituting
such decreases shall resume the status which they had prior
to the adoption of the resolution originally fixing the
number of shares of such series.
In all other particulars, the Articles of Incorporation of
the Corporation, as previously amended, remain unaltered.
Harry Kletter and Roberta Kletter do hereby certify that
they are the President and Assistant Secretary, respectively, of
Alson Industries, Inc., a Florida corporation; that at a duly
called special meeting of the shareholders of the Corporation
held on July 10, 1984, pursuant to notice duly sent to all
shareholders entitled to vote at that meeting, and with a quorum
present, the said shareholders, by at least a majority of the
number of shares entitled to vote, adopted the foregoing Articles
of Amendment to the Articles of Incorporation of Alson
Industries, Inc.
IN TESTIMONY WHEREOF, Harry Kletter and Roberta Kletter,
President and Assistant Secretary, respectively, of the
Corporation, have executed these Articles of Amendment on behalf
of the Corporation and Harry Kletter, the President of the
Corporation, has acknowledged these Articles of Amendment this
17th day of July, 1984.
<PAGE>
ALSON INDUSTRIES, INC.
By: /s/ Harry Kletter
-------------------------------
Harry Kletter, President
By: /s/ Roberta Kletter
-------------------------------
Roberta Kletter,
Assistant Secretary
STATE OF KENTUCKY
COUNTY OF JEFFERSON
The undersigned, a Notary Public in and for the State and
County aforesaid, does hereby certify that on this date, Harry
Kletter signed the foregoing Articles of Amendment to the
Articles of Incorporation of Alson Industries, Inc., before me
and acknowledged the name as his true act and deed on behalf of
the Corporation and swore the same to be true.
My commission expires: Jan. 26, 1987.
IN TESTIMONY WHEREOF, witness my signature this 17th day of
July, 1984.
(SEAL) /s/ Roberta Kletter
----------------------------------
Notary Public, Jefferson County
Kentucky
<PAGE>
ARTICLES OF MERGER
------------------
Pursuant to the provisions of Section 607.224 of the Florida
General Corporation Act the undersigned domestic and foreign
corporations have adopted the following Articles or Merger for
the purpose of merging Computerized Waste, Inc. into Industrial
Services of America, Inc.:
1) The names of the constituent corporations and the states
under the laws of which each is organized are:
NAME OF CORPORATION STATE
------------------- -----
Industrial Services of America, Inc. Florida
Computerized Waste, Inc. Massachusetts
2) The laws under which such foreign corporation is organized
permit such merger pursuant to the Annotated Laws of
Massachusetts, Chapter 156B, Sections 78 and 79.
3) The name of the surviving Corporation is Industrial Services
of America, Inc. and it is to be governed by the laws of the
State of Florida.
4) Each outstanding share of Computerized Waste, Inc. Common
Voting Stock, no par value per share shall be exchanged for one
thousand (1000) shares of Industrial Services of America, Inc.
Common Voting Stock, having a par value of one cent ($.01) per
share.
5) The plan of merger was adopted by the shareholders of
Industrial Services of America, Inc. on December 19, 1984, in the
manner prescribed for in Section 607.221 of the Florida General
Corporation Act and was adopted by the shareholders of
Computerized Waste, Inc. on December 31, 1984 in the manner
prescribed by the laws of Massachusetts, the state under which it
was organized.
6) No changes have been made in the Articles of Incorporation
of Industrial Services of America, Inc., the surviving
corporation, as a result of this merger.
7) The effective date of the merger is January 1, 1985.
<PAGE>
Dated December 31, 1984.
Industrial Services of America, Inc.
/s/ Harry Kletter
---------------------------------------
By: Harry Kletter, President
/s/ Roberta Kletter
---------------------------------------
By: Roberta Kletter, Secretary
Computerized Waste, Inc.
/s/ Harry Kletter
---------------------------------------
By: Harry Kletter, President
/s/ Joseph D. Freedman
---------------------------------------
By: Joseph D. Freedman, Secretary
State of Kentucky )
)
County of Jefferson )
The foregoing instrument was acknowledged before me this 31st day
of December, 1984, by Harry Kletter, President and Roberta
Kletter, Secretary on behalf of Industrial Services of America,
Inc. and by Harry Kletter, President of Computerized Waste, Inc.
on behalf of said corporation.
