UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 20172018

or

¨      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:000-30396

GLYECO, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:(866) 960-1539

Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to section 12(g) of the Act:

Common Stock, par value $0.0001 per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes¨ Nox

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes¨ Nox

Note– Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark 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 preceding 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¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yesx No¨��

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K.¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes¨ Nox

As of June 30, 2017,2018, the last business day of the registrant’s most recently completed second fiscal quarter, 76,640,145828,397 shares of its common stock, par value $0.0001 per share (the “Common Stock”), were held by non-affiliates of the registrant.  The aggregate market value of those shares was $6,131,212$6,212,978 based on the closing sale price of $0.08$7.50 on such date as reported on the OTC Markets system. Shares held by executive officers, directors, and persons then owning directly or indirectly more than 10% of the outstanding Common Stock have been excluded from the preceding number because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purposes.

As of March 30, 2018,29, 2019, the registrant had 165,438,0611,383,731 shares of Common Stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements that involve risks and uncertainties, principally in the sections entitled “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact contained in this Annual Report, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in this Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, and financial needs. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report and those discussed in other documents we file with the Securities and Exchange Commission that are incorporated into this Annual Report by reference, if any. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included in this Annual Report. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Annual Report. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our future 10-Q, 8-K, and 10-K reports to the Securities and Exchange Commission. Also note that we include in this Annual Report a cautionary discussion of risks, uncertainties, and assumptions relevant to our business. These are factors that we think could cause our actual results to differ materially from expected and historical results. Other factors besides those listed here could also adversely affect us.

PART I

When used in this Annual Report, the words “anticipate,” “believe,” “expect,” “estimate,” “project,” “intend,” “plan,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, expected, estimated, projected, intended, or planned. For additional discussion of such risks, uncertainties, and assumptions, see “Cautionary Note Regarding Forward-Looking Statements” included in the beginning of this Annual Report.

Item 1. Business

Unless otherwise noted, terms such as the “Company,” “GlyEco,” “we,” “us,” “our” and similar terms refer to GlyEco, Inc., a Nevada corporation, and its subsidiaries, unless otherwise specified.

Corporate History

GlyEco, Inc. (“GlyEco” or the “Company”) is a Nevada corporation, with its principal executive offices located at 230 Gill Way, Rock Hill,1620 1^st Avenue South, Carolina 29730.Nitro, West Virginia 25143. GlyEco was formed in the State of Nevada on October 21, 2011. On that same date, the Company became a wholly-owned subsidiary of Environmental Credits, Inc., a Delaware corporation (“ECVL”). On November 21, 2011, ECVL was merged into its wholly-owned subsidiary, GlyEco (the “Reincorporation”). Upon the consummation of the Reincorporation, the Company was the surviving corporation and the Articles of Incorporation and Bylaws of the Company replaced the Certificate of Incorporation and Bylaws of ECVL.

On November 28, 2011, the Company consummated a reverse triangular merger (the “Merger” or “Transaction”) as a tax-free reorganization within the meaning of Section 368 of the United States Internal Revenue Code of 1986, as amended, pursuant to an Agreement and Plan of Merger, dated November 21, 2011 (the “Merger Agreement”), with GRT Acquisition, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, and Global Recycling Technologies, Ltd., a Delaware corporation and privately-held operating subsidiary (“Global Recycling”). Pursuant to the Merger Agreement, GRT Acquisition, Inc. merged with and into Global Recycling, with Global Recycling being the surviving corporation and which resulted in Global Recycling becoming a wholly-owned subsidiary of the Company.

On December 27, 2016, the Company purchased WEBA Technology Corp. (“WEBA”), a privately-owned company that develops, manufactures and markets additive packages for the antifreeze/coolant, gas patch coolants and heat transfer industries, and 96.9% of Recovery Solutions & Technologies Inc. (“RS&T”), a privately-owned company involved in the development and commercialization of glycol recovery technology. On December 28, 2016, the Company purchased certain glycol distillation assets from Union Carbide Corporation (“UCC”), a wholly-owned subsidiary of The Dow Chemical Company, located in Institute, West Virginia (the “Dow Assets”). During the first quarter of fiscal year 2017 and fourth quarter of fiscal year 2018, the Company purchased an additional 2.9% and .20% respectively, of RS&T (for a total percentage ownership of 99.8%100% of RS&T).

Description of Business Activity

GlyEco, Inc. is adeveloper, manufacturer chemical company focused on technology development and distributormanufacturing of performance fluids for the automotive, commercial and industrial markets. We specializein coolants, additives, and complementaryrelated performance fluids.We believe ourserve and support the automotive, heavy-duty, and industrial markets with an unwavering commitment to customer service and quality. GlyEco, Inc., is a vertically integrated approach,company which includes formulating products, acquiring feedstock,manufactures ethylene glycol, additives, and finished fluids. Maintaining control over all core ingredients of its glycol-based performance fluids, and directly managing facility construction and upgrades, operating facilities, and distributing products throughall aspects of the manufacturing process allows GlyEco, Inc. to offer our fleet of trucks, positions us to serve our key markets and enables us to capture incremental revenue and margin throughoutcustomers the process. Our network of facilities, develop, manufacture and distribute high quality products that meet or exceed industry quality standards, including a wide spectrum of ready to use antifreezes and additive packages for the antifreeze/coolant, gas patch coolants and heat transfer fluid industries, throughout North America.highest value with competitive costs.

Prior to our acquisitions of WEBA, RS&T and the Dow Assets in December 2016, the Company operated in only one business segment, the Consumer segment. Effective as of January 1, 2017, GlyEco conductsconducted its operation in two business segments: the Consumer segment and the Industrial segment. The Consumer segment’s principal business activity iswas the production and distribution of ASTM (American Society for Testing Materials) grade glycol products, specifically automotive antifreeze and specialty-blended antifreeze, for sale into the automotive and industrial end markets. The Consumer segment operatesoperated a full lifecycle business, picking up waste antifreeze and producing finished antifreeze from both recycled and virgin glycol sources. We operateoperated six processing and distribution centers located in the eastern region of the United States. The production capacity of the Consumer segment iswas approximately 90,000 gallons per month of ready to use (50/50) antifreeze. On January 11, 2019, the Company completed the sale of the assets of its Consumer segment and now retains only the Industrial division. Operations in our Industrial segment are conducted through WEBA and RS&T, two of our subsidiaries. WEBA develops, manufactures and markets additive packages for the antifreeze/coolant, gas patch coolant and heat transfer industries throughout North America.  RS&T operates a glycol re-distillation plant in West Virginia that produces virgin quality glycol for sale to industrial customers worldwide. The RS&T facility currently produces antifreeze and industrial grade ethylene glycol. The production capacity of the RS&T facility is approximately 1.5 million gallons per month of concentrated ethylene glycol.

