U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO
Commission File No. 0-21946
HI-RISE RECYCLING SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0222933
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16255 NW 54th AVENUE
MIAMI, FLORIDA 33014
(Address of principal executive offices)
(305) 624-9222
(Issuer's telephone number)
Check whether the issuer (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
The number of shares outstanding of the Issuer's Common Stock, $.01 Par Value,
as of August 10, 1996 was 5,982,771.
Transitional small business disclosure format:
Yes No X
Page 1
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HI-RISE RECYCLING SYSTEMS, INC.
FORM 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and 3
June 30, 1996
Consolidated Statements of Operations for the three months 4
and six months ended June 30, 1995 and 1996
Consolidated Statement of Changes in Shareholders' Equity 5
for the six months ended June 30, 1996
Consolidated Statements of Cash Flows for the six months ended 6
June 30, 1995 and 1996
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and 8
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 15
2
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<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
DECEMBER 31, JUNE 30,
1995 1996
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,717,560 $ 3,137,405
Investments 836,056 582,385
Accounts receivable, net of allowance
for doubtful accounts of $120,559 in 1995 and 1996 612,133 1,002,970
Inventory 579,881 979,790
Other assets 300,837 330,127
----------- -----------
Total current assets 8,046,467 6,032,677
----------- -----------
Property and equipment, net 411,025 574,753
Note receivable from related party 32,847 34,347
Net investment in sales type leases 2,558,350 2,741,530
Goodwill 1,035,281 1,015,281
----------- -----------
Total assets $12,083,970 $10,398,588
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 279,448 $ 340,776
Revolving line of credit 1,243,858 979,482
Current portion of long term debt 200,000 80,000
Unearned service agreements 17,171 12,563
----------- ----------
Total current liabilities 1,740,477 1,412,821
----------- -----------
Long term portion of note payable 300,000 220,000
----------- -----------
Total liabilities $ 2,040,477 $ 1,632,821
=========== ===========
Shareholders' Equity:
Preferred stock, par value $.01 per share; 1,000,000 shares
authorized; 720 and 190 issued and outstanding at
December 31,1995 and June 30 1996, respectively $ 7 $ 1
Common stock, $.01 par value; 10,000,000 shares authorized;
3,444,563 and 5,982,771 issued and outstanding at
December 31, 1995 and June 30, 1996, respectively 34,446 59,827
Additional paid-in capital 13,328,112 13,619,066
Accumulated deficit (3,319,072) (4,913,127)
----------- -----------
Total shareholders' equity 10,043,493 8,765,767
----------- -----------
Total liabilities and shareholders' equity $12,083,970 $10,398,588
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
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<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Equipment sales $ 768,991 $ 660,234 $1,069,485 $ 961,001
Shared savings contract revenue 94,907 99,195 189,334 195,528
Service/Parts revenue 145,031 157,411 275,112 287,674
---------------------------------------------------------------
Total revenue $1,008,929 $ 916,840 $1,533,931 $1,444,203
===============================================================
COST AND EXPENSES:
Cost of equipment sold, including
direct costs of service/parts $ 522,460 $ 518,581 $ 747,066 $ 816,793
Selling and marketing 453,765 521,533 722,287 909,188
General and administrative 296,473 501,435 604,778 977,164
Product development 14,785 19,368 28,308 28,894
Shared savings contract expense 89,483 79,836 167,189 154,015
----------------------------------------------------------------
Total operating cost and expenses 1,376,966 1,640,753 2,269,628 2,886,054
----------------------------------------------------------------
Operating loss (368,037) (723,913) (735,697) (1,441,851)
----------------------------------------------------------------
Other income (expense):
Settlement expense -- (75,000) -- (75,000)
Interest income 67,373 109,569 176,152 231,056
Interest expense (31,158) (31,501) (64,201) (80,008)
----------------------------------------------------------------
Net loss $(331,822) $ (720,845) $(623,746) $(1,365,803)
================================================================
Net loss per share $ (0.10) $ (0.14) $ (0.19) $ (0.35)
Weighted average common
shares outstanding 3,227,689 5,725,464 3,215,011 4,736,765
</TABLE>
The accompanying notes are an integral part of these financial statements
4
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED
JUNE 30, 1996
SHARES OF ADDITIONAL TOTAL
COMMON PREFERRED COMMON PAID-IN ACCUMULATED SHAREHOLDERS'
STOCK STOCK STOCK CAPITAL DEFICIT EQUITY
---------- ----------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 3,444,583 $ 7 $ 34,446 $13,328,112 $(3,319,072) $10,043,493
Issuance of common stock 2,538,208 (6) 25,381 87,933 113,308
Net loss (1,365,822) (1,365,822)
Prefferred Stock Dividend 280,852 (306,233) (25,381)
---------- ---------- -------- ----------- ----------- -----------
Balance at June 30, 1996 5,982,771 $ 1 $ 59,827 $13,696,897 $(4,891,127) $ 8,765,598
========== ========== ======== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1995 JUNE 30, 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (623,746) $(1,365,822)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 36,000 80,000
(Increase) decrease in accounts receivable (223,472) (390,838)
(Increase) in inventory (63,716) (399,909)
(Increase) decrease in other assets (126,125) (29,290)
Decrease in net investments in sales type leases (49,038) (183,180)
(Decrease) in accounts payable and accrued expenses 8,761 61,328
Increase in unearned Service Agreements 9,527 (4,608)
Increase in note receivable from related party (454) (1,500)
------------- -------------
Net cash used in operating activities (1,032,263) (2,233,819)
------------- -------------
INVESTING ACTIVITIES:
Purchase of businesses net of cash acquired (450,372) -
Maturity of investments 727,827 249,086
Purchase of equipment and furniture and fixtures (290,572) (243,728)
------------- -----------
Net cash (used in) provided by investing activities (13,117) 5,358
------------- -----------
FINANCING ACTIVITIES:
Private Placement-Net of expenses 842,089 -
Proceeds from Line of Credit 400,000 -
Payments under credit line (241,369) (264,376)
Decrease in note payable to related party (7,464) -
Payment of current portion of long-term debt - (120,000)
(Decrease) of Long term portion of note payable (80,000)
Decrease in deferred acquisition costs 63,061
Conversion of preferred stock - (6)
Common Stock issued to pay Note Payable 84,353
Common Stock purchased from exercise of stock options 28,335
------------- -----------
Net cash (provided by) used in financing activities 1,056,317 (351,694)
------------- -----------
Net increase (decrease) in cash and cash equivalents 10,937 (2,580,155)
Cash and cash equivalents, beginning of year 805,774 5,717,560
------------- -----------
Cash and cash equivalents, end of quarter 816,711 3,137,405
------------- -----------
*Purchase of businesses, net of cash acquired
Working capital, other than cash (262,436) -
Property, plant and equipment (25,139) -
Cost in excess of net assets of companies acquired, net (927,060) -
Other assets (8,862) -
Current portion of long term debt 150,000 -
</TABLE>
The accompanying notes are an integral part of these financial statments
6
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited consolidated financial statements, which
are for interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained
in the Annual Report on Form 10-KSB for the year ended December 31,
1995 of Hi-Rise Recycling Systems, Inc. (the "Company"), as filed with
the Securities and Exchange Commission. The December 31, 1995 balance
sheet was derived from audited consolidated financial statements, but
does not include all disclosures required by generally accepted
accounting principles.
2. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (which are of
a normal recurring nature) necessary for a fair presentation of the
financial statements. The results of operations for the three and six
months ended June 30, 1996 are not necessarily indicative of the
results to be expected for the full year.
3. Per share data was computed by dividing net loss as adjusted by the
preferred dividend by the weighted average number of shares outstanding
during the period.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is engaged primarily in the business of marketing a proprietary
automated system known as the "hi-rise system" designed to collect and separate
recyclable and other solid waste in multistory buildings. In February 1995, the
Company acquired all of the issued and outstanding capital stock of IDC Systems,
Inc. ("IDC"). IDC is engaged in the business of manufacturing, installing and
servicing trash compaction systems. The Company's results of operation for the
six months ended June 30, 1995 include the results of IDC from February 23,
1995, while the Company's results of operation for the six months ended June 30,
1996 include the results of IDC for the full six months.
RESULTS OF OPERATION
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED
JUNE 30, 1995.
Total revenue during the six months ended June 30, 1996 was $1,444,203, a
decrease of $89,728, compared to total revenue of $1,533,931 during the prior
comparable period. Revenue from equipment sales, which includes Hi-Rise system
sales and IDC compactor sales, decreased by $98,484 to $971,001 during the six
months ended June 30, 1996, compared to $1,069,485 during the prior comparable
period. Hi-rise system sales for the current six months were $348,123 compared
to $665,943 for the previous comparable period. The decrease is a result of the
Company's emphasis during the six months ended June 30, 1996 on equipment sales
in new construction buildings. In the case of new building sales, the period of
time between the execution of a sales contract and installation of the hi-rise
system typically ranges from six to twenty months. The Company does not
recognize revenue until the installation of the system. As a result, backlog
balance at June 30, 1996 was $2,454,849. Revenue from shared savings agreements
increased by $6,194 to $195,528 during the six months ended June 30, 1996,
compared to $189,334 during the prior comparable period. Pursuant to the shared
savings agreements, the Company manages the customer's solid waste disposal in
order to reduce the waste hauling bill, in return for a percentage of the
savings achieved by the Company. The Company had 30 shared saving agreements in
effect at June 30, 1996. Revenue from service and parts increased by $12,562 to
$287,674 during the six months ended June 30, 1996, compared to $275,112 during
the prior comparable period.
During the six months ended June 30, 1996, the Company had interest income of
$231,056, an increase of $54,904, compared to $176,152 during the prior
comparable period. The increase in interest income is primarily attributable to
interest realized from sales type lease agreements and interest from
investments.
Total operating costs and expenses during the six months ended June 30, 1996
were $2,886,054, an increase of $616,426, compared to total operating costs and
expenses of $2,269,628 during the prior comparable period. Cost of equipment
sold increased by
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$169,727 from $747,066 during the six months ended June 30, 1995 to $916,793
during the current six months. As a percentage of equipment sales and service
and parts revenue, cost of equipment sold increased to 65% during the six months
ended June 30, 1996 from 56% during the prior comparable period. The increase in
cost of equipment sold in absolute dollars and as a percentage of revenue is
primarily attributable to the inclusion of IDC's cost of equipment sold in the
amount of $367,801. IDC's cost of equipment sold as a percentage of its revenues
is typically higher than the cost of equipment sold of hi-rise systems as a
percentage of revenue from sales of hi-rise systems. In addition, included in
equipment sales is approximately $95,000 in sales of trash chutes. The Company
realizes lower margins on these items as they are subcontracted out. Selling and
marketing expenses during the six months ended June 30, 1996 were $909,188, an
increase of $186,901, compared to selling and marketing expenses of $722,287
during the prior comparable period. The increase in selling and marketing
expenses was primarily attributable to salaries for additional sales personnel
and related costs, in the amount of $40,000, in connection with the addition of
sales personnel in New York, as well as an increase of $61,000 in salaries and
related costs as a result of the hiring of additional sales personnel in the
Miami and corporate offices. The addition of sales personnel in the corporate
offices is part of the Company's efforts to establish a nationwide distributor
network. In addition, included in selling and marketing is $50,000 of additional
expenses for IDC during the current six months as opposed to only four months
last year. General and administrative expenses during the six months ended June
30, 1996 were $977,164, an increase of $372,386, compared to general and
administrative expenses of $604,778 during the prior comparable period. The
increase in general and administrative expenses was partially attributable to an
increase of approximately $128,000 in salaries and related costs as a result of
the hiring of additional executive and administrative personnel including a new
chief executive officer and administrative assistant. In addition, general and
administrative expenses for the six months ended June 30, 1996 include
approximately $55,000 of such expenses for IDC above the four months in 1995.