/s/ Roberta Kletter
-----------------------------
Notary Public
(SEAL)
My Commission Expires: 1-26-87
<PAGE>
BY-LAWS
ALSON MFG. CO., INC.
--------------------
(A Florida Corporation)
ARTICLE I
---------
Offices
-------
SECTION 1. HOME OFFICE. The home office shall be
--------- -----------
2690 N.E. 191st Street, Miami, Florida.
SECTION 2. PRINCIPAL OFFICE. The principal office
--------- ----------------
shall be 2690 N.E. 191st Street, Miami, Florida.
SECTION 3. OTHER OFFICES. The corporation may also
--------- -------------
have an office or offices at such other place or places within or
without the State of Florida as the Board of Directors may, from
time to time, designate or the business of the Corporation may
require.
ARTICLE II
----------
Stockholders' Meetings
----------------------
SECTION 1. ANNUAL MEETING. The annual meeting of the
--------- --------------
stockholders of the corporation, shall be held at the office of
the Corporation in the State of Florida, or at such other place
within or without the State of Florida as may be determined by
the Board of Directors and as shall be designated in the notice
of said meeting, on the Third Tuesday in the month of May of each
year (or if said day be a legal holiday) the on the next
succeeding day not a legal holiday), at 10:00 o'clock in the
forenoon, for the purpose of electing directors for the ensuing
year, and for the transaction of such other business as may be
properly brought before the meeting, unless the Board of
Directors previously shall have fixed a different date for the
meeting.
<PAGE>
SECTION 2. SPECIAL MEETING. Special meeting of stock-
--------- ---------------
holders other than those regulated by statute, may be called at
any time by a majority of directors. Notice of such meeting
stating the purpose for which it is called shall be served
personally or by mail, not less than ten (10) days before the
date set for such meeting. If mailed, it shall be directed to a
stockholder at his address as it appears on the stock book; but
at any meeting at which all stockholders shall be present, or of
which stockholders not present have waived notice in writing, the
giving of notice as above described may be dispensed with. The
Board of Directors shall also, in like manner, call a special
meeting of stockholders whenever so requested in writing by
stockholders representing not less than a majority of the capital
stock of the company. No business other than that specified in
the call for the meeting, shall be transacted at any meeting of
the stockholders.
SECTION 3. NOTICE AND PURPOSE OF MEETINGS. Notice of
--------- ------------------------------
the purpose or purposes and of the time and place within or
without the State of Florida of every meeting of stockholders,
annual or special, shall be given in accordance with the Laws of
the State of Florida, and shall be in writing and signed by the
President, Vice-President or the Secretary, and a copy thereof
shall be served either personally or by mail or by any other
lawful means, not less than ten (10) days before the meeting,
upon each stockholder of record entitled to vote at such meeting.
If mailed, such notice shall be directed to each stockholder at
his address, as it appears on the stock book; unless he shall
have filed with the Secretary of the corporation a written
request that notices intended for him be mailed to some other
address, in which case it shall be mailed or transmitted to the
address designated in such request. Except as otherwise
expressly provided by statute, no publication of any notice of a
meeting of stockholders shall be required to be given to any
stockholder who shall, in person or by attorney thereunto
authorized, waive such notice in writing or by telegraph, cable,
radio or wireless either before or after such meeting. Except
where otherwise required by law, notice of any adjourned meeting
of the stockholders of the corporation shall not be required to
be given. However, stockholders holding one-half of the
outstanding stock may execute a written waiver of any and all
notices, and when such waiver is had, the proceedings of such
meeting shall be as valid and binding as though the meeting were
legally called.
SECTION 4. QUORUM. A quorum at all meetings of stock-
--------- ------
holders shall consist of the holders of record of a majority of
the shares of the Common Stock of the corporation, issued and
outstanding, entitled to vote at the meeting, present in person
or by proxy, except as otherwise provided by law or the
Certificate of Incorporation.