Consumer Segment

Our Consumer segment has processing and distribution centers located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Rock Hill, South Carolina, (5) Tea, South Dakota, and (6) Landover, Maryland. The Minneapolis, Minnesota, Lakeland, Florida, Rock Hill, South Carolina and Tea, South Dakota facilities have distillation equipment and operations for recycling waste glycol streams as well as blending equipment and operations for mixing glycol and other chemicals to produce finished products for sale to third party customers, while the Indianapolis, Indiana and Landover, Maryland facilities currently only have blending equipment and operations for mixing glycol and other chemicals to produce finished products for sale to third party customers. We estimate that the monthly processing capacity of our facilities with distillation equipment is approximately 90,000 gallons of ready to use finished products. We have invested significant time and money into increasing the capacity and actual production of our facilities. Our processing and distribution centers utilize a fleet of trucks to deliver glycol products directly to retail end users at their storefronts, which is typically 50-100 gallons per customer order and to collect waste material for processing at our facilities. Collectively, we directly service approximately 5,000 customers. To meet the delivery volume needs of our existing customers, we supplement our collected and processed glycol with new or virgin glycol that we purchase in bulk from various suppliers. In addition to our retail end users, we also sell our recycled products to wholesale or bulk distributors who, in turn, sell to retail end users specifically as automotive or specialty blended antifreeze.

We have deployed our technology and processes across our six processing and distribution centers, allowing for safe and efficient handling of waste streams, application of our processing technology and Quality Control & Assurance Program (“QC&A Program”), sales of high-quality glycol products, and data systems allowing for tracking, training, and further development of our products and service.

Our Consumer segment product offerings include:

We currently sell and deliver all of our products in bulk containers (55 gallon barrels, 250 gallon totes, etc.) or variable metered bulk quantities.

We began developing new methods for recycling glycols in 1999. We recognized a need in the market to improve the quality of recycled glycol being returned to retail customers. In addition, we believed through process technology, systems, and footprint we could clean more types of waste glycol in a more cost-efficient manner. Each type of industrial waste glycol contains a different list of impurities which traditional waste antifreeze processing does not clean effectively. Additionally, many of the contaminants left behind using these processes - such as esters, organic acids and high dissolved solids - leave the recycled material risky to use in vehicles or machinery.

Our patented technology removes difficult pollutants, including esters, organic acids, high dissolved solids and high un-dissolved solids in addition to the benefit of clearing oil/hydrocarbons, additives and dyes that are typically found in used engine coolants. Our QC&A Program seeks to ensure consistently high quality, ASTM (American Society for Testing and Materials) standard compliant recycled material. We believe our products are trusted in all vehicle makes and models and regional fleet and by local and national auto retailers. Our QC&A Program is managed and supported by dedicated process and chemical engineering staff and requires periodic onsite field audits, and ongoing training by our facility managing partners.

Industrial SegmentDivision

Our Industrial segmentdivision consists of two divisions: WEBA, our additives business, and RS&T, our glycol re-distillation plant in West Virginia.

WEBA develops, manufactures and markets additive packages for the antifreeze/coolant, gas patch coolants and heat transfer industries throughout North America. We believe WEBA is one of the largest companies serving the North American additive market. WEBA's METALGUARD® additive package product line includes one-step inhibitor systems, which give our customers the ability to easily make various types of antifreeze concentrate and 50/50 coolants for all automobiles, heavy-duty diesel engines, stationary engines in gas patch and other applications. METALGUARD® additive packages cover the entire range of coolant types from basic green conventional to the newest extended life OAT antifreezes of all colors. Our heat transfer fluid additives allow our customers to make finished heat transfer fluids for most industry applications including all-aluminum systems. The METALGUARD® heat transfer fluids include light and heavy-duty fluids, both propylene and ethylene glycol based, for various operating temperatures. These inhibitors cover the industry standard of phosphate-based inhibitors as well as all-organic (OAT) inhibitors for specific pH range and aluminum system requirements.

All of the METALGUARD® products are tested at our in-house laboratory facility and by third-party laboratories to assure conformance. We use the standards set by the American Society of Testing Materials (“ASTM”) for all of our products. All of our products pass the most current ASTM standards and testing for each type of product. Our manufacturing facility conforms to the highest levels of process quality control including ISO 9001 certification.

RS&T operates a glycol re-distillation plant in West Virginia, which produces virgin quality glycol for sale to industrial customers worldwide. The RS&T facility currently produces antifreeze and industrial grade ethylene glycol. We believe it is one of the largest glycol re-distillation plants in North America, with production capacity of approximately 1.5 million gallons per month of concentrated ethylene glycol. The facility, located at the Dow Institute Site at Institute, West Virginia, includes five distillation columns, three wiped-film evaporators, heat exchangers, processing and storage tanks, and other processing equipment. The facility’s tanks include feedstock storage capacity of several million gallons and finished goods storage capacity of several million gallons. The plant is equipped with rail and truck unloading/loading facilities, and on-site barge loading/unloading facilities.

Our Strategy

We are a vertically integrated specialty chemical company focused on high quality glycol-based and other products where we can be an efficiency leader, providing value added products as a low costlow-cost manufacturer. To deliver value to all of our stakeholders we: develop manufacture and delivermanufacture value-added niche or specialty products, deliver high quality products which meet or exceed industry standards, provide white-glove, proactive customer service, effectively manage costs as a low costlow-cost manufacturer, operate a dependable low cost distribution network, leverage technology and innovation throughout our company and are eco-friendly.company.

To effectively deliver on our strategy, we offer a broad spectrum of products in our niches, focus on non-standard innovative products, leverage multiple distribution channels and we are market smart in that we maximize less competitive/under-served markets.

Our manufacturing operations produce high quality products while effectively managing costs by recycling at high capacitycosts. As a vertically integrated company, we manufacture glycol, develop and high up time, driving down raw material costs with focused feedstock streams managementmanufacture additive technologies, and using technologyleverage our position in glycols and dataadditives to manage our business in real-time. Our distribution operations provide dependable service at a low cost by effectively using know how, technology and data. We leverage technology and innovation to develop a recognized brand and operate certified laboratories and well supported research and development activities. In addition, we focus on internal and external training programs and we are eco-friendly with themanufacture finished downstream products we offer and the way we operate our businesses.as performance fluids.

