FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _______ to ________
Commission File Number 0-20979
INDUSTRIAL SERVICES OF AMERICA, INC.
(Exact Name of Registrant as specified in its Charter)
Florida 59-0712746
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
7100 Grade Lane, PO Box 32428
Louisville, Kentucky 40232
(Address of principal executive offices)
(502) 368-1661
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant (1) has 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 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of November 1, 1997:
1,929,600.
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets
September 30, 1997 and December 31, 1996 3
Condensed Statements of Operations
three months ended September 30, 1997 5
and 1996
Condensed Statements of Operations
Nine months ended September 30, 1997 6
and 1996
Condensed Statements of Cash Flows-
Nine months ended September 30, 1997
and 1996 7
Notes to Condensed Consolidated
Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
Part II. Other Information
Item 5. 14
<PAGE>
<TABLE>
Part I - FINANCIAL INFORMATION
INDUSTRIAL SERVICES OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<S> <C> <C>
September 30, December 31,
1997 1996
Current assets
Cash and cash equivalents $ 259,287 $ 1,371,435
Receivables:
Trade, net of allowance for
doubtful accounts of $16,000 4,546,798 3,300,728
in 1997 and 1996
Related parties 57,217 100,360
Income tax refunds 75,127 1,203,900
Other 2,000 10,599
--------- ---------
Total receivables 4,681,142 4,615,587
Net investment in sales-type leases 2,758 8,435
Inventories 2,275,928 433,103
Deferred income taxes 18,200 45,400
Other 84,818 158,385
--------- ----------
Total current assets 7,322,133 6,632,345
Net property and equipment 3,620,083 2,704,192
Intangible assets net 1,261,667 0
Other assets 199,056 102,931
----------- -----------
Total assets $12,402,939 $ 9,439,468
=========== ===========
See accompanying notes
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
CONDENSED BALANCE SHEETS
CONTINUED
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1997 1996
Current liabilities
Accounts payable $ 5,223,129 $ 4,790,710
Income taxes payable 16,000 0
Current maturities of long-term debt 1,355,396 611,774
Notes payable John Felloneau 800,000 0
Notes payable Mark Trakhtenberg 800,000 0
Affiliated company payable 128,237 179,778
Other current liabilities 139,619 82,019
--------- ---------
Total current liabilities 8,462,381 5,664,281
Long-term debt 2,499 5,356
Deferred income taxes 172,800 161,000
Stockholders' equity
Common stock, $.01 par value,
value, 10,000,000 shares authorized;
1,957,500 shares issued as of 19,575 19,575
September 30, 1997
Additional paid-in capital 1,405,000 1,405,000
Retained earnings 2,348,684 2,192,256
Treasury stock, at cost, 27,900 shares (8,000) (8,000)
--------- ---------
Total stockholders' equity 3,765,259 3,608,831
--------- ---------
Total liabilities and stockholders'
equity $12,402,939 $ 9,439,468
=========== ===========
See accompanying notes
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
Revenue
Net equipment and scrap sales $ 4,237,361 $ 2,786,574
Service and consulting revenue 7,804,093 6,398,140
Rental income 145,345 102,194
---------- ---------
Total revenue 12,186,799 9,286,908
Cost and expenses
Costs of sales:
Equipment and scrap 2,987,364 1,672,089
Service and consulting 7,357,329 6,182,232
---------- ----------
Total cost of sales 10,344,693 7,854,321
Direct expenses applicable to rental 99,103 50,792
income
Selling, general and administrative 1,703,896 1,219,114
expenses ---------- ----------
Total cost and expenses 12,147,692 9,124,227
---------- ----------
Income (loss) from operations 39,107 162,681
Other income, net 30,431 (16,215)
---------- ----------
Income before provision for income taxes 69,538 146,466
Provision for income taxes 26,000 56,000
---------- ----------
Net income $ 43,538 $ 90,466
=========== ===========
Earnings per common share
Primary $0.02 $0.05
===== =====
Fully diluted $0.02 $0.05
===== =====
Weighted average shares
Primary 1,998,230 1,955,763
========= =========
Fully diluted 1,998,230 1,955,763
========= =========