Legal and professional fees increased by $90,000 primarily as a result of the
filing of a registration statement on Form S-3 during the current six months and
legal fees incurred in connection with the exercise by certain holders of the
Company's Series A Preferred Stock of their right to convert such shares into
shares of the Company's common stock and recent changes in the Company's
management. The purchase of IDC and Dade County Recycling, Inc. and the
depreciation on assets purchased in 1995 resulted in an additional $70,000 of
depreciation and goodwill expense in the first six months of 1996. Interest
expense increased by $15,807 to $80,008 as compared to the prior comparable
period, as a result of increased borrowings under the Company's line of credit.
The Company recently agreed to an out of court settlement with Mr. Jeffrey
Daniels, its former president who was terminated in January 1996, and another
former employee. The Company incurred settlement expenses totaling $75,000 in
cash in connection with such settlements. See "Part II. Item 1.-Legal
Proceedings."
As a result, the Company incurred a net loss of $1,365,803 during the six months
ended June 30, 1996, compared to a net loss of $623,746 during the six months
ended June 30, 1995.
9
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RESULTS OF OPERATION
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED
JUNE 30, 1995.
Total revenue during the three months ended June 30, 1996 was $916,840, a
decrease of $92,089, compared to total revenue of $1,008,929 during the prior
comparable quarter. Revenue from equipment sales, which includes Hi-Rise system
sales and IDC compactor sales, decreased by $108,757 to $660,234 during the
three months ended June 30, 1996, compared to $768,991 during the prior
comparable quarter. Hi-rise system sales for the current quarter were $391,000
compared to $348,000 for the previous comparable quarter. The decrease in
equipment sales is primarily the result of the Company's emphasis during the
three months ended June 30, 1996 on equipment sales in new construction
buildings. In the case of new building sales, the period of time between the
execution of a sales contract and installation of the hi-rise system typically
ranges from six to twenty-four months. The Company does not recognize revenue
until installation of the hi-rise system. As a result, backlog continues to grow
and totaled $2,454,849. Revenue from shared savings agreements increased by
$4,288 to $99,195 during the three months ended June 30, 1996, compared to
$94,907 during the prior comparable quarter. Pursuant to the shared savings
agreements, the Company manages the customer's solid waste disposal in order to
reduce the waste hauling bill, in return for a percentage of the savings
achieved by the Company. The Company had 30 shared saving agreements in effect
at June 30, 1996. Revenue from service and parts increased by $12,380 to
$157,411 during the three months ended June 30, 1996, compared to $145,031
during the prior comparable quarter.
During the three months ended June 30, 1996, the Company had interest income of
$109,569, an increase of $42,196, compared to $67,373 during the prior
comparable period. The increase in interest income is primarily attributable to
interest realized from sales type lease agreements and interest from
investments.
Total operating costs and expenses during the three months ended June 30, 1996
were $1,640,753, an increase of $263,787, compared to total operating costs and
expenses of $1,376,966 during the prior comparable quarter. Cost of equipment
sold decreased by $3,879 from $522,460 during the three months ended June 30,
1995 to $518,581 during the current three months. As a percentage of equipment
sales and service and parts revenue, cost of equipment sold increased to 63%
during the three months ended June 30, 1996 from 57% during the prior comparable
period. The increase in cost of equipment sold in absolute dollars and as a
percentage of revenue is primarily attributable to the inclusion of IDC's cost
of equipment sold in the amount of $147,501. IDC's cost of equipment sold as a
percentage of its revenues is typically higher than the cost of equipment sold
of hi-rise systems as a percentage of revenue from sales of hi-rise systems. In
addition, included in equipment sales is approximately $95,000 of sales of trash
chutes. The Company realizes lower margins on these items as they are
subcontracted out. Selling and marketing expenses during the three months ended
June 30, 1996 were $521,533, an increase of $67,768, compared to selling and
marketing expenses of $453,765 during the prior comparable period. The increase
in selling and marketing expense is a result of the hiring of additional sales
personnel in New York and the corporate offices in Miami. General and
administrative expenses during the three months ended June 30, 1996 were
$501,435, an increase of $204,962, compared to general and
10
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administrative expenses of $296,473, during the prior comparable period. The
increase in general and administrative expenses was partially attributable to an
increase of approximately $93,000 in salaries and related costs as a result of
the hiring of additional executive and administrative personnel including a new
chief executive officer and administrative assistant. In addition, legal and
professional fees increased by $30,000 primarily relating to a registration
statement on Form S-3 completed in the current quarter which was filed during
the first quarter of 1996 and legal fees incurred in connection with the
exercise by certain holders of the Company's Series A Preferred Stock of their
right to convert such shares into shares of the Company's common stock and
recent changes in the Company's management. The purchase of IDC and Dade County
Recycling, Inc. and the depreciation on assets purchased in 1995 resulted in an
additional $32,000 of depreciation and goodwill expense in the three months
ended June 30, 1996. Interest expense increased by $343 to $31,501 as compared
to the prior comparable period, as a result of increased borrowings under the
Company's line of credit.
The Company recently agreed to an out of court settlement with Mr. Jeffrey
Daniels, its former president who was terminated in January 1996, and another
former employee. The Company incurred settlement expenses totaling $75,000 in
cash in connection with such settlements.
As a result, the Company incurred a net loss of $720,845 during the three months
ended June 30, 1996, compared to a net loss of $331,822 during the three months
ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of $4,618,836 and cash and
cash equivalents aggregating $3,137,405 compared to working capital of
$6,305,990 and cash and cash equivalents of $5,717,560 at December 31, 1995.
The Company's primary sources of working capital are a $1.5 million line of
credit with Ocean Bank, N.A. ("Ocean Bank") and net proceeds from an offshore
private placement of the Company's Series A Preferred Stock, $.01 par value (the
"Series A Preferred Stock"), in November 1995 for an aggregate purchase price of
$7,200,000. In connection with this private placement, the Company received
proceeds net of expenses of approximately $6,368,000.
Under the Ocean Bank line of credit, the Company may borrow up to 75% of the
present value of eligible leases of the hi-rise systems entered into since
January 1994. The line of credit is collateralized by leases of the Company's
hi-rise system, bears interest at a rate per annum equal to Citibank's prime
rate plus 2%, and is payable on demand. As of June 30, 1996, the outstanding
balance under this line of credit was $979,482.