Our Industry

Background on Glycol

Glycols are man-made liquid chemicals derived from natural gas and crude oil - non-renewable and limited natural resources. Glycols are used as a base chemical component in industries such as:

During use in these industries, glycol becomes contaminated with impurities. Impurities in waste glycol vary depending on the industry source, with each waste stream containing different amounts of water, glycols, dirt, metals, and oils. Most waste glycol is landfilled, sent to waste water treatment, released to surface water, or disposed of improperly, wasting an important natural resource and causing a negative effect on our environment. Because of the rapid biodegradability of glycol, the U.S. Environmental Protection Agency (“EPA”) allows disposal by “release to surface waters.” However, when glycols break down in water they deplete oxygen levels, which kill fish and other aquatic life. Exposure to ethylene glycol can be hazardous and may cause death for humans, animals, birds, fish, and plants.

There are different types of glycol, including propylene glycol and ethylene glycol. Through the use of our technology and assets, we generally focus on ethylene glycol but can work with any type of glycol.  Virgin ethyleneEthylene glycol is produced in petrochemical plants using the ethane/ethylene extracted from natural gas or cracked from crude oil in refineries. Ethylene is oxidized in these petrochemical plants to ethylene oxide, which is then hydrated to form ethylene glycol. Glycols are also used in other applications such as paints and coatings, but these uses do not produce waste glycol, thus are not relevant to our business.

Glycol and Antifreeze Market

World-wide consumption for ethylene glycol is over 5.5 billion gallons per year. China and the United States are the largest consumers of ethylene glycol (“EG”), with the majority of EG being used in polyester and antifreeze applications. While the growth rate of EG consumption has slowed, demand continues to exceed supply for ethylene glycol, largely because of growth in polyester manufacturing used to make clothing, plastic containers, and plastic beverage bottles. The United States consumes approximately 700 million gallons of EG per year, with over 160 million gallons being used in antifreeze applications.

It is estimated that only 15% of waste antifreeze is recycled, equaling approximately 25 million gallons recycled per year (Environmental Protection Agency).

Glycol Recycling

Companies began recycling waste glycol in the 1980s. Material technological advances and market acceptance of recycled glycol did not occur until the 1990s, but recyclers rarely processed any other type of glycol than waste automotive antifreeze. To this day, recyclers still generally focus on automotive antifreeze, as waste glycol from the other industries have unique impurities and are challenging to process. The glycol recycling industry is generally fragmented with many small to mid-sized companies throughout North America that recycle glycol, antifreeze, and/or other glycol-based liquids. Additionally, a few used motor-oil recyclers who operate in multi-state regions also collect and recycle waste antifreeze. The most common methods of glycol recycling include distillation, nanofiltration, and electrodialysis.

Glycol RecyclingGlycol-Based Standards

ASTM, OEM and various states have developed guidelines and regulations that govern the quality of virgin and recycled glycol. ASTM is recognized as the independent leader in creating standards for the composition of antifreeze and other glycol-based products. ASTM sets both performance standards (e.g. specifications for engine coolant used in light- and heavy-duty automobiles) and general purity standards. OEMs set particular standards for the individual needs and preferences for the vehicles/equipment they each manufacture.

Competition

We compete in the highly fragmented specialty chemicals industry.  We operate in highly competitive markets and face competition in each of our product categories and subcategories. The participants in the industry offer a varied and broad array of product lines designed to meet specific customer requirements.  Participants compete with individual and service product offerings on a global, regional and/or local level subject to the nature of the businesses and products, as well as the end-markets and customers served.  Competition is based on several key criteria, including product performance and quality, product price, product availability and security of supply, responsiveness of product development in cooperation with customers, customer service, industry knowledge and technical capability.  Most key competitors are significantly larger than GlyEco and have greater financial resources, leading to greater operating and financial flexibility.

The glycol recycling industry, a key submarket for GlyEco, is comprised primarily of independent recyclers who operate within their own geographic region. The industry is fragmented with multiple small to mid-sized independent recyclers spread out across the United States. Many operations are companies still owned by the original entrepreneur that founded the company, or they are a division of a larger chemical operation where glycol recycling is only a small portion of the business. Additionally, a few used motor-oil recyclers who operate in multistate regions also collect and recycle waste antifreeze. The majority of recycled glycol from these operations is sold into secondary markets as generic automotive antifreeze. This material is often mixed with refinery-grade glycol to dilute remaining impurities and because the quality does not meet the standards of many buyers and certain industries as a whole. These glycol recycling competitors actively seek to purchase waste glycol from local, regional, and national collectors, competition which can increase the price to obtain such waste.

Other competitorsCompetitors include refinery grade glycol manufacturers (e.g. MEGlobal and Huntsman), antifreeze producers (e.g. PrestoneShell, Chevron, and Old World), and antifreeze distributors (e.g. NexeoBrenntag and Brenntag), waste collectors and recyclers (e.g. Safety Kleen and Heritage-Crystal Clean)Univar Solutions).

Suppliers

We purchase raw materials, including waste glycol, from multiple sources of supply primarily in the United States.

We conduct business with a number of waste glycol generators, including specialty chemical companies, as well as waste collectors that have varied operations in solid, hazardous, special, and liquid waste. In connection with business conducted in our Consumer segment, we collect waste glycol directly from approximately 5,000 generators, such as oil change service stations, automotive and heavy equipment repair shops, automotive dealerships, vehicle fleet operations, plastic bottle manufacturers, virgin glycol refineries, and other companies that generate waste glycol. We also receive waste glycol from waste collectors that act as a “one-stop shop” for companies generating a variety of waste including oil, glycol, solvents, and solid waste. At our processing and distribution centers, we receive the majority of our waste glycol from waste generators, with the balance coming from waste collectors. We normally collect waste glycol from waste generators in volumes between 50 and 100 gallons. We also receive waste glycol in bulk loads by trucks and railcars from waste collectors and generators. Depending on the type of waste glycol and the chemical composition of that glycol, we may pay the collector/generators to take the material, take it for free, or pay for the material.

Seasonality

Our business is affected by seasonal factors, mainly the demand for automotive antifreeze, which can affect our sales volume and the price point. Because the demand for automotive antifreeze is typically higher in winter months, we often see an increase in sales during the first and fourth quarters.