See accompanying notes
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
CONDENSED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
Revenue
Net equipment and scrap sales $ 8,482,646 $ 7,983,484
Service and consulting revenue 22,427,853 17,812,353
Rental income 417,808 283,682
----------- -----------
Total revenue 31,328,307 26,079,519
Cost and expenses
Costs of sales:
Equipment and scrap 5,320,590 4,689,170
Service and consulting 21,369,481 16,976,597
---------- ----------
Total cost of sales 26,690,071 21,665,767
Direct expenses applicable to rental 161,784 100,442
income
Selling, general and administrative expenses 4,312,161 3,614,197
---------- ----------
Total cost and expenses 31,164,016 25,380,406
Income from operations 164,291 699,113
Other income, net 88,137 12,162
---------- ----------
Income before provision for income taxes 252,428 711,275
Provision for income taxes 96,000 271,000
---------- ----------
Net income $ 156,428 $ 440,275
----------- -----------
Earnings per common share
Primary $0.08 $0.23
===== =====
Fully diluted $0.08 $0.23
===== =====
Weighted average shares
Primary 1,998,230 1,955,763
========= =========
Fully diluted 1,998,230 1,955,763
========= =========
See accompanying notes
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
Operating activities
Net Income $ 156,428 $ 440,275
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 475,378 353,558
Gain on sale of property and equipment (25,053)
Increase (decrease) in cash resulting
from changes in:
Receivables (1,246,070) 468,513
Inventories (1,842,825) (130,951)
Prepaid expenses (81,968) 120,824
Accounts payable 432,419 659,551
Income tax refunds 1,128,773 0
Income taxes payable 16,000 (157,938)
Other current liabilities 96,600 3,477
--------- ---------
Net cash provided by operating (865,265) 1,732,256
activities
Investing activities
Payment to affiliate (35,857) 0
Acquisition of TMG Enterprises' Assets (1,600,000) 0
Purchase of service contracts (24,000) 0
Advances to related parties 43,143 (14,968)
Proceeds from sale of property and 0 56,423
equipment
Payments for property and equipment ( 979,369) (1,019,419)
Additions to notes receivables 0 (107,500)
---------- ----------
Net cash used in investing activities (2,296,083) (1,085,464)
Financing activities
Payments on long-term debt (5,356) (16,168)
Proceeds from issuance of notes payable 746,121 100,000
to bank
Proceeds from issuance of long-term 1,600,000 0
debt
Investment in sales-type leases 0 (2,463)
Proceeds from sales-type leases 8,435 35,815
Proceeds from issuance of stock options 0 250,000
---------- ---------
Net cash provided by financing 2,349,200 367,184
activities ---------- ---------
Net increase (decrease) in cash (1,112,148) 1,013,976
Cash at beginning of period 1,371,435 507,889
---------- ---------
Cash at end of period $ 259,287 $ 1,521,865
=========== ===========
See accompanying notes
<PAGE>
INDUSTRIAL SERVICES OF AMERICA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial reporting and Article 10 of Regulation S-X. They do not include
all information and footnotes required by generally accepted accounting
principles for complete financial statements. The information furnished
includes all adjustments which are, in the opinion of management, necessary
to present fairly the Registrant's financial position as of September 30,
1997 and the results of its operations and changes in cash flows for the
periods ended September 30, 1997 and 1996. Results of operations for the
period ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the entire year. Additional information,
including the audited 1996 Financial Statements and the Summary of
Significant Accounting Policies, is included in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996 on file with the
Securities and Exchange Commission. Net income and earnings per share for
the revised Nine-month periods ended September 30, 1996 differ from amounts
previously reported on the Registrant's filing on form 10-QSB for the third
quarter of 1996. Such changes are the result of fourth quarter 1996 charges
and adjustments as described on Note 14 to the Financial Statements filed
as part of the 1996 Form 10-K.