In the absence of a quorum at any meeting or any
adjournment thereof, a majority of the Common stockholders
present in person or by proxy and entitled to vote may adjourn
such meeting from time to time. At any such adjourned meeting at
which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally called.
<PAGE>
SECTION 5. ORGANIZATION. Meetings of the stockholders
--------- ------------
shall be presided over by the President, or if he is not present,
by the Secretary, or if neither the President nor the Secretary
is present, by a Vice-President or by a Chairman to be chosen by
a majority of the common stockholders entitled to vote who are
present in person or by proxy at the meeting. The Secretary of
the corporation, or should he be absent or serve as Chairman, a
Vice-President or an Assistant Secretary, shall act as Secretary
of every meeting, but if neither the Vice-President nor an
Assistant Secretary is present, the Chairman shall choose any
person present to act as Secretary of the meeting.
At the annual meeting of stockholders the order of
business, subject to change directed by the Chairman or voted by
the stockholders, shall be as follows:
1. Calling Meeting to Order
2. Proof of Notice of Meeting
3. Reading of Minutes of last previous annual
meeting.
4. Reports of Officers
5. Reports of committees
6. Election of directors
7. Miscellaneous business
SECTION 6. VOTING. Except as otherwise provided in
--------- ------
the By-Laws, the Certificate of Incorporation, or by the Laws of
the State of Florida, at every meeting of the stockholders, each
stockholder of the corporation entitled to vote at such meeting
shall have one vote in person or by proxy for each share of stock
held by him and registered in his name on the books of the
corporation at the time of such meeting. Any vote on stock of
the corporation may be given by the stockholder entitled thereto
in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto
authorized and delivered to the Secretary of the meeting;
provided, however, that no proxy shall be noted on after three
(3) years from its date unless said proxy provides for a longer
period. Except as otherwise required by statute, by the
Certificate of Incorporation or these By-Laws, elections of
Directors and all other elections and voting with regard to any
corporate matters coming before any meeting of the stockholders
shall be decided by vote of a plurality in interest of the
stockholders of the corporation present in person or by proxy at
such meeting, and entitled to vote thereat, a quorum being
present.
SECTION 7. LIST OF STOCKHOLDERS. A complete list of
--------- --------------------
the stockholders entitled to vote at the ensuing election, and
the number of voting shares held by each shall be made available
at the meeting by the Secretary, or other officer of the
corporation and such list may be prepared by the company or the
Transfer Agent and shall, during the whole time of said election,
be open to the examination of any inspectors of election.
<PAGE>
SECTION 8. INSPECTORS OF ELECTION. At all elections
--------- ----------------------
of directors, or in any other case in which inspectors may act,
two inspectors of election shall be appointed by the chairman of
the meeting, except as otherwise provided by the law. The
inspectors of election shall take and subscribe on oath
faithfully to execute the duties of inspectors at such meeting
with strict impartiality, and according to the best of their
ability, and shall take charge of the polls and after the vote
shall have been taken, shall make certificate of the result
thereof, but no director or candidate for the office of directors
shall be appointed as such inspector. If there be a failure to
appoint inspectors or if any inspector appointed be absent or
refuse to act, or if his office becomes vacant, and should the
Chairman not appoint said inspectors, the stockholders present at
the meeting, by a per capita vote, may choose temporary
inspectors of the number required.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. POWERS, NUMBER, QUALIFICATIONS, TERMS,
--------- --------------------------------------
QUORUM AND VACANCIES. The property, affiars and business of the
- --------------------
corporation shall be managed by its Board of Directors,
consisting of three (3) persons or more, as hereinafter provided.
Except as hereinafterprovided, directors shall be elected at the
annual meeting of the stockholders and each director shall be
elected to serve for one (1) year and until his successor shall
be elected and shall qualify. Two directors shall have power
from time to time, and at any time, when the stockholders as such
are not assembled in a meeting, regular or special, to increase
or decrease their own number by an amendment to these By-Laws,
but in accordance with the requirements of the Certificate of
Incorporation. If the number of directors be increased the
additional directors may be elected by a majority of the
directors in office at the time of the increase to serve until
the next annual meeting of the stockholders, or if not so elected
prior to the next annual meeting of the stockholders, they shall
be elected by the stockholders. The number of directors shall
never be less than three (3).