Regulation

Although glycol can be considered a hazardous material, there are few federal rules or regulations governing its characterization, transportation, packaging, processing, or disposal (e.g. handling). Typically any regulations that address such activities occur at either the state and/or county level and can vary significantly from region to region. For example, while a majority of states do not regulate the resale of recycled glycol in any manner, a few states do regulate the quality of recycled glycol that can be resold in the market as antifreeze by requiring that all branded recycled antifreeze be tested and approved before resale can occur.

Regarding the handling of waste glycol, most states have little to no regulation specifically regarding the handling of waste glycol. Instead, the handling of waste glycol is typically regulated under state-level hazardous waste and solid waste regulations. Waste glycol is not automatically characterized as a hazardous waste by the states, but it can be considered hazardous if the waste material is tested and contains a certain amount of contaminants, such as lead. For example, the State of Indiana published guidance explaining that used antifreeze is not a “listed” hazardous waste, but it can be identified as a hazardous waste if it is contaminated from use or mixture with other wastes. Importantly, a handful of states grant an exception to handlers of waste glycol allowing them to not have to test their waste material if its destination is a recycling facility. This is a notable exception that allows the glycol recycling industry to function without significant barriers. For example, the State of Minnesota does not require used antifreeze destined for recycling to be evaluated. Additionally, some states exempt the handling of waste glycol from the application of state-level hazardous waste regulations if the waste material is recycled according to certain best management practices (BMPs) identified by the states. BMPs often relate to the labeling and storage of waste glycol and to proper recordkeeping. For example, the State of Florida exempts used antifreeze generated by vehicle repair facilities from the application of the state’s hazardous waste regulations if it is recycled according to the BMPs outlined by the state. The handling of waste glycol is also often regulated by state-level solid waste regulations, as such regulations typically define “solid waste” to include spent liquids. However, similar to state-level hazardous waste regulations, an exception sometimes applies that exempts the handling of waste glycol from the application of state-level solid waste regulations if the waste glycol is being recycled and therefore does not pose any threat to public health or the environment.

A few states and localities require a license or permit to process waste glycol. The cost of such licenses and permits to process waste glycol can vary from less than one hundred dollars to a few thousand dollars. Recyclers are often left with hazardous metals or chemicals as a byproduct of their process, for which they pay a nominal fee to register with the state and/or county as a hazardous waste generator and pay for the waste to be incinerated or disposed of in some other environmentally friendly way.

As a handler of glycol, we are subject to the requirements of the United States Occupational Safety and Health Act (“OSHA”) and comparable state laws that regulate the protection of employee health and safety. OSHA’s hazard communication standard requires that information about hazardous materials used or produced in our operations be maintained and provided to employees, state and local government authorities and citizens.

We also conduct interstate motor carrier operations that are subject to federal regulation by the Federal Motor Carrier Safety Administration (“FMCSA”), a unit within the United States Department of Transportation, (“USDOT”). The FMCSA publishes and enforces comprehensive trucking safety regulations, including rules on commercial driver licensing, controlled substance testing, medical and other qualifications for drivers, equipment maintenance, and drivers’ hours of service. Another unit within USDOT publishes and enforces regulations regarding the transportation of hazardous materials, but our interstate motor carrier operations are not typically regulated as hazardous materials at this time. 

In addition to taking the necessary precautions and maintaining the required permits/licenses, glycol recyclersproducers generally purchase environmental liability insurance policies to mitigate risks associated with the handling of waste glycol.glycol-based products and other specialty chemicals. We believe we have the appropriate permits, licenses, and insurance policies in place to mitigate risks stemming from the actions of our employees or third parties.

Internationally, the regulation of waste glycol varies from country to country. Some countries have strong regulations, meaning they specifically identify waste glycol as a hazardous waste that requires particular handling (e.g. transportation, collection, processing, packaging, resale, and disposal). Other countries have fewer regulations, meaning they do not specifically identify waste glycol as a hazardous waste that requires particular handling, allowing producers of waste glycol to dispose of the waste in ways that may harm the environment. Europe and Canada have strong regulations. Aside from the United States, Canada, and Europe, the remainder of the world generally has weak regulations. Despite strong regulations in certain parts of the world, we believe the United States is the only market with an established glycol recycling industry. Strong regulations are favorable for glycol recyclers because it causes waste generators to track their waste, resulting in more waste glycol supply for recyclers, and therefore potentially lower prices for raw material.

Intellectual Property

On March 15, 2013, we filed a utility patent application for our GlyEco Technology™ processes with the United States Patent and Trademark Office (“USPTO”) claiming priority to the provisional patent application that we filed in August 2012. This utility patent application was approved and issued by the USPTO on September 29, 2015. We maintain and use several service marks including “GlyEcoÒ”, “Innovative Green ChemistryÒ”, “GlyEco CertifiedÒ”, “GlyEco Technology” and “METALGUARD”. In addition, we have developed a website and have registeredwww.glyeco.com as our domain name, which contains information we do not desire to incorporate by reference herein.

Employees

As of March 30, 2018,29, 2019, we have a total of 5119 employees, including 4918 full-time employees. We believe that we have good relations with all of our employees.

Item 1A. Risk Factors

As a smaller reporting company, the Company is not required to include disclosure under this Item 1A.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We maintain our principal executive offices at 230 Gill Way, Rock Hill, SC 29730.1620 1^St Avenue South, Nitro, West Virginia, 25143. Our telephone number is (866) 960-1539.

Our Consumer segment has six processing and distribution centers located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Rock Hill, South Carolina, (5) Tea, South Dakota, and (6) Landover, Maryland. The Minnesota, Florida, South Carolina and South Dakota facilities have distillation equipment and operations for recycling waste glycol streams as well as blending equipment and operations for mixing glycol and other chemicals to produce finished products for sale to third party customers. The Indiana and Maryland facilities currently only have blending equipment and operations for mixing glycol and other chemicals to produce finished products for sale to third party customers.(304) 400-4100.

Our Industrial segmentdivision includes our subsidiary, RS&T. RS&T operates our glycol re-distillation plant located in Institute, West Virginia, which processes waste glycol into virgin quality recycled glycol for sale to industrial customers worldwide.

Our Minnesota facility leases approximately 9,600 square feet of property located at 796 29th Avenue SE, Minneapolis, MN 55414. The monthly base rent for this location is currently $3,560. The base rent will gradually increase until the lease term expires on March 31, 2021.