2. Acquisition
On July 1, 1997, the Registrant acquired certain assets of TMG Enterprises,
Inc. ("TMG"), John Fellonneau and Mark Trakhtenberg pursuant to the terms
and conditions set forth in an Asset Purchase Agreement dated July 1, 1997,
among the Registrant, TMG and Messrs. Fellonneau and Trakhtenberg. TMG
owned and operated a non-ferrous scrap metal recycling facility in
Louisville, Kentucky known as "The Metal Center" formerly operated. For
further information see the Registrant's Form 8-K filed on July 15, 1997
with the Securities and Exchange Commission which is incorporated herein by
reference.
3. Inventories
Inventories consist of the September 30, December 31,
following: 1997 1996
Equipment and parts $ 932,662 $ 84,858
Scrap materials $ 1,343,266 $ 348,245
----------- -----------
Total inventories $ 2,275,928 $ 443,103
=========== ===========
Inventories for scrap materials increased 286% from $348,245 to $1,343,266
due to the acquisition of assets of the non-ferrous scrap metal recycling
facility.
<PAGE>
4. Commitments
The Registrant has a purchase agreement with Industrial Hydraulics for an
H-L 800 shear/baler/logger. As of September 30, 1997, payments made for
this equipment totaled $637,197. The original intention for the investment
in the H-L 800 shear/baler/logger was to use it in the Registrant's
operations. However, due to efficiencies in the scrap operations, this
equipment will no longer be necessary for production, therefore the
Registrant has transferred this equipment to inventory where it is carried
at the lower of cost or net realized value.
5. New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share, which generally simplifies the calculation requirements for earnings
per share. Basic earnings per share for year-end 1997 and later will be
calculated solely on average common shares outstanding. Diluted earnings
per share will reflect the potential dilution of stock options and other
common stock equivalents, as well as securities which are convertible into
common stock. All prior calculations will be restated to be comparable with
the new methods. The Registrant is required to implement this standard at
December 31, 1997 and will restate all prior periods at that time.
Implementation before December 31, 1997, including 1997 interim periods, is
prohibited.
In September 1997, the FASB issued SFAS No. 188, Reporting Comprehensive
Income. This standard requires that certain items currently reported as
direct changes in separate components of stockholders' equity be reported
in a separate statement of comprehensive income or is included as a
separate, additional component of the statement of income. Such items
include foreign currency translation, accounting for futures contracts,
accounting for defined benefit pension plans, and accounting for certain
investments in debt and equity securities. If a company has no items of
comprehensive income in any periods reported a statement of comprehensive
income is not required. The Registrant has not had any items of
comprehensive income in prior periods. This standard is effective for the
Registrant in 1998.
In September 1997, the FASB issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. This standard changes the way
public companies report information about operating segments in annual
financial statements and requires that those companies report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. Operating segments are parts of a
company for which separate information is available, which is evaluating
performance. Required disclosures for operating segments include total
segment revenues, total segment profit or loss, and total segment assets.
The standard also requires disclosure regarding revenues derived from
products and services (or similar groups of products or services),
countries in which the company derives revenue or holds assets, and about
major
<PAGE>
customers, regardless of whether this information is used in operating
decision making. Certain additional descriptive information to help the
financial statement reader understand how the information was developed and
how it compares to total amounts reflected in the company's financial
statements are also required. The Registrant is required to adopt the
disclosure requirements in its 1998 annual report, and in interim periods
in 1999. The 1999 interim period disclosures are required to include
comparable 1998 information.
6. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation. These reclassifications have no impact on
net income or stockholders' equity as previously reported.