Under the terms of the offshore private placement the Series A Preferred Stock
is convertible, at the option of the holders thereof, in increments over a
period of 135 days from the consummation of the private placement, into shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), at a
conversion rate based upon the lower of (i) $9.75
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per share or (ii) 85% of the market price of the Common Stock at the time of
conversion. The conversion rate is subject to adjustment on the occurrence of
certain events. The Series A Preferred Stock is mandatorily convertible by the
holders thereof on October 27, 1998. Prior to any such conversion of the Series
A Preferred Stock, the Company has the option to redeem the Series A Preferred
stock at the then applicable conversion price. Upon conversion or redemption,
the holder will be entitled to dividends at the rate of 10% per annum, accrued
from the date of issuance through the date of conversion or redemption, as the
case may be, payable in Common Stock in the case of conversion and cash in the
case of redemption. To date, 660 shares of Series A Preferred Stock were
converted into 2,517,424 shares of Common Stock at an average per share
conversion price of $2.73.
Net cash used in operating activities was $2,232,799 and $1,032,263, during the
six months ended June 30, 1996 and 1995, respectively. The increase was
primarily attributable to a net loss of $742,057 more than the prior comparable
period and sales type leases of hi-rise systems entered into in the six months
ended June 30, 1996. In addition, accounts receivable increased by $390,838 as a
result primarily of three cash sales totaling $235,000 installed at the end of
June. Also inventory increased by $399,909 as a result of the increased backlog
and stock needed for these installations to meet this backlog. Net cash used in
financing activities was $352,714 during the six months ended June 30, 1996,
compared to net cash provided by financing activities of $1,056,317 during the
six months ended June 30, 1995. Net cash provided by investing activities was
$5,358 during the six months ended June 30, 1996, compared to net cash used in
investing activities of $13,117 during the six months ended June 30, 1995.
The Company currently has no outstanding material commitments for capital
expenditures. The Company's primary requirements for capital will be the cost of
systems sold, leased and rented, strategic acquisitions, marketing and sales
costs associated with the Company's national and international expansion into
new target markets and efforts to establish a nationwide distribution network
and general and administrative expenses associated with the Company's plan for
expansion.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported, the Company had been notified that
Jeffrey A. Daniels, its former president whose employment was
terminated in January 1996, intended to pursue claims against the
Company resulting from his termination. In July 1996, the Company
entered into a compromise agreement with Mr. Daniels pursuant to
which (1) the Company agreed to pay Mr. Daniels $39,000, in cash
less appropriate payroll taxes and pay his attorney $11,000, and (2)
Mr. Daniels agreed to release all claims against the Company. In
addition, the Company entered into a compromise agreement with
another former employee pursuant to which (1) the Company agreed to
pay such employee $27,500, in cash less appropriate payroll taxes,
and (2) such former former employee agreed to release all claims
against the Company.
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ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A. The Annual Meeting of Shareholders (the "Meeting") of the Company
was held on July 16, 1996.
B. Not applicable because:
(i) Proxies for the Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934.
(ii) There was no solicitation in opposition to management's
nominees as listed in the Company's proxy statement dated June
17, 1996; and
(iii) All such nominees were elected.
C. The matters voted on at the meeting consisted of the following:
(i) The election of five members to the Company's Board of
Directors. The name of each nominee for election and
the number of shares voted for and against such nominee,
as well as the number of abstentions and broker non-votes
with respect to such nominee, are set forth below:
NAME FOR AGAINST ABSTAIN NON-VOTES
- -------------------------------------------------------------------------
Don Engel 5,355,397 16,755 -0- 610,619
Mark Shantzis 5,351,397 20,755 -0- 610,619
Warren Adelson 5,355,397 16,755 -0- 610,619
Ira Merritt 5,355,397 16,755 -0- 610,619
Joel Pashcow 5,355,397 16,755 -0- 610,619
(ii) A proposal to approve the adoption of the Company's 1996
Stock Option Plan and the reservation of 1,000,000 shares of
Common Stock for issuance pursuant to the 1996 Stock Option
Plan. 3,958,689 shares were voted in favor of such proposal,
122,076 shares against and 32,325 shares abstained. In
addition, there were 1,869,681 broker non-votes with with
respect to such proposal.
(iii) A proposal to approve the adoption of the Company's 1996
Director's Stock Option Plan and reservation of 150,000
shares of Common Stock for issuance pursuant to the 1996
Director's Stock Option Plan. 4,014,499 shares were voted in
favor of such proposal, 122,961 shares against and 31,225
abstained. In addition, there were 1,844,086 broker non-votes
with
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respect to such proposal.
D. Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBITS DESCRIPTION
10.1 Compromise agreement dated July 1996 between the
Company and Jeffrey Daniels.
10.2 Compromise agreement dated July 1996 between the
Company and Thomas Witter.
11 Statement re: computation of per share earnings
(B) REPORTS ON FORM 8-K:
None
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HI-RISE RECYCLING SYSTEMS, INC.
Date: August 13, 1996 By: /s/ DONALD ENGEL
----------------------------------
Donald Engel, Co- Chairman of the
Board and Chief Executive Officer
(principal executive officer)
Date: August 13, 1996 By: /s/ BRADLEY HACKER
----------------------------------
Brad Hacker, Controller,
(Principal Financial and Accounting Officer)
15
EXHIBIT 10.1
COMPROMISE AGREEMENT
THIS AGREEMENT is entered into as of this _____ day of July, 1996
between HI-RISE RECYCLING SYSTEMS, INC., located in Dade County, Florida
("HI-RISE") and JEFFREY DANIELS ("DANIELS"), as follows:
RECITALS
WHEREAS, DANIELS was employed by HI-RISE as President; and
WHEREAS, DANIELS' employment at HI-RISE was terminated, effective
January 22, 1996;
WHEREAS, disputes have arisen between the parties concerning DANIELS'
employment and the termination thereof;
WHEREAS, the parties by this Agreement desire, among other things, to
resolve the disputes that have arisen between them;
NOW, THEREFORE, in consideration of the mutual promises and covenants
between the parties, the sufficiency of which is hereby acknowledged, HI-RISE
and DANIELS hereby agree to the following Terms and Conditions:
TERMS AND CONDITIONS
1. RECITALS. All the foregoing Recitals are true and correct and are
incorporated as part of these Terms and Conditions.