Our Indiana facility leases approximately 10,000 square feet of property located at 3455 E. St. Clair Street, Indianapolis, IN 46201. The monthly base rent for this location is currently $4,500. The base rent will gradually increase until the lease term expiresexpired on December 31, 2018.

Our Florida facility leases approximately 4,200 square feet of2018 and the property located at 4302 Holden Road, Lakeland, FL 33811. The monthly base rent for this location is $2,675. The lease term expirescurrently being rented on August 31, 2018.a month to month basis until our departure is completed.

Our South Carolina facility leases approximately 7,000 square feet of property located at 230 Gill Way, Rock Hill, SC 29730. The monthly base rent for this location is currently $4,698.$4,838. The base rent will gradually increase until the lease term expires on October 1, 2023. Our South Carolina facility also leases approximately 3,500 square feet of property located at 1500 Farmer Road, Suite G-1, Conyers, GA 30012. The monthly base rent for this location is currently $1,183.$1,218. The base rent will gradually increaseproperty is currently being rented on a month to month basis until the lease term expires on January 31, 2019.

Our South Dakota facility leases approximately 7,200 square feet of property located at 46958 Mindy Street, Tea, SD 57064. The monthly base rent for this locationour departure is $3,060. The base rent will gradually increase until the lease term expires on July 31, 2027.completed.

Our Maryland facility leases approximately 12,000 square feet of property located at 8464 Ardwick-Ardmore Road, Landover, MD 20785. The monthly base rent for this location is currently $4,600. The lease term expired on December 31, 2016 and the property is currently being rented on a month to month basis.basis until our departure is completed.

Our Louisiana facility leases approximately 1,380 square feet of property located at 14141 Airline Highway, Building 2, Suite E, Baton Rouge, Louisiana 70817. The monthly base rent for this location is currently $818.$842. The lease term expires on March 31, 2020.

Our West Virginia facility leases approximately 15 acres of property located in Institute, WV. The monthly base rent for this location is currently $3,125 and increases to $6,500 at the beginning of 2018 and increases to $12,500 at the beginning of 2019 on a per month basis.$12,500. The lease term expires December 27, 2021.

We believe that our existing consumer facilities are adequate to meet our current business needs and that additional space will be available, if needed, on commercially reasonable terms for the foreseeable future.

Item 3. Legal Proceedings

The Company may be party to legal proceedings in the ordinary course of business from time to time. Litigation is subject to inherent uncertainties, and an adverse result in a legal proceeding could arise that may harm our business. Below is an overview of a pending legal proceeding in which an adverse result could have a material adverse effect on our business and results of operations.

On December 27, 2017, PSP Falcon Industries, LLC (“PSP Falcon”) filed a civil action against the Company in the Ocean County Superior Court located in Toms River, New Jersey. The civil action relatesrelated to an outstanding balance alleged to be due to PSP Falcon from the Company in an amount of $530,633 related to certain construction expenses. The Company believes it has paid PSP Falcon in fullsettled this issue on February 26, 2019 for the services rendered and, therefore, no outstanding balance remains due. Accordingly, the Company plans to vigorously defend itself from this claim.a minimal amount.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Common Stockcommon stock is quoted on the OTC Pink Sheets under the symbol “GLYE.”

The following table sets forth, on a per share basis for the periods indicated, the high and low sale prices for the Common Stockcommon stock for each fiscal quarter for the two most recent fiscal years as reported by the OTC Pink Sheets. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

As of March 30, 2018,29, 2019, the closing sale price for our Common Stockcommon stock as quoted on the OTC Pink Sheets system was $0.05.$2.00. As of March 30, 2018,29, 2019, there were 165,438,0611,383,731 shares of Common Stockcommon stock outstanding and approximately 983212 shareholders of record for our Common Stock.common stock. This does not include shareholders holding Common Stockcommon stock in street name in brokerage accounts.

Transfer Agent

The Company’s transfer agent is Olde Monmouth Stock Transfer Co. Inc. located at 200 Memorial Parkway, Atlantic Highlands, NJ 07716.  The transfer agent’s phone number is (732) 872-2727 and its website iswww.oldemonmouth.com.

Dividend Policy

We have never paid cash dividends on our Common Stock,common stock, and it is unlikely that we will pay any dividends in the foreseeable future. We currently intend to invest future earnings, if any, to finance expansion of our business. Any payment of cash dividends in the future will be dependent upon our earnings, financial condition, capital requirements, and other factors deemed relevant by our Board of Directors.

Securities Authorized For Issuance under Equity Compensation Plans

Reference is made to “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Equity Compensation Plan Information” for information required by this Item 5.

Recent Sales of Unregistered Securities

The Company issued the following unregistered securities during the fiscal year ended December 31, 2017,2018, some of which were issued pursuant to the Company’s Equity Incentive Program, a program approved by the Company's Board of Directors on December 18, 2014, pursuant to which the Company’s employees can elect to receive equity in lieu of cash for all or part of their salary compensation (the “Equity Incentive Program”):

On January 31, 2017,8, 2018, the Company issued an aggregate of 38,4011,200 shares of Common Stockcommon stock to fourteen employeesan employee of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.12$7.50 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employeesemployee made representations that the shares were taken for investment purposes and not with a view to resale.  The shares of Common Stock issued are restricted.

On February 13, 2017, the Company issued an aggregate of 160,000 shares of Common Stock to two employees of the Company at a price of $0.125 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale.  The shares of Common Stock issued are restricted.

On February 28, 2017, the Company issued an aggregate of 38,301 shares of Common Stock to fourteen employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.12 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stockcommon stock issued are restricted.

On March 31, 2017,2018, the Company issued an aggregate of 38,8019,245 shares of Common Stock to fourteen employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.12 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On March 31, 2017, the Company issued an aggregate of 512,498 shares of Common Stockcommon stock to six directors of the Company pursuant to the Company’s Fiscal Year 2017 Director Compensation Plan at a price of $0.12$8.13 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the directors had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The directors made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stockcommon stock issued are restricted.

On April 30, 2017,July 12, 2018, the Company issued an aggregate of 44,04011,766 shares of Common Stock to nine employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.10 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On May 11, 2017, the Company issued an aggregate of 3,437,500 shares of Common Stock to a warrant holder in connection with the exercise of warrants at an exercise price of $0.08 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the warrant holder had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising.