Directors need not be stockholders.
Half of the members of the Board of Directors then
acting, or a majority of these be an odd number, acting at a
meeting duly assembled, shall constitute a quorum for the
transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority
of those present may adjourn the meeting, without further notice,
from time to time until a quorum shall have been obtained.
<PAGE>
In case one or more vacancies shall occur in the Board
of Directors by reason of death, resignation or otherwise, the
remaining directors, although less than a quorum, may, by a
majority vote, elect a successor or successors for the unexpired
term or terms.
SECTION 2. MEETINGS. Meetings of the Board of
--------- --------
Directors shall be held at such place within or outside the State
of Florida as may from time to time be fixed by resolution of the
Board of Directors, or as may be specified in the notice of the
meeting, or as provided for by the Certificate of Incorporation.
Regular meetings of the Board of Directors shall be held at such
times as may from time to time be fixed by resolution of the
Board of Directors. Special meetings may be held at any time
upon the call of the President or any Vice-President or the
Secretary or any two Directors by oral, telegraphic or written
notice duly served on or sent or mailed to each director not less
than two (2) days before such meeting. A meeting of the Board of
Directors may be held without notice immediately after the annual
meeting of stockholders. Notice need not be given of regular
meetings of the Board of Directors. Meetings may be held at any
time without notice if all the directors are present, or if at
any time before or after the meeting those not present waive
notice of the meeting in writing.
The Chairman of the Board shall preside at such
meeting, but the following officers may preside in his absence in
the following order only if they are directors. The President,
the Secretary, the Vice-President.
SECTION 3. COMMITTEES. The Board of Directors may, in
--------- ----------
its discretion, by the affirmative vote of a majority of the
whole Board of Directors, appoint committees which shall have and
may exercise such powers as shall be conferred or authorized by
the resolutions appointing them. A majority of any such
committee, if the committee be composed of more than two (2)
members, may determine its action and fix the time and place of
its meetings, unless the Board of Directors shall otherwise
provide. The Board of Directors, shall have power at any time to
fill vacancies in, to change the membership of, or to discharge
any such committee.
SECTION 4. EXECUTIVE COMMITTEE. The Board of
--------- -------------------
Directors may form an Executive Committee, to consist of two (2)
or more directors elected by resolution passed by a majority of
the entire Board, and to which the Board of Directors may direct
or delegate from time to time all or part of the duties and
powers of the Board of Directors with the exception of those
duties and powers specifically prohibited by the Laws of the
State of Florida, said Committee when so designated and elected
shall have the authority to act in the place and stead of the
Board of Directors, and may meet at any stated time within or
without the State of Florida, on notice to all of the members of
the Executive Committee by any of their own number. Should any
of the following officers be on the Executive Committee a
chairman shall be chosen from among them but in the order stated:
(1) Chairman of the Board of Directors, (2) President, (3)
<PAGE>
Secretary, (4) Vice-President, (5) Treasurer. During the
intervals between meetings of the Board, such Committee shall
advise with and aid the officers of the corporation in all
matters concerning its interest and management of its business,
and generally perform such duties and powers as may be directed
or delegated by the Board of Directors from time to time.
Membership of the Committee may be increased by, and vacancies
therein may be filled by, the Board of Directors.
SECTION 5. DIVIDENDS. Subject always to the
--------- ---------
provisions and requirements of the Law, the Certificate of
Incorporation and The Amendment to the Certificate of
Incorporation, the Board of Directors shall have full power to
determine whether any, and if any, what part of any, funds
legally available for the payment of dividends shall be declared
in dividends and paid to stockholders; the division of the whole
or any part of such funds of the corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it
shall not be required at any time, against such discretion, to
divide or pay any part of such funds among or to the stockholders
as dividends or otherwise; and the Board of Directors may fix a
sum which may be set aside or reserved over and above the capital
paid in to the corporation as working capital for the corporation
or as a reserve for any proper purpose, and from time to time may
increase, diminish, and vary the same in its absolute judgment
and direction.