ITEM 2. MANGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The following table presents, for the periods indicated, the percentage
relationship which certain captioned items in the Registrant's Statements
of Operations bear to total revenues and other pertinent data:
Nine Months ended September 30,
1997 1996
Statements of Operations Data:
Total Revenue...................... 100.0% 100.0%
Cost of Sales...................... 85.2% 83.1%
Selling, general and administrative
expenses........................... 13.8% 13.6%
Income from operations............. 0.5% 2.7%
Nine months ended September 30, 1997 compared to Nine months ended
September 30, 1996
Total revenue increased 20% from $26,079,519 in 1996 to $31,328,307 in
1997. This increase in total revenue is the result of: 1) service and
consulting revenues increasing 26% from $17,812,353 in 1996 to $22,427,853
in 1997, due to increases in both new customers and volume with existing
customers, 2) the asset acquisition of the non-ferrous recycling facility
increased revenues by approximately $2,000,000 for the third quarter, 3)
ferrous scrap sales increased 18% from $2,519,190 in 1996 to $2,967,049
in 1997, and 4) the equipment sales have decreased 35% from $5,464,294
in 1996 to $3,547,863 in 1997.
Cost of sales increased 23% from $21,665,767 in 1996 to $26,690,071 in
1997. As a percentage of total revenue, these costs were 83% and 85% in
1996 and 1997, respectively. This increase in cost of sales was the result
of: 1) service and consulting costs increasing 25% from $16,976,597 in 1996
to $21,369,481 in 1997, 2) the asset acquisition of the non-ferrous
recycling facility increased cost of sales by approximately $1,600,000 for
<PAGE>
the third quarter, 3) ferrous scrap cost of sales have increased 25% from
$1,313,882 in 1996 to $1,648,292 in 1997, and 4) the equipment cost of
sales have decreased 37% from $3,375,288 in 1996 to $2,138,115 in 1997.
Direct expenses applicable to rental income increased 61% from $100,442
in 1996 to $161,784 in 1997, primarily due to the increase in the units of
equipment leased by the Registrant to customers. As a percentage of rental
income, these costs were 35% and 39% in 1996 and 1997, respectively.
Selling, general and administrative expenses increased 19% from
$3,614,197 in 1996 to $4,312,161 in 1997. However, as a percentage of total
revenue, selling, general and administrative expenses remained constant at
approximately 14% in 1996 and 1997. Depreciation expense increased 24% from
$353,558 in 1996 to $437,045 in 1997 due to the purchase of new operational
and rental fleet equipment totaling $1,401,664. Interest expense increased
40% from $36,152 in 1996 to $50,760 in 1997 due to increased financing
related to the purchase of equipment.
Expenses to related parties increased 24% from $254,453 in 1996 to
$315,629 in 1997. The commissions expense decreased 34% from $146,000 in
1996 to $97,000 in 1997. Rent expense increased 102% from $108,453 in 1996
to $218,629 in 1997, primarily due to the Registrant renting additional
properties from K & R Corporation, an affiliated company. The additional
properties increase the leased property from approximately 10 acres to
approximately 20 acres.
On September 4, 1997, the Registrant entered into an agreement with MGM
Services, Inc. ("MGM") that among other things, effectively, terminated the
Management Agreement between MGM and provided for the assignment of certain
contracts between MGM and its principal customers. The Registrant agreed to
pay MGM up to $300,000 for such contracts (dependent on the consent of the
underlying customers to the assignment). To date, the Registrant has paid
MGM $24,000 pursuant to the terms of this agreement. Upon the consummation
of this agreement with MGM, all potential merger and/or acquisition
discussions between MGM and the Registrant ceased.