On May 31, 2017, the Company issued an aggregate of 44,020 shares of Common Stock to nine employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.10 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On June 30, 2017, the Company issued an aggregate of 106,979 shares of Common Stock to nine employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.10 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On June 30, 2017, the Company issued an aggregate of 627,546 shares of Common Stockcommon stock to six directors of the Company pursuant to the Company’s Fiscal Year 2017 Director Compensation Plan at a price of $0.098$6.38 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the directors had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The directors made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stockcommon stock issued are restricted.

On July 31, 2017,12, 2018, the Company issued an aggregate of 78,9733,778 shares of Common Stockcommon stock to twelveeight employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.08$5.38 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stockcommon stock issued are restricted.

On August 10, 2017,October 11, 2018, the Company issued an aggregate of 781,25010,344 shares of Common Stock to four investors in connection with the conversion of convertible notes at a conversion price of $0.08 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the issuance of the convertible notes and underlying shares of Common Stock did not involve any form of general solicitation or general advertising. The investors made investment representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On August 30, 2017, the Company issued an aggregate of 79,686 shares of Common Stock to twelve employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.08 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On September 30, 2017, the Company issued an aggregate of 79,789 shares of Common Stock to twelve employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.08 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On September 30, 2017, the Company issued an aggregate of 803,930 shares of Common Stockcommon stock to six directors of the Company pursuant to the Company’s Fiscal Year 2017 Director Compensation Plan at a price of $0.077$7.25 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the directors had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The directors made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On October 31, 2017, the Company issued an aggregate of 60,342 shares of Common Stock to ten employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.09 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale.

The shares of Common Stock issued are restricted.

On November 30, 2017, the Company issued an aggregate of 60,386 shares of Common Stock to ten employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.09 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On December 31, 2017, the Company issued an aggregate of 60,408 shares of Common Stock to ten employees of the Company pursuant to the Company’s Equity Incentive Program at a price of $0.09 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the employees had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The employees made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stock issued are restricted.

On December 31, 2017, the Company issued an aggregate of 691,010 shares of Common Stock to six directors of the Company pursuant to the Company’s Fiscal Year 2017 Director Compensation Plan at a price of $0.089 per share. The shares were issued pursuant to Section 4(a)(2) of the Securities Act because the directors had sufficient sophistication and knowledge of the Company, and the issuance did not involve any form of general solicitation or general advertising. The directors made representations that the shares were taken for investment purposes and not with a view to resale. The shares of Common Stockcommon stock issued are restricted.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6. Selected Financial Data

As a smaller reporting company, the Company is not required to include the disclosure required under this Item 6.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our results of operations and financial condition for the years ended December 31, 20172018 and 20162017 with the audited consolidated financial statements and related notes included elsewhere herein. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs, and which involve numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements.

Company Overview

GlyEco, Inc. is a chemical company focused on technology development and manufacturing of coolants, additives, and related performance fluids. We serve and support the automotive, heavy-duty, and industrial markets with an unwavering commitment to customer service and quality. GlyEco Inc., located in Institute, West Virginia, is a vertically integrated company which manufactures ethylene glycol, additives, and finished fluids. Maintaining control over all core ingredients of its glycol-based performance fluids, and directly managing all aspects of the manufacturing process allows GlyEco Inc. to offer our customers the highest value with competitive costs.

Company Overview

GlyEco is adeveloper, manufacturer and distributor of performance fluids for the automotive, commercial and industrial markets. We specialize incoolants, additives and complementary fluids.We believe our vertically integrated approach, which includes formulating products, acquiring feedstock, managing facility construction and upgrades, operating facilities, and distributing products through our fleet of trucks, positions us to serve our key markets and enables us to capture incremental revenue and margin throughout the process. Our network of facilities, develop, manufacture and distribute high quality products that meet or exceed industry quality standards, including a wide spectrum of ready to use antifreezes and additive packages for the antifreeze/coolant, gas patch coolants and heat transfer fluid industries, throughout North America.

Prior to our acquisitions of WEBA, RS&T and the Dow Assets in December 2016, the Company operated in only one business segment, the Consumer segment. Effective as of January 1, 2017, GlyEco conductsconducted its operation in two business segments: the Consumer segment and the Industrial segment. The Consumer segment’s principal business activity iswas the production and distribution of ASTM (American Society for Testing Materials) grade glycol products, specifically automotive antifreeze and specialty-blended antifreeze, for sale into the automotive and industrial end markets. The Consumer segment operatesoperated a full lifecycle business, picking up waste antifreeze and producing finished antifreeze from both recycled and virgin glycol sources. We operateoperated six processing and distribution centers located in the eastern region of the United States. The production capacity of the Consumer segment iswas approximately 90,000 gallons per month of ready to use (50/50) antifreeze. On January 11, 2019, the Company completed the sale of the assets of its Consumer segment and now retains only the Industrial division. Operations in our Industrial segment are conducted through WEBA and RS&T, two of our subsidiaries. WEBA develops, manufactures and markets additive packages for the antifreeze/coolant, gas patch coolant and heat transfer industries throughout North America.  RS&T operates a glycol re-distillation plant in West Virginia that produces virgin quality glycol for sale to industrial customers worldwide. The RS&T facility currently produces antifreeze and industrial grade ethylene glycol. The production capacity of the RS&T facility is approximately 1.5 million gallons per month of concentrated ethylene glycol.

Consumer segment

 Our Consumer segment has processing and distribution centers located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Rock Hill, South Carolina, (5) Tea, South Dakota, and (6) Landover, Maryland. The Minneapolis, Minnesota, Lakeland, Florida, Rock Hill, South Carolina and Tea, South Dakota facilities have distillation equipment and operations for recycling waste glycol streams as well as blending equipment and operations for mixing glycol and other chemicalsOn January 11, 2019, the Company completed the Asset Sale of the consumer division to produce finished products for salethe Purchaser pursuant to third party customers, while the Indianapolis, Indiana and Landover, Maryland facilities currently only have blending equipment and operations for mixing glycol and other chemicals to produce finished products for sale to third party customers. We estimate that the monthly processing capacityterms of our facilities with distillation equipment is approximately 90,000 gallons of ready to use finished products. We have invested significant time and money into increasing the capacity and actual production of our facilities. Our processing and distribution centers utilize a fleet of trucks to deliver glycol products directly to retail end users at their storefronts, which is typically 50-100 gallons per customer order and to collect waste material for processing at our facilities. Collectively, we directly service approximately 5,000 customers. To meet the delivery volume needs of our existing customers, we supplement our collected and processed glycol with new or virgin glycol that we purchase in bulk from various suppliers. In additionan Asset Purchase Agreement (see Note 10 to our retail end users, we also sell our recycled products to wholesale or bulk distributors who,consolidated financial statements included elsewhere in turn, sell to retail end users specifically as automotive or specialty blended antifreeze.