2. COMPROMISE PAYMENTS AND PROPERTY TRANSFER. HI-RISE shall pay to
DANIELS the lump sum of thirty-nine thousand dollars ($39,000), less $7,800.00
in federal income tax withholding and less $2,983.50 in F.I.C.A., resulting in a
check to DANIELS from HI-RISE in the amount of $28,216.50, representing a
compromise of
<PAGE>
the claim for past and future wages, and payable on the Payment Date as defined
herein. On the Payment Date, HI-RISE shall also pay to the law firm of Gunster,
Yoakley, Valdes-Fauli & Stewart, P.A., the sum of eleven thousand dollars
($11,000), representing attorneys' fees incurred by DANIELS.
On the Payment Date, HI-RISE shall deliver to DANIELS the Macintosh
IIcx computer, the Epson Stylus Color P II printer, and the Macintosh
Laserwriter II printer, all of which DANIELS left on the premises of HI-RISE
following the termination of DANIELS' employment.
3. NO FURTHER MONIES OWED; TAXES. DANIELS acknowledges and agrees that
other than the payments and transfer of property set forth in paragraph 2 above,
no further compensation or benefits or other monies are owed to DANIELS by
HI-RISE or arising out of his employment with HI-RISE. DANIELS further agrees
that he will not in the future seek employment or reemployment with HI-RISE.
DANIELS further agrees that should any competent taxing authority determine that
HI-RISE is liable for unpaid F.I.C.A. and/or federal withholding taxes for any
payments made under this Agreement, then DANIELS shall indemnify and hold
harmless HI-RISE for such liability.
4. TREATMENT OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" means information disclosed to DANIELS or
known by DANIELS as a consequence of or through his employment by HI-RISE
(including information conceived, originated, discovered or developed by
HI-RISE), and not generally
2
<PAGE>
known, about HI-RISE's business. DANIELS acknowledges that any Confidential
Information or data acquired by DANIELS with respect to the business of HI-RISE
(which includes, but is not limited to, information concerning the Company's
financial condition, prospects, methods of doing business and marketing and
promotion of HI-RISE's services) is a valuable, special and unique asset of
HI-RISE that was received by DANIELS in confidence and as a fiduciary, and
DANIELS shall remain a fiduciary to HI-RISE with respect to all of such
information. DANIELS shall not divulge, communicate, use to the detriment of
HI-RISE or for the benefit of any other person or persons, or misuse in any way,
any Confidential Information (as previously defined) pertaining to the business
of HI-RISE.
5. RELEASE BY DANIELS. DANIELS, his personal representatives, heirs and
assigns, first party, hereby releases, discharges and covenants not to sue
HI-RISE, its past and present directors, officers, employees, and agents,
attorneys in fact, parent, subsidiary and affiliated entities, second party,
from and for any and all claims, demands, damages, lawsuits, obligations,
promises, administrative actions, charges and causes of action, both known or
unknown, in law or in equity, of any kind whatsoever, which first party ever
had, now has, or may have against second party, for, upon or by reason of any
matter, cause or thing whatsoever, up to and including the date of this
Agreement, INCLUDING BUT NOT LIMITED TO any and all claims arising out of or in
connection with DANIELS' employment with HI-RISE; any and all claims and causes
of action under Title VII of the Civil Rights Act
3
<PAGE>
of 1964, as amended, the Age Discrimination in Employment Act of 1967, as
amended, the Older Workers Benefits Protection Act, the Employee Retirement
Income Security Act ("ERISA"), and any other federal, state or local
anti-discrimination law, statute or ordinance; any claim under the Fair Labor
Standards Act, including but not limited to claims for overtime, liquidated
damages, penalties, interest, costs and attorneys' fees; any lawsuit founded in
tort, contract (oral, written or implied) or any other common law or equitable
basis of action. This release does not release any claims based on any actions
or inactions which occurred after the date of this Agreement.
6. RELEASE BY HI-RISE. Attached as Schedule A is a list of all present
or former employees of HI-RISE (other than Thomas Witter) whom DANIELS knows to
have planned, asserted, or threatened claims or litigation against HI-RISE.
DANIELS represents and warrants that, other than Thomas Witter, Whale
Securities, and the individuals listed on Schedule A, DANIELS is unaware of any
other person or entity who has planned, asserted, or threatened a claim or
litigation against HI-RISE which arises out of DANIELS' conduct as an employee
of HI-RISE and which has not been resolved. HI-RISE, its successors and assigns,
second party, hereby releases, discharges and covenants not to sue DANIELS, his
successors, heirs and assigns, first party, from and for any and all claims,
demands, damages, lawsuits, obligations, promises, administrative actions,
charges and causes of action, both known or unknown, in law or in equity, of any
kind whatsoever, which second
4
<PAGE>
party ever had, now has, or may have against first party, for, upon or by reason
of any matter, cause or thing whatsoever, up to and including the date of this
Agreement, including but not limited to any and all claims and causes of action
arising out of DANIELS' employment with HI-RISE and any lawsuit founded in tort,
contract (oral, written or implied) or any other common law or equitable basis
of action, EXCEPT FOR (a) claims and causes of action relating to any claims or
litigation against HI-RISE by persons listed on Schedule A, and (b) claims and
causes of action relating to any claims or litigation against HI-RISE by any
person or entity (other than Thomas Witter and the individuals listed on
Schedule A) whom DANIELS currently knows to have planned, asserted, or
threatened claims or litigation against HI-RISE, which arise out of DANIELS'
conduct as an employee of HI-RISE and which have not been resolved. This release
does not release any claims based on actions or inactions which occurred after
the date of this Agreement.
7. AGREEMENT NOT TO INSTITUTE ACTION. DANIELS agrees not to institute
an administrative proceeding or lawsuit against HI-RISE upon any basis outlined
in paragraph 5 above, and represents and warrants that, to the best of his
knowledge, no other person or entity has initiated or is authorized to initiate
such administrative proceedings or lawsuit on his behalf. Furthermore, DANIELS
agrees not to encourage any other person or suggest to any other person that he
or she institute any legal action or claim against HI-RISE.