Three months ended September 30, 1997 compared to three months ended
September 30, 1996
The following table presents, for the periods indicated, the percentage
relationship which certain captioned items in the Registrant's Statements
of Operations bear to total revenues and other pertinent data:
<PAGE>
Three Months ended September 30,
1997 1996
Statements of Operations Data:
Total Revenue...................... 100.0% 100.0%
Cost of Sales...................... 84.9% 84.6%
Selling, general and administrative
expenses........................... 14.0% 13.1%
Income (loss) from operations...... 0.3% 1.8%
Total revenue increased 31% from $9,286,908 in 1996 to $12,186,799 in
1997. This increase in total revenue is the result of: 1) service and
consulting revenues increasing 22% from $6,398,140 in 1996 to $7,804,093 in
1997, 2) the acquisition of the non-ferrous recycling facility increasing
revenues by approximately $2,000,000 for the third quarter and 3) the
ferrous scrap sales have decreased 20% from $950,754 in 1996 to $931,117 in
1997, 4) and the equipment sales have decreased 27% from $1,835,820 in 1996
to $1,337,790 in 1997.
Cost of sales increased 32% from $7,854,321 in 1996 to $10,344,693 in
1997. As a percentage of total revenue, these costs were consistently 85%
in 1996 and 1997. This increase in cost of sales was the result of: 1)
service and consulting costs increasing 19% from $6,182,232 in 1996 to
$7,357,329 in 1997, 2) the acquisition of the non-ferrous recycling
facility increasing cost of sales by approximately $1,600,000 for the third
quarter and 3) ferrous scrap cost of sales have decreased 05% from $592,289
in 1996 to $560,456 in 1997, and 4) the equipment cost of sales have
decreased 17% from $1,079,800 in 1996 to $892,725 in 1997.
Direct expenses applicable to rental income increased 95% from $50,792
in 1996 to $99,103 in 1997, primarily due to the increase in the units of
equipment leased by the Registrant to customers. As a percentage of rental
income, these costs were 50% and 68% in 1996 and 1997, respectively.
Selling, general and administrative expenses increased 39% from
$1,219,114 in 1996 to $1,703,896 in 1997. However, as a percentage of total
revenue, and these expenses were 13% in 1996 and 14% in 1997. Depreciation
expense increased 30% from $127,122 in 1996 to $165,148 in 1997 due to the
purchase of new operational and rental fleet equipment totaling $1,352,936.
Interest expense increased 221% from $7,121 in 1996 to $22,879 in 1997, due
to increased financing.
Expenses to related parties decreased 9% from $75,890 in 1996 to
$83,000 in 1997. The commissions expense decreased 87% from $40,450 in 1996
to $5,000 in 1997. Rent expense increased 120% from $35,440 in 1996 to
$78,000 in 1997.
Financial Condition at September 30, 1997 Compared to December
31, 1996
Accounts receivable-trade increased $1,246,070 from
<PAGE>
$3,300,728 as of December 31, 1996 to $4,546,798 as of September 30, 1997.
The increase in accounts receivable-trade was due to the acquisition of the
non-ferrous scrap recycling facility and higher volumes related to the
scrap recycling operations, corrugated paper recycling operations, service
and consulting servicing and rental operations.
Accounts payable-trade increased $432,419 from $4,790,710 as of
December 31, 1996 to $5,223,129 as of September 30, 1997 primarily due to
service and consulting business increases.
Working Capital decreased $2,108,312 from $968,064 as of December 31,
1996 to ($1,140,248) as of September 30, 1997. This decrease was primarily
due to purchase of inventory for the non-ferrous recycling facility and the
debt related to acquisition.
Liquidity and Capital Resources
As of September 30, 1997 the Registrant held cash and cash equivalents
of $259,287.
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 85% and 60% of the Registrant's income
before provision for income taxes for the years ended December 31, 1996 and
1995 respectively.
The Registrant currently maintains two working capital lines of credit
with the Mid-America Bank of Louisville and Trust Company (the "Bank") in
the amount of $1,600,000. Outstanding principal under these two credit
facilities (the "Credit Facilities") bears interest based at prime rate
plus a fee of .005. The maturity date under this Credit Facility is June 30
1998. As of September 30, 1997, approximately $1,350,000 was outstanding
under these Credit Facilities.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security
Holders
None
Item 5. Other Information
On August 21, 1997, the Registrant entered into a Consulting Agreement with
Glenn Bierman ("Bierman") of Tycon Equity Partners, LLC ( the "Tycon
Consulting Agreement"). Pursuant to the terms of the Tycon Consulting
Agreement, Bierman has been engaged to provide services for the
Registrant for a period of four (4) months with the right for the
Registrant to renewal for additional two- (2) year period. Effective
September 1, 1997, Tycon Equity Partners, LLC ("Tycon") has been receiving
a consulting fee of $20,000 per month plus an additional $5,000 expense re-
imbursement fund per month.
Item 6. Exhibits and Reports on Form 8-K
The Registrant amended the By-Laws on April 11, 1997, changing the number
of board members to not less than (3) not more than nine (9) persons.
Attached as Exhibit.
The Registrant filed two (2) Form 8-K's with the Securities and Exchange
Commission on July 15, 1997; one with respect to Item 2 "Acquisition or
Disposition of Assets" and one with respect to Item 4. "Changes in
Registrant's Certifying Accountant."
The Registrant filed two Form 8-K's with the Securities and Exchange
Commission on August 4th and August 5th, respectively, with respect to Item
4. "Changes in Registrant's Certifying Accountant."
The Registrant filed a Form 8-K with the Securities and Exchange Commission
on August 12th with respect to Item 4. "Changes in Registrant's Certifying
Accountant."
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDUSTRIAL SERVICES OF AMERICA, INC.
DATE: November 14, 1997 /s/ Harry Kletter
--------------------------------------
President and Chief Executive Officer
(Principal Executive and Financial
Officer)
<PAGE>
EXHIBITS
Exhibit
Number Description
3.2 Bylaws of the Registrant are incorporated by reference to Exhibit
3.2 of the Registrant's report on Form 10-KSB for the year ended
December 31, 1995.
3.2a Amendment to the Registrant's Bylaws.
<PAGE>
EXHIBIT 3.2a
AMENDMENT OF THE
BY-LAWS
OF
INDUSTRIAL SERVICES OF AMERICA, INC.
(Under Section 607.1020 of the Florida Business Corporation Act)
We, the undersigned, being the President and Secretary of Industrial
Services of America, Inc., do hereby certify:
1. The name of the corporation is Industrial Services
of America, Inc. (the "Corporation").
2. The first grammatical sentence of Article III, Section 1, of the
By-laws of the Corporation shall be deleted and replaced as follows:
"The property, affairs and business of the corporation shall be managed
by its Board of Directors, which shall consist of not less than (3) not
more than nine (9) persons, as hereinafter provided."
3. This amendment to the By-laws of the Corporation was authorized by the
unanimous written consent of the Board of Directors of the Corporation on
April 11, 1997.
IN WITNESS WHEREOF, the undersigned have subscribed this amendment to the
By-laws of Industrial Services of America, Inc. and affirm the statement
herein as true under the penalties of perjury this 11th day of April,
1997.
/s/ Harry Kletter
---------------------------------
Harry Kletter, President
/s/ Matthew L. Kletter, Secretary
---------------------------------
Matthew L. Kletter, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 259,287
<SECURITIES> 0
<RECEIVABLES> 4,681,158
<ALLOWANCES> (16,000)
<INVENTORY> 2,275,928
<CURRENT-ASSETS> 7,322,133
<PP&E> 5,087,214
<DEPRECIATION> 1,467,131
<TOTAL-ASSETS> 12,402,939
<CURRENT-LIABILITIES> 8,462,381
<BONDS> 2,499
0
0
<COMMON> 19,575
<OTHER-SE> 3,745,684
<TOTAL-LIABILITY-AND-EQUITY> 12,402,939
<SALES> 30,910,499
<TOTAL-REVENUES> 31,328,307
<CGS> 26,690,071
<TOTAL-COSTS> 31,113,256
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,760
<INCOME-PRETAX> 252,428
<INCOME-TAX> 96,000
<INCOME-CONTINUING> 156,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 156,428
<EPS-PRIMARY> 0.080
<EPS-DILUTED> 0.080
</TABLE>