We have deployed our technology and processes across our six processing and distribution centers, allowing for safe and efficient handling of waste streams, application of our processing technology and Quality Control & Assurance Program (“QC&A Program”), sales of high-quality glycol products, and data systems allowing for tracking, training, and further development of our products and service.

Our Consumer segment product offerings include:

We currently sell and deliver all of our products in bulk containers (55 gallon barrels, 250 gallon totes, etc.) or variable metered bulk quantities.

We began developing new methods for recycling glycols in 1999. We recognized a need in the market to improve the quality of recycled glycol being returned to retail customers. In addition, we believed through process technology, systems, and footprint we could clean more types of waste glycol in a more cost-efficient manner. Each type of industrial waste glycol contains a different list of impurities which traditional waste antifreeze processing does not clean effectively. Additionally, many of the contaminants left behind using these processes - such as esters, organic acids and high dissolved solids - leave the recycled material risky to use in vehicles or machinery.

Our patented technology removes difficult pollutants, including esters, organic acids, high dissolved solids and high un-dissolved solids in addition to the benefit of clearing oil/hydrocarbons, additives and dyes that are typically found in used engine coolants. Our QC&A Program seeks to ensure consistently high quality, ASTM standard compliant recycled material.

We believe our products are trusted in all vehicle makes and models and regional fleet and by local and national auto retailers. Our QC&A Program is managed and supported by dedicated process and chemical engineering staff and requires periodic onsite field audits and ongoing training by our facility managing partners.this Annual Report).

Industrial SegmentDivision

Our Industrial segmentdivision consists of two divisions: WEBA, our additives business, and RS&T, our glycol re-distillation plant in West Virginia.

WEBA develops, manufactures and markets additive packages for the antifreeze/coolant, gas patch coolants and heat transfer industries throughout North America. We believe WEBA is one of the largest companies serving the North American additive market. WEBA's METALGUARD® additive package product line includes one-step inhibitor systems, which give our customers the ability to easily make various types of antifreeze concentrate and 50/50 coolants for all automobiles, heavy-duty diesel engines, stationary engines in gas patch and other applications. METALGUARD® additive packages cover the entire range of coolant types from basic green conventional to the newest extended life OAT antifreezes of all colors. Our heat transfer fluid additives allow our customers to make finished heat transfer fluids for most industry applications including all-aluminum systems. The METALGUARD® heat transfer fluids include light and heavy-duty fluids, both propylene and ethylene glycol based, for various operating temperatures. These inhibitors cover the industry standard of phosphate-based inhibitors as well as all-organic (OAT) inhibitors for specific pH range and aluminum system requirements.

All of the METALGUARD® products are tested at our in-house laboratory facility and by third-party laboratories to assure conformance. We use the standards set by the ASTM (AmericanAmerican Society of Testing Materials)Materials (“ASTM”) for all of our products. All of our products pass the most current ASTM standards and testing for each type of product. Our manufacturing facility conforms to the highest levels of process quality control including ISO 9001 certification.

RS&T operates a glycol re-distillation plant in West Virginia, which produces virgin quality glycol for sale to industrial customers worldwide. The RS&T facility currently produces antifreeze and industrial grade ethylene glycol. We believe it is one of the largest glycol re-distillation plants in North America, with production capacity of approximately 1.5 million gallons per month of concentrated ethylene glycol. The RS&T facility, located at the Dow Institute Site at Institute, West Virginia, includes five distillation columns, three wiped-film evaporators, heat exchangers, processing and storage tanks, and other processing equipment. The facility’s tanks include feedstock storage capacity of several million gallons and finished goods storage capacity of several million gallons. The plant is equipped with rail and truck unloading/loading facilities, and on-site barge loading/unloading facilities.

Our Strategy

We are a vertically integrated specialty chemical company focused on high quality glycol-based and other products where we can be an efficiency leader, providing value added products.products as a low-cost manufacturer. To deliver value to all of our stakeholders we: develop manufacture and delivermanufacture value-added niche or specialty products, deliver high quality products which meet or exceed industry standards, provide white glove, proactive customer service, effectively manage costs as a low costlow-cost manufacturer, operate a dependable low cost distribution network, leverage technology and innovation throughout our company and are eco-friendly.company.

To effectively deliver on our strategy, we offer a broad spectrum of products in our niches, focus on non-standard innovative products, leverage multiple distribution channels and we are market smart in that we maximize less competitive/under-served markets.

Our manufacturing operations produce high quality products while effectively managing costs by recycling at high capacitycosts. As a vertically integrated company, we manufacture glycol, develop and high up time, driving down raw material costs with focused feedstock streams managementmanufacture additive technologies, and using technologyleverage our position in glycols and dataadditives to manage our business in real-time. Our distribution operations provide dependable service at a low cost by effectively using know how, technology and data. We leverage technology and innovation to develop a recognized brand and operate certified laboratories and well supported research and development activities. We focus on internal and external training programs. We are also eco-friendly with themanufacture finished downstream products we offer and the way we operate our businesses.as performance fluids.

Results of Operations

Year Ended December 31, 20172018 Compared to Year Ended December 31, 20162017

The information below only constitutes the continuing operations of the company.

Net Sales

For the year ended December 31, 2017,2018, Net Sales were $12,072,686$6,457,484 compared to $5,591,087$5,806,907 for the year ended December 31, 2016,2017, representing an increase of $6,481,599$650,577 or 116%11%. The increase in Net Sales was due to organic revenue growth of $674,692, or approximately 12%, and $5,806,907 of sales related to the businesses and assets acquired in December 2016. Net Sales, excluding intersegment sales for the year ended December 31, 2017, were $6,265,779 and $5,806,907 for the Consumer and Industrial segments, respectively, for the year ended December 31, 2017.growth.