The Board of Directors shall, prior to the declaration
of any dividend, fix a date no more than sixty(60) nor less than
ten (10) days prior to the payment date on which stockholders of
record on such fixed date shall be entitled to receive such
dividend thereafter payable, notwithstanding such such date may
precede determination of any period, provided for by the
Certificate of Incorporation, for which a dividend may be
payable.
SECTION 6. REMOVAL OF DIRECTORS. At any special
--------- --------------------
meeting of the directors, duly called as provided in these
By-laws, any director or directors may by the affirmative vote of
a majority of all of the directors be removed from office, either
with or without cause, and his successor or their successors may
be elected at such meeting.
SECTION 7. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
--------- -----------------------------------------
Each director officer, whether or not then in office, shall be
indemnified by the corporation against all costs and expenses
reasonably incurred by or imposed upon him in connection with or
arising out of any action, suit, or proceeding in which he may be
involved by reason of his being or having been a director or
officer of the corporation, such expenses to include the cost of
reasonable settlements (other than amounts paid to the
corporation itself) made with a view to curtailment of costs of
litigation.
<PAGE>
ARTICLE IV.
-----------
OFFICERS
--------
SECTION 1. NUMBER. The Board of Directors shall meet
--------- ------
as soon after the election thereof held in each year and shall
from among them elect a Chairman to be known as the Chairman of
the Board of Directors, and to preside at Directors' Meetings and
at meetings of the Executive Committee, and shall, in addition,
elect a President, chosen from the members of the Board, a
Secretary, and a Treasurer, and from time time may appoint one or
more Vice-Presidents and such Assistant Secretaries, Assistant
Treasurers and such other officers, agents and employees as it may
deem proper. Any two officers may be held by the same person;
more than two officers other than the officers of President and
Secretary, may be held by the same person.
SECTION 2. TERM AND REMOVAL. The term of office of
--------- ----------------
all officers shall be one (1) year and until their respective
successors are elected thereafter and qualify, but any officer
may be removed from office, either with or without cause, at any
time by the affirmative vote of a majority of the members of the
Board of Directors then in office. A vacancy in any office
arising from any cause maybe filled for the unexpired portion of
the term by the Board of Directors.
SECTION 3. POWERS AND DUTIES. The officers of the
--------- -----------------
corporation shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and
duties as from time to time may be conferred by the Board of
Directors. The Vice-President and Vice-Presidents, the Assistant
Secretary or Assistant Secretaries and the Assistant Treasurer or
Assistant Treasurers shall, in the order of their respective
seniorities, in the absence or disability of the President,
Secretary or Treasurer respectively, perform the duties of such
officer or shall generally assist the President, Secretary or
Treasurer, respectively.
ARTICLE V
---------
CERTIFICATION OF STOCK
----------------------
SECTION 1. FORM AND TRANSFERS. The interest of each
------------------------------
stockholder of the corporation shall be evidenced by certificates
for shares of stock, certifying the number of shares represented
thereby and in such form not inconsistent with the Certificate of
Incorporation as the Board of Directors may from time to time
prescribe.
<PAGE>
Transfers of shares of the capital stock of the
corporation shall be made only on the books of the corporation by
the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the
Secretary of the Corporation, or with a tranfer clerk or a
Transfer Agent, appointed as in Section 4 of this Article
provided, and on surrender of the certificate or certificates for
such shares properly endorsed and the payment of all taxes
thereon. The person in whose name shares of stock stand on the
books of the corporation shall be deemed the owner thereof for
all purposes as regards the corporation; provided that whenever
any transfer of shares shall be made for collateral security, and
not absolutely, such fact, if known to the Secretary of the
corporation, shall be so expressed in the entry of transfer.
The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these
By-Laws, concerning the issue, transfer, and registration of
certificates for shares of the capital stock of the corporation.
Certificates of stock or Warrants shall be signed by
the President or a Vice-President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer,
and sealed with the seal of the corporation. Such seal may be a
facsimile, engraved or printed. Where any such certificate is
signed by a Transfer Agent or a transfer clerk, the signatures of
the President, Vice-President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer upon such certificate may be
facsimiles, engraved or printed. In case any such officer who
has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate
is issued, it may be issued by the corporation with the same
effect as if such officer had not ceased to be such at the time
of its issue.
SECTION 2. CLOSING OF TRANSFER BOOKS. The board of
--------- -------------------------
Directors shall have power to close the stock transfer books of
the corporation for a period not exceeding sixty (60) days before
any stockholders' meeting or to otherwise provide for a cut-off
or fixed date, which shall consist of the last date as of which
stockholders of record as of such date will be entitled to any
dividends; or on which the consent or dissent of stockholders may
be effectively expressed for any purpose without a meeting; or
the date fixed for the payment of any divident or the making of
any distribution; or for the delivery of evidences of rights or
evidences of interests arising out of any change, conversion,
exercise or exchange of capital stock or warrants or option; or
as the time as of which stockholders entitled to notice of and to
vote at any meeting; or whose consent or dissent is required or
may be expressed for any purpose; or entitled to receive any such
divident or distribution; or on which rights or interests shall
be determined; and all persons who are holders of record of
voting stock at such time and no others shall be entitled to
notice of and to vote at such meeting or to express their consent
or dissent, as the case may be, and only stockholders of record
at the time so fixed shall be entitled to receive such divident,
distributions, rights or interests notwithstanding the fact that
the period for which any distribution is made or divident is
payable expires after the closing of said transfer books or the
fixing or setting of said cut-off, fixed or last date.
<PAGE>
SECTION #3. LOST, STOLEN, DESTROYED OR MUTILATED
---------- ------------------------------------
CERTIFICATES
------------
No certificate for shares of stock in the corporation
shall be issued in place of any certificate alleged to have been
lost, destroyed or stolen, except on production of such evidence
of such loss, destruction or theft, and on delivery to the
corporation if the Board of Directors shall so require, of a bond
of indemnity in such amount (not exceeding twice the value of the
share represented by such certificate), upon such terms and
secured by such surety as the Board of Directors may, in its
discretion, require.
SECTION 4. TRANSFER AGENT. The Board of Directors may
--------- --------------
appoint one or more transfer clerks or one or more transfer
agents and may require all certificates of stock to bear the
signature or signatures real or facsimile of any or all of them.
SECTION 5. EXAMINATION OF BOOKS BY STOCKHOLDERS. The
--------- ------------------------------------
Board shall have power to determine, from time to time whether
and to what extent and at what times and places and under what
conditions and regulations the accounts and books and documents
of the corporation, or any of them, shall be open to inspection
of the stockholders; and no stockholder shall have any right to
inspect any account or book or document of the corporation unless
specifically authorized to do so by the Board of Directors and as
required by the Laws of the State of Florida.
ARTICLE VI
----------
FISCAL YEAR
-----------
The fiscal year of the corporation shall begin on the
1st day of January in each year, and shall end on the 31st day of
December next following, unless otherwise determined by the Board
of Directors.
ARTICLE VII
-----------
CORPORATE SEAL
--------------
The corporate seal of the corporation shall consist of
two concentric circles, between which shall be the name of the
corporation, and in the center shall be inscribed the year of its
incorporation, and the words, "Corporate Seal, Florida".
<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
The By-Laws of the corporation shall be subject to
alteration, amendment, or repeal, and new By-Laws not
inconsistent with any provisions of the Certificate of
Incorporation or statute, may be made, either by the affirmative
vote of the holders of a majority in interest of the stockholders
of the corporation present in person or by proxy at any annual or
special meeting of the stockholders and entitled to vote thereat,
a quorum being present, or by the affirmative vote of a majority
of the Board, By-Laws made, altered, or amended by the Board may
be altered, amended or repealed by the stockholders at any annual
meeting or special meeting thereof.
<PAGE>
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<NAME> INDUSTRIAL SERVICES OF AMERICA
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