5
<PAGE>
8. CONFIDENTIALITY. DANIELS covenants and agrees that this Agreement
and its terms and conditions are, collectively and individually, totally
confidential and from the date of this agreement forward, shall forever be kept
TOTALLY CONFIDENTIAL and shall not in any manner or for any reason be disclosed
by DANIELS without the express written consent of HI-RISE except (a) to
attorneys and accountants on a "need to know" basis, all of whom shall be
informed of and be bound by the provisions of this paragraph; (b) as may be
required by government agencies, such as the Internal Revenue Service; (c)
pursuant to court order or subpoena compelling such disclosure. Should DANIELS
or his representatives receive any such subpoena or court order compelling
disclosure, he shall immediately notify HI-RISE so that it may have the
opportunity to interpose an objection. Furthermore, DANIELS warrants and
represents that he has not, prior to the date of this Agreement, in any way
disclosed the terms of this Settlement Agreement to any person other than the
persons and entities listed above in this paragraph and to Thomas Witter, who is
identified in paragraph 17 of this Agreement, and with whom DANIELS has
communicated concerning these matters.
Since the extent of the damages caused by a breach of this paragraph
will be difficult if not impossible to measure, DANIELS hereby agrees that
HI-RISE shall have the right to recover from DANIELS the sum of $5,000 per
violation, for a maximum of $10,000, as reasonable liquidated damages should
HI-RISE prove in a court of law that DANIELS breached the provisions of this
6
<PAGE>
paragraph, or that DANIELS' representations contained in the preceding paragraph
be incorrect.
9. SEVERABILITY. If any provision of this Agreement is invalidated by a
Court of competent jurisdiction, then all of the remaining provisions of this
Agreement shall remain in full force and effect, provided that both parties may
still effectively realize the complete benefit of the promises and
considerations conferred hereby.
10. CONSTRUCTION The parties acknowledge that each party has reviewed
and revised this Agreement and that the rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
11. ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters set forth herein and
supersedes in its entirety any and all agreements or communications, whether
written or oral, previously made in connection with the matter herein, other
than the existing Confidentiality Agreement between DANIELS and HI-RISE. Any
agreement to amend or modify the terms and conditions of this Agreement must be
in writing and executed by the parties hereto.
12. NO ADMISSION OF LIABILITY. Neither this Agreement nor anything
contained herein shall constitute or is to be construed as an admission by
HI-RISE or DANIELS as evidence of any liability, wrongdoing, or unlawful
conduct. The parties acknowledge that this Agreement has been entered into by
the
7
<PAGE>
parties to effect an amicable resolution of differences that have arisen between
the parties.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to principles of
conflicts of law.
14. ATTORNEYS' FEES. In the event that a legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover its costs of court, including reasonable attorneys fees at all trial and
appellate levels.
15. SUFFICIENT TIME TO REVIEW. DANIELS acknowledges and agrees that he
has had sufficient time to review this Agreement and consult with anyone he
chooses regarding this Agreement, that he has a right to and should consult with
legal counsel regarding this Agreement and has in fact consulted with counsel,
and that he has received all information he requires from HI-RISE in order to
make a knowing and voluntary release and waiver of all claims against HI-RISE.
16. RIGHT OF RESCISSION. DANIELS acknowledges and agrees that he has
been given at least twenty-one (21) days to review this Agreement, and that by
this Agreement he is receiving consideration in addition to that which he is
already entitled. DANIELS further acknowledges and agrees that he has seven (7)
days from the date of his signature below to rescind this Agreement by providing
notice to HI-RISE in writing. If DANIELS does rescind this Agreement within the
seven day period set forth herein, then this Agreement shall be null and void.
DANIELS further
8
<PAGE>
acknowledges that this Agreement and the release contained herein satisfy all
the requirements for an effective release by DANIELS of all age discrimination
claims under ADEA.
17. CONDITIONAL NATURE OF SETTLEMENT; "PAYMENT DATE" DEFINED. The
parties acknowledge and agree that the differences that have arisen between the
parties are interrelated with the differences that have arisen between HI-RISE
and Thomas Witter, a former employee of HI-RISE ("WITTER"). The parties agree
that this Compromise Agreement shall be null and void if, by July 15, 1996,
HI-RISE and WITTER have not entered into an agreement resolving the differences
among them (the "Witter Compromise Agreement"). For purposes of this Agreement,
the "Payment Date" shall be that date which is five business days AFTER (a) the
expiration of the 7-day time period for DANIELS to rescind this Agreement
pursuant to paragraph 16 hereof and (b) the expiration of WITTER's 7-day right
of rescission pursuant to the Witter Compromise Agreement, WHICHEVER IS LATER.
9
<PAGE>
18. HEADINGS. The headings are for the convenience of the parties, and
are not to be construed as terms and conditions of this Agreement.
----------------------------------
JEFFREY DANIELS
STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this___ day of
July, 1996 by JEFFREY DANIELS. He personally appeared before me, is personally
known to me or produced_____________________ as identification, and did take an
oath.
Notary:
[NOTARIAL SEAL] Print Name
Notary Public, State of
My commission expires:
10
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
By:____________________________
Its:
STATE OF __________ )
) SS:
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this day of July,
1996 by ________________________ as ______________of HI-RISE RECYCLING SYSTEMS,
INC., a Florida corporation, on behalf of the corporation. He personally
appeared before me, is personally known to me or produced
________________________ as identification, and did take an oath.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of
My commission expires:
11
EXHIBIT 10.2
COMPROMISE AGREEMENT
THIS AGREEMENT is entered into as of this _____ day of July, 1996
between HI-RISE RECYCLING SYSTEMS, INC., located in Dade County, Florida
("HI-RISE") and THOMAS WITTER ("WITTER"), as follows:
RECITALS
WHEREAS, WITTER was employed by HI-RISE as National Sales Manager; and
WHEREAS, WITTER'S employment at HI-RISE was terminated, effective
February 19, 1996;
WHEREAS, disputes have arisen between the parties concerning WITTER'S
employment and the termination thereof;
WHEREAS, the parties by this Agreement desire, among other things, to
resolve the disputes that have arisen between them;
NOW, THEREFORE, in consideration of the mutual promises and covenants
between the parties, the sufficiency of which is hereby acknowledged, HI-RISE
and WITTER hereby agree to the following Terms and Conditions:
TERMS AND CONDITIONS
1. RECITALS. All the foregoing Recitals are true and correct and are
incorporated as part of these Terms and Conditions.
2. COMPROMISE PAYMENTS. HI-RISE shall pay to WITTER the lump sum of
twenty-seven thousand five hundred dollars ($27,500), less standard payroll
deductions (i.e. F.I.C.A., federal withholding), representing a compromise of
the claim for past and future wages, and payable on the Payment Date as defined
herein.
<PAGE>
3. NO FURTHER MONIES OWED; TAXES. WITTER acknowledges and agrees that
other than the payment set forth in paragraph 2 above, no further compensation
or benefits or other monies are owed to WITTER by HI-RISE or arising out of his
employment with HI-RISE. WITTER further agrees that he will not in the future
seek employment or reemployment with HI-RISE. WITTER further agrees that should
any competent taxing authority determine that HI-RISE is liable for unpaid
F.I.C.A. and/or federal withholding taxes for any payments made under this
Agreement, then WITTER shall indemnify and hold harmless HI-RISE for such
liability.
4. TREATMENT OF CONFIDENTIAL INFORMATION. For purposes of this
Agreement, "Confidential Information" means information disclosed to WITTER or
known by WITTER as a consequence of or through his employment by HI-RISE
(including information conceived, originated, discovered or developed by
HI-RISE), and not generally known, about HI-RISE's business. WITTER acknowledges
that any Confidential Information or data acquired by WITTER with respect to the
business of HI-RISE (which includes, but is not limited to, information
concerning the Company's financial condition, prospects, methods of doing
business and marketing and promotion of HI-RISE's services) is a valuable,
special and unique asset of HI-RISE that was received by WITTER in confidence
and as a fiduciary, and WITTER shall remain a fiduciary to HI-RISE with respect
to all of such information. WITTER shall not divulge, communicate, use to the
detriment of HI-RISE or for the benefit of any other person or
2
<PAGE>
persons, or misuse in any way, any Confidential Information (as previously
defined) pertaining to the business of HI-RISE.
5. RELEASE BY WITTER. WITTER, his personal representatives, heirs and
assigns, first party, hereby releases, discharges and covenants not to sue
HI-RISE, its past and present directors, officers, employees, and agents,
attorneys in fact, parent, subsidiary and affiliated entities, second party,
from and for any and all claims, demands, damages, lawsuits, obligations,
promises, administrative actions, charges and causes of action, both known or
unknown, in law or in equity, of any kind whatsoever, which first party ever
had, now has, or may have against second party, for, upon or by reason of any
matter, cause or thing whatsoever, up to and including the date of this
Agreement, INCLUDING BUT NOT LIMITED TO any and all claims arising out of or in
connection with WITTER'S employment with HI-RISE; any and all claims and causes
of action under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, as amended, the Older Workers Benefits
Protection Act, the Employee Retirement Income Security Act ("ERISA"), and any
other federal, state or local anti-discrimination law, statute or ordinance; any
claim under the Fair Labor Standards Act, including but not limited to claims
for overtime, liquidated damages, penalties, interest, costs and attorneys'
fees; any lawsuit founded in tort, contract (oral, written or implied) or any
other common law or equitable basis of action. This release does not release
3
<PAGE>
any claims based on any actions or inactions which occurred after the date of
this Agreement.
6. RELEASE BY HI-RISE. WITTER represents and warrants that WITTER is
unaware of any person or entity who has planned, asserted, or threatened a claim
or litigation against HI-RISE which arises out of WITTER'S conduct as an
employee of HI-RISE and which has not been resolved. HI-RISE, its successors and
assigns, second party, hereby releases, discharges and covenants not to sue
WITTER, his successors, heirs and assigns, first party, from and for any and all
claims, demands, damages, lawsuits, obligations, promises, administrative
actions, charges and causes of action, both known or unknown, in law or in
equity, of any kind whatsoever, which second party ever had, now has, or may
have against first party, for, upon or by reason of any matter, cause or thing
whatsoever, up to and including the date of this Agreement, including but not
limited to any and all claims and causes of action arising out of WITTER'S
employment with HI-RISE and any lawsuit founded in tort, contract (oral, written
or implied) or any other common law or equitable basis of action, EXCEPT FOR
claims and causes of action relating to any claims or litigation against HI-RISE
by any person or entity whom WITTER currently knows to have planned, asserted,
or threatened claims or litigation against HI-RISE, which arise out of WITTER'S
conduct as an employee of HI-RISE and which have not been resolved. This release
does not release any claims based on actions or inactions which occurred after
the date of this Agreement.
4
<PAGE>
7. AGREEMENT NOT TO INSTITUTE ACTION. WITTER agrees not to institute an
administrative proceeding or lawsuit against HI-RISE upon any basis outlined in
paragraph 5 above, and represents and warrants that, to the best of his
knowledge, no other person or entity has initiated or is authorized to initiate
such administrative proceedings or lawsuit on his behalf. Furthermore, WITTER
agrees not to encourage any other person or suggest to any other person that he
or she institute any legal action or claim against HI-RISE.
8. CONFIDENTIALITY. WITTER covenants and agrees that this Agreement and
its terms and conditions are, collectively and individually, totally
confidential and from the date of this agreement forward, shall forever be kept
TOTALLY CONFIDENTIAL and shall not in any manner or for any reason be disclosed
by WITTER without the express written consent of HI-RISE except (a) to attorneys
and accountants on a "need to know" basis, all of whom shall be informed of and
be bound by the provisions of this paragraph; (b) as may be required by
government agencies, such as the Internal Revenue Service; (c) pursuant to court
order or subpoena compelling such disclosure. Should WITTER or his
representatives receive any such subpoena or court order compelling disclosure,
he shall immediately notify HI-RISE so that it may have the opportunity to
interpose an objection. Furthermore, WITTER warrants and represents that he has
not, prior to the date of this Agreement, in any way disclosed the terms of this
Settlement Agreement to any person other than the persons and entities listed
5
<PAGE>
above in this paragraph, and to Jeffrey Daniels, who is identified in paragraph
17 of this Agreement, and with whom WITTER has communicated concerning these
matters.
Since the extent of the damages caused by a breach of this paragraph
will be difficult if not impossible to measure, WITTER hereby agrees that
HI-RISE shall have the right to recover from WITTER the sum of $5,000 per
violation, for a maximum of $10,000, as reasonable liquidated damages should
HI-RISE prove in a court of law that WITTER breached the provisions of this
paragraph on or after the date of this Agreement.
9. SEVERABILITY. If any provision of this Agreement is invalidated by a
Court of competent jurisdiction, then all of the remaining provisions of this
Agreement shall remain in full force and effect, provided that both parties may
still effectively realize the complete benefit of the promises and
considerations conferred hereby.
10. CONSTRUCTION The parties acknowledge that each party has reviewed
and revised this Agreement and that the rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
11. ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters set forth herein and
supersedes in its entirety any and all agreements or communications, whether
written or oral, previously made in connection with the matter herein, except
for the existing
6
<PAGE>
Confidentiality Agreement between WITTER and HI-RISE. Any agreement to amend or
modify the terms and conditions of this Agreement must be in writing and
executed by the parties hereto.
12. NO ADMISSION OF LIABILITY. Neither this Agreement nor anything
contained herein shall constitute or is to be construed as an admission by
HI-RISE or WITTER as evidence of any liability, wrongdoing, or unlawful conduct.
The parties acknowledge that this Agreement has been entered into by the parties
to effect an amicable resolution of differences that have arisen between the
parties.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to principles of
conflicts of law.
14. ATTORNEYS' FEES. In the event that a legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover its costs of court, including reasonable attorneys fees at all trial and
appellate levels.
15. SUFFICIENT TIME TO REVIEW. WITTER acknowledges and agrees that he
has had sufficient time to review this Agreement and consult with anyone he
chooses regarding this Agreement, that he has a right to and should consult with
legal counsel regarding this Agreement and has in fact consulted with counsel,
and that he has received all information he requires from HI-RISE in order to
make a knowing and voluntary release and waiver of all claims against HI-RISE.
7
<PAGE>
16. RIGHT OF RESCISSION. WITTER acknowledges and agrees that he has
been given at least twenty-one (21) days to review this Agreement, and that by
this Agreement he is receiving consideration in addition to that which he is
already entitled. WITTER further acknowledges and agrees that he has seven (7)
days from the date of his signature below to rescind this Agreement by providing
notice to HI-RISE in writing. If WITTER does rescind this Agreement within the
seven day period set forth herein, then this Agreement shall be null and void.
WITTER further acknowledges that this Agreement and the release contained herein
satisfy all the requirements for an effective release by WITTER of all age
discrimination claims under ADEA.
17. CONDITIONAL NATURE OF SETTLEMENT; "PAYMENT DATE" DEFINED. The
parties acknowledge and agree that the differences that have arisen between the
parties are interrelated with the differences that have arisen between HI-RISE
and Jeffrey Daniels, a former employee of HI-RISE ("DANIELS"). The parties agree
that this Compromise Agreement shall be null and void if, by July 15, 1996,
HI-RISE and DANIELS have not entered into an agreement resolving the differences
among them (the "Daniels Compromise Agreement"). For purposes of this Agreement,
the "Payment Date" shall be that date which is five business days AFTER (a) the
expiration of the 7-day time period for WITTER to rescind this Agreement
pursuant to paragraph 16 hereof and (b) the expiration of DANIELS' 7-day right
of rescission pursuant to the Daniels Compromise Agreement, WHICHEVER IS LATER.
8
<PAGE>
18. HEADINGS. The headings are for the convenience of the parties, and
are not to be construed as terms and conditions of this Agreement.
-------------------------------
THOMAS WITTER
STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ____ day of
July, 1996 by THOMAS WITTER. He personally appeared before me, is personally
known to me or produced ___________ as identification, and did take an oath.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of
My commission expires:
9
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
By:____________________________
Its:
STATE OF _______ )
) SS:
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this day of July,
1996 by ____________________________ as _______________ of HI-RISE RECYCLING
SYSTEMS, INC., a Florida corporation, on behalf of the corporation. He
personally appeared before me, is personally known to me or produced
__________________________ as identification, and did take an oath.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of
My commission expires:
10
EXHIBIT 11
16
<PAGE>
<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOT THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1995 AND 1996
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1995 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1996
------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares outstanding 3,439,721 5,982,771 3,439,721 5,982,771
Weighted average 3,227,689 3,194,889 3,215,011 3,748,465
shares outstanding
Net loss $ (331,822) $ (711,000) $ (623,746) $(1,355,000)
Preferred Dividend -- (280,547) -- (100,000)
------------------------------------------------------------
Total (331,822) (991,547) (623,746) (1,455,000)
Net loss per share $ (0.10) $ (0.31) $ (0.19) $ (0.39)
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-01-1994
<CASH> 3,137,405
<SECURITIES> 582,385
<RECEIVABLES> 1,123,529
<ALLOWANCES> 120,559
<INVENTORY> 979,790
<CURRENT-ASSETS> 6,032,677
<PP&E> 764,479
<DEPRECIATION> 189,720
<TOTAL-ASSETS> 10,398,588
<CURRENT-LIABILITIES> 1,412,821
<BONDS> 0
0
1
<COMMON> 59,827
<OTHER-SE> 8,705,939
<TOTAL-LIABILITY-AND-EQUITY> 10,398,588
<SALES> 1,444,203
<TOTAL-REVENUES> 1,444,203
<CGS> 999,702
<TOTAL-COSTS> 908,188
<OTHER-EXPENSES> 977,164
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,008
<INCOME-PRETAX> (1,290,803)
<INCOME-TAX> 0
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