Cost of Goods Sold

For the year ended December 31, 2017,2018, our Costs of GoodGoods Sold was $10,444,573$5,172,305 compared to $5,283,054$4,921,741 for the year ended December 31, 2016,2017, representing an increase of $5,161,519,$250,564, or approximately 98%5%. The increase in Cost of Goods Sold was primarily due to costs associated with the increase in Net Sales as well as approximately $200,000 of production costs that were not fully absorbed into inventory, but rather expensed as incurred while our West Virginia facility was not operational during the first two months of fiscal year 2017 for infrastructure related capital improvements.Sales.

Gross Profit

For the year ended December 31, 2017,2018, we realized a gross profit of $1,628,113$1,285,179 compared to a gross profit of $308,033$885,166 for the year ended December 31, 2016. Gross profit, excluding intersegment sales, for the year ended December 31, 2017 was $742,947 and $885,166 for the Consumer and Industrial segments, respectively.2017.

Our gross profit margin for the year ended December 31, 20172018 was approximately 13%20% compared to approximately 6%15% for the year ended December 31, 2016. Gross profit margin, excluding intersegment sales for the year ended December 31, 2017, was 12% and 13% for the Consumer and Industrial segments, respectively, for the year ended December 31, 2017.

The increase in gross profit margin for the Consumer segment was positively impacted by increased salesdue to scaling up West Virginia, maintaining WEBA margin, and proportionately lower costs.selling a small amount of profitable antifreeze from our blending facility.

Operating Expenses

For the year ended December 31, 2017,2018, Operating Expenses increaseddecreased to $5,963,734$3,946,139 from $3,492,475$5,154,782 for the year ended December 31, 2016,2017, representing an increasea decrease of $2,471,259,$1,208,643, or approximately 71%23%.  Operating Expenses consist of Consulting Fees, Share-Based Compensation, Salaries and Wages, Tank Remediation, Legal and Professional Expenses, and General and Administrative Expenses. Our operating expense ratio for the year ended December 31, 20172018 was approximately 49%61% compared to approximately 62%89% for the year ended December 31, 2016.2017.

Consulting Fees consist of marketing and administrative fees incurred under consulting agreements.  Consulting Fees increaseddecreased to $416,445$94,292 for the year ended December 31, 2018 from $415,516 for the year ended December 31, 2017, from $129,752 for the year ended December 31, 2016, representing an increasea decrease of $286,693,$321,224, or approximately 221%77%.  The increasedecrease is primarily due to the Company’sdiscontinuing use of external specialiststhree outside consultants. In 2017, the Company engaged a recruiting firm to assist with short duration projectsthe search for a CFO and thetwo senior sales staff, a full-time accountant to assist with implementation of ouran ERP software.system and a marketing firm to assist in a rebranding effort. All three of these services were discontinued in 2018.

Share-Based Compensation consists of stock, options and warrants issued to consultants and employees in consideration for services provided to the Company. Share-Based Compensation decreased to $376,500 for the year ended December 31, 2018 from $523,613 for the year ended December 31, 2017, from $1,064,086 for the year ended December 31, 2016, representing a decrease of $540,473,$147,113, or 51%28%. The decreaseThis is due to a market vesting basedthe decrease in stock grant to the Company’s Board of Directorsgrants awarded in 2016 that was expensed in full during 2016.2018.

Salaries and Wages consist of wages and the related taxes.  Salaries and Wages increased to $1,855,713$1,931,371 for the year ended December 31, 2018 from $1,617,168 for the year ended December 31, 2017, from $1,094,465 for the year ended December 31, 2016, representing an increase of $761,248$314,203 or 70%19%.  The increase is due to the addition of employees in such areas as marketing, sales and finance in late 2016 and 2017, as well as additional employees relatedthree additions to the businessessenior management team that took place in the second half of 2017. The Company onboarded a CFO, EVP of Performance Fluids and assets acquiredEVP of Specialty Chemicals in December 2016.2017 which increased the Salaries and Wages expense for 2018.

Legal and Professional Fees consist of legal, accounting, tax and audit services.  For the year ended December 31, 2017,2018, Legal and Professional Fees increased to $901,339$874,728 from $274,824$795,835 for the year ended December 31, 2016,2017, representing an increase of $626,515$78,893 or approximately 228%10%. The increase is primarily related to work performed that was relatedthe legal fees associated with the reverse/forward stock split conducted in July 2018 and the technology consultants utilized in 2018 for the implementation of an ERP system.

Tank remediation expense consists of an accrual from the compliance with West Virginia regulations enacted in 2017, where the Company elected to accrue $780,000 for tank remediation during the businesses and assets acquired inyear ended December 2016, as well as other special projects in31, 2017.

General and Administrative (G&A) Expenses consist of general operational costs of our business. For the year ended December 31, 2017,2018, G&A Expenses increaseddecreased to $1,486,624$669,248 from $929,348$1,022,650 for the year ended December 31, 2016,2017, representing an increasea decrease of $557,276,$353,402, or approximately 60%35%. The increasedecrease is due to additional depreciation and amortization of $428,721 related to the property and equipment and intangible assets acquireda larger contingent acquisition reduction in December 2016, as well as expenses related to the build out of our sales team, including the associated travel and training2018, which offset expenses.

Other Income and Expenses

For the year ended December 31, 2017,2018, Other Income and Expenses was an expense of $830,993$778,360 compared to an expense of $100,170$808,616 for the year ended December 31, 2016.2017. Other Income and Expenses consist of Interest Income, Interest Expense and Accelerated Interest. The change was primarily due to Interest Expense associated with the debt issued in late December 2016, as well as Accelerated Interest expense as a result of the repayment and conversion of notes payable which was classified as loss on debt extinguishment.Expense.

Adjusted EBITDA

Presented below is the non-GAAP financial measure representing earnings before interest, taxes, depreciation, amortization and share-based compensation (which we refer to as “Adjusted EBITDA”). Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, net income (loss) and cash flows from operations calculated in accordance with GAAP.

Adjusted EBITDA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our Company’s financial results that may not be shown solely by period-to-period comparisons of net income (loss) and cash flows from operations. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our Company’s performance. Further, we believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results and helps investors make comparisons between our company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income (loss), as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliations of Adjusted EBITDA to net loss below.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Significant factors affecting the management of liquidity are cash flows generated from operating activities, capital expenditures, and acquisitions of businesses and technologies.  Cash provided from financing continues to be the Company’s primary source of funds. We believe that we can raise adequate funds through the issuance of equity or debt as necessary to continue to support our planned expansion.

Cash Flows

The table below sets forth certain information about the Company’s cash flows for the years ended December 31, 20172018 and 2016:2017: