FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _________ to ________

Commission File Number 0-20979

INDUSTRIAL SERVICES OF AMERICA, INC.

_______________________________________________________________________________________________________

(Exact Name of Registrant as specified in its Charter)


Florida		59-0712746
(State or other jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

7100 Grade Lane

Louisville, Kentucky 40213

(Address of principal executive offices)

(502) ~~368~~366-~~1661~~-3452

(Registrant’s Telephone Number, Including Area Code)

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 ☒ 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 (Section 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). Yes ☒ No ☐

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


(Check one):	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

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 Exchange Act). Yes ☐ No ☒

Indicate the number of shares issued and outstanding of each of the issuer’s classes of common stock, as of ~~November 6, 2017~~May 9, 2018: ~~8,081,793.~~8,100,529.

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES

	TABLE OF CONTENTS	Page No.
Part I	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets - ~~September 30, 2017~~March 31, 2018 (Unaudited) and December 31, ~~2016~~2017	3
	Condensed Consolidated Statements of Operations - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ (Unaudited)	5
	Condensed Consolidated Statement of Shareholders’ Equity - ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2018 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2523
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3228
Item 4.	Controls and Procedures	3228
Part II	OTHER INFORMATION	3329
Item 1.	Legal Proceedings	3329
Item 1A.	Risk Factors	3329
Item 1B.	Unresolved Staff Comments.	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329
Item 3.	Defaults upon Senior Securities	3330
Item 4.	Mine Safety Disclosures	3330
Item 5.	Other Information	3330
Item 6.	Exhibits	3330

PART I – FINANCIAL INFORMATION

ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Unaudited)				(Unaudited)
	(in thousands)				(in thousands)

Current assets
Cash and cash equivalents	$	852	$	526	$	880	$	841
Income tax receivable	3		14		4		—
Accounts receivable – trade after allowance for doubtful accounts of $60.0 thousand and $35.0 thousand in 2017 and 2016, respectively	5,567		3,361
Receivables and other assets from related parties	91		150
Inventories	3,747		3,437
Accounts receivable – trade after allowance for doubtful accounts of $60.0 thousand in 2018 and 2017					5,343		4,220
Receivables and other assets from related parties (Note 6)					45		92
Inventories (Note 2)					5,504		5,106
Prepaid expenses and other current assets	327		216		334		182
Total current assets	10,587		7,704		12,110		10,441
Net property and equipment	11,678		13,068		10,795		11,212
Other assets
Deferred income taxes	27		27		27		27
Other non-current assets	158		57		247		187
Total other assets	185		84		274		214
Total assets	$	22,450	$	20,856	$	23,179	$	21,867


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Unaudited)						(Unaudited)
	(in thousands, except par value and share information)						(in thousands, except par value and share information)
Current liabilities
Current maturities of long-term debt	$	5,181		$	2,942
Current maturities of long-term debt, related parties		64			—
Current maturities of capital lease obligations		293			198
Current maturities of long-term debt (Note 3)							$	5,874		$	5,018
Current maturities of long-term debt, related parties (Notes 3 and 6)								64			64
Current maturities of capital lease obligations (Note 4)								307			300
Checks in excess of bank	—			79			40			148
Accounts payable	1,697			1,605			2,670			1,784
Payables and accrued expenses to related parties	408			578
Payables and accrued expenses to related parties (Note 6)							49			173
Income tax payable							—			2
Other current liabilities	819			627			612			765
Total current liabilities	8,462			6,029			9,616			8,254
Long-term liabilities
Long-term debt, related parties	1,553			1,504
Capital lease obligations, net of current maturities	897			1,050
Long-term debt, net of current maturities, related parties (Notes 3 and 6)							1,520			1,536
Capital lease obligations, net of current maturities (Note 4)							740			819
Total long-term liabilities	2,450			2,554			2,260			2,355
Shareholders' equity
Common stock, $0.0033 par value: 20.0 million shares authorized in 2017 and 2016; 8,081,793 and 8,074,541 shares issued and outstanding in 2017 and 2016, respectively	27			27
Common stock, $0.0033 par value: 20.0 million shares authorized in 2018 and 2017; 8,100,529 and 8,089,129 shares issued and outstanding in 2018 and 2017							27			27
Additional paid-in capital	24,002			23,912			24,037			24,028
Stock warrants outstanding	1,025			1,025			1,025			1,025
Retained losses	(13,472		)	(12,647		)	(13,742		)	(13,778		)
Treasury stock at cost, 30,690 shares in 2017 and 2016	(44		)	(44		)
Treasury stock at cost, 30,690 shares in 2018 and 2017							(44		)	(44		)
Total shareholders' equity	11,538			12,273			11,303			11,258
Total liabilities and shareholders' equity	$	22,450		$	20,856		$	23,179		$	21,867

THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30~~MARCH 31, ~~2017~~2018 AND ~~2016~~2017


	For the three months ended						For the nine months ended						For the three months ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
Revenue from product sales
Revenue from ferrous operations	$	6,649		$	3,684		$	16,461		$	9,638		$	7,045		$	4,598
Revenue from nonferrous operations		7,936			5,787			23,891			15,085
Revenue from non-ferrous operations														7,315			7,994
Revenue from auto parts operations and other revenue		324			425			1,128			1,292			297			419
Total revenue from product sales		14,909			9,896			41,480			26,015			14,657			13,011
Cost of sales for product sales		13,968			9,810			38,928			25,391			13,445			12,080
Gross profit		941			86			2,552			624			1,212			931
Selling, general and administrative expenses		859			1,095			2,757			3,485			926			1,042
Income (loss) before other income (expense)		82			(1,009	)		(205	)		(2,861	)		286			(111	)
Other income (expense)
Interest expense, including loan fee amortization		(240	)		(129	)		(625	)		(302	)		(242	)		(183	)
Gain on sale of assets		—			—			28			—			—			28
Other income (expense), net		(17	)		237			(14	)		250			—			2
Total other income (expense)		(257	)		108			(611	)		(52	)
Loss before income taxes		(175	)		(901	)		(816	)		(2,913	)
Total other expense, net														(242	)		(153	)
Income (loss) before income taxes														44			(264	)
Income tax provision		2			37			9			77			8			7
Net loss	$	(177	)	$	(938	)	$	(825	)	$	(2,990	)
Net income (loss)													$	36		$	(271	)

Basic loss per share	$	(0.02	)	$	(0.12	)	$	(0.10	)	$	(0.37	)
Diluted loss per share	$	(0.02	)	$	(0.12	)	$	(0.10	)	$	(0.37	)
Basic earnings (loss) per share													$	0.00		$	(0.03	)
Diluted earnings (loss) per share													$	0.00		$	(0.03	)

Weighted average shares outstanding:
Basic		8,082			8,067			8,077			8,042			8,090			8,075
Diluted		8,082			8,067			8,077			8,042			8,114			8,075

Common Stock

Stock Warrants

Retained Losses

Treasury Stock

Shares

Amount

Additional Paid-in Capital
Shares

Cost
Total Shareholders’ Equity

(in thousands, except share information)
Balance as of December 31, 2016
8,105,231

$
27

$
23,912

$
1,025

$
(12,647
)

(30,690
)

$
(44
)

$
12,273

Common stock
7,252

—

—

—

—

—

—

—

Share-based compensation
—

—

90

—

—

—

—

90

Net loss
—

—

—

—

(825
)

—

—

(825
)
Balance as of September 30, 2017
8,112,483

$
27

$
24,002

$
1,025

$
(13,472
)

(30,690
)

$
(44
)

$
11,538



	Common Stock					Stock Warrants		Retained Losses			Treasury Stock
	Shares	Amount		Additional Paid-in Capital		Stock Warrants		Retained Losses			Shares		Cost			Total Shareholders’ Equity
	(in thousands, except share information)
Balance as of December 31, 2017	8,119,819	$	27	$	24,028	$	1,025	$	(13,778	)	(30,690	)	$	(44	)	$	11,258
Common stock	11,400	—		—		—		—			—		—			—
Share-based compensation	—	—		9		—		—			—		—			9
Net income	—	—		—		—		36			—		—			36
Balance as of March 31, 2018	8,131,219	$	27	$	24,037	$	1,025	$	(13,742	)	(30,690	)	$	(44	)	$	11,303

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30~~MARCH 31, ~~2017~~2018 AND ~~2016~~2017

	For the nine months ended						For the three months ended
	September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
	(in thousands)						(in thousands)
Cash flows from operating activities
Net loss	$	(825	)	$	(2,990	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net income (loss)							$	36		$	(271	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Bad debt expense	25			—			—			25
Depreciation and amortization	1,669			1,715			521			575
Impairment loss, property and equipment	—			80
Share-based compensation expense	90			333			9			32
Deferred income taxes	—			70
Gain on sale of assets	(28		)	—			—			(28		)
Amortization of loan fees included in interest expense	94			100			32			35
Change in assets and liabilities
Receivables	(2,231		)	(1,482		)	(1,123		)	(842		)
Receivables from related parties	59			151			47			105
Inventories	(310		)	(490		)	(398		)	(426		)
Income tax receivable/payable	11			7			(6		)	5
Other assets	(181		)	88			(150		)	(163		)
Accounts payable	92			(475		)	886			218
Payables and accrued expenses to related parties	(170		)	252			(124		)	(145		)
Other current liabilities	192			421			(153		)	(60		)
Net cash used in operating activities	(1,513		)	(2,220		)	(423		)	(940		)
Cash flows from investing activities
Proceeds from sale of property and equipment	28			—			—			28
Purchases of property and equipment	(75		)	(8		)	(104		)	(54		)
Net cash used in investing activities	(47		)	(8		)	(104		)	(26		)
Cash flows from financing activities
Loan fees capitalized	(125		)	(241		)	(94		)	(80		)
Change in checks in excess of bank	(79		)	41			(108		)	(55		)
Payments on long-term debt	—			(20		)
Payments on related party debt	(16		)	—			(16		)	—
Payments on capital lease obligations	(133		)	(23		)	(72		)	(15		)
Proceeds from revolving line of credit, net	2,239			2,321			856			1,093
Net cash from financing activities	1,886			2,078			566			943
Net change in cash and cash equivalents	326			(150		)	39			(23		)
Cash and cash equivalents at beginning of period	526			642			841			526
Cash and cash equivalents at end of period	$	852		$	492		$	880		$	503

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL

Industrial Services of America, Inc. (herein “ISA,” the “Company,” or other similar terms) is a Louisville, Kentucky-based company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities and buys used autos in order to sell used auto parts. The Company purchases, processes and sells ferrous and non-ferrous scrap metal to steel mini-mills, integrated steel makers, foundries, refineries and processors. The Company purchases ferrous and non-ferrous scrap metal primarily from industrial and commercial generators of steel, aluminum, copper, brass, stainless steel and other metals as well as from scrap dealers and retail customers who deliver these materials directly to ISA facilities. The Company processes scrap metal through sorting, cutting, baling, and shredding operations. The shredding operations were restarted in May ~~2017.~~2017, which had previously been idled in May 2015. The non-ferrous scrap recycling operations consist primarily of collecting, sorting and processing various grades of copper, aluminum, stainless steel and brass. The used automobile yard primarily purchases automobiles so that retail customers can locate and remove used parts for purchase.

The Company's core business is now focused on the metal recycling industry. During 2016, the Company announced that the Company formed a special committee of independent board members to evaluate various growth and strategic options. During the first quarter of 2017, the special committee concluded its work and reported to the Board. The Board accepted the special committee's recommendation to focus on returning the core recycling business to profitability. The Company intends to do this by increasing efficiencies and productivity, which included the commercial restart of the Company's auto shredder in the second quarter of ~~2017.~~2017. The Company ~~intends to run~~operates the auto shredder in the normal course of business subject to market conditions and operating needs. ISA will also evaluate other various options and remain alert for possible strategic partnerships, joint ventures and mergers/acquisitions.

In connection with the evaluation of strategic alternatives, on September 30, 2016, the Company and Algar, Inc. ("Algar") mutually agreed to terminate the Management Services Agreement between them dated as of December 1, 2013 (the "Management Agreement"), pursuant to the Agreement to Terminate Management Services among the Company, Algar, and Sean Garber dated as of September 30, 2016 (the "Termination Agreement"). See Note 6 - Related Party Transactions for further details.

~~Effective September 30, 2016, Mr. Garber resigned from all positions with the Company, including as President, and~~On March 26, 2018, the Board appointed Todd L. Phillips as ~~President.~~Chief Executive Officer. See Note 7 – Share-Based Compensation and Other Compensation Agreements. Mr. Phillips has been the Company's ~~CFO~~Chief Financial Officer since December 31, 2014 and President since September 30, 2016 and will continue to serve in ~~that role.~~these roles.

Liquidity

During the first quarter of 2017, the Company amended and extended its working capital line of ~~credit.~~credit which extended the contractual maturity date to February 28, 2020 and increased the borrowing availability. See Note 3 ~~- Long Term~~– Long-Term Debt and Notes Payable to Bank for discussion of loan arrangements with MidCap Business Credit LLC ("MidCap"). The Company expects operating cash flow and borrowings under its working capital line of credit to be sufficient to meet its ongoing obligations. Influenced by the scrap metal market downturn from late 2014 through 2016, the Company's sources of liquidity during that time primarily consisted of proceeds from asset and equity sales as well as the idling of the auto shredder and refinancing of its working capital line of credit. Additional information, including the steps the Company took, is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, on file with the Securities and Exchange Commission.

The borrowings under the working capital line of credit are classified as short-term obligations under GAAP as the agreement with the lender contains a subjective acceleration clause and requires the Company to maintain a lockbox arrangement with the lender. However, the contractual maturity date of the revolver is February 28, 2020.

~~NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued~~

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The Accounting Standards Codification ("ASC") as produced by the Financial Accounting Standards Board ("FASB") is the sole source of authoritative GAAP. In the opinion of management of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position at~~September 30, 2017~~March 31, 2018, and the results of operations and changes in cash flows for the quarters ended March 31, 2018 and ~~September 30,~~ 2017 ~~and~~ ~~2016~~. Results of operations for the period endedMarch 31, 2018~~September 30, 2017~~are not necessarily indicative of the results that may be expected for the entire year. Additional information, including the audited December 31, ~~2016~~2017consolidated financial statements and the Summary of Significant Accounting Policies, is included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017, on file with the Securities and Exchange Commission.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued

Estimates

In preparing the consolidated financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, management must make estimates and assumptions. These estimates and assumptions affect the amounts reported for assets, liabilities, revenues and expenses, as well as affecting the disclosures provided. Examples of estimates include the allowance for doubtful accounts, estimates of deferred income tax assets and liabilities, estimates of inventory balances, and estimates of stock option and warrant values. The Company also uses estimates when assessing fair values of assets and liabilities acquired in business acquisitions as well as any fair value and any related impairment charges related to the carrying value of inventory and machinery and equipment and other long-lived assets. Despite the Company’s intention to establish accurate estimates and use reasonable assumptions, actual results may differ from these estimates.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. Upon consolidation, all inter-company accounts, transactions and profits have been eliminated.

Reclassifications

The Company has reclassified certain items within the accompanying Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements for the prior year in order to be comparable with the current presentation. These reclassifications had no effect on previously reported net income (loss) or shareholders' equity.

~~Fair Value~~Revenue Recognition

The Company's revenue is primarily generated from contracts with customers. The Company notes there have been no credit losses recorded on any receivables or contract assets arising from contracts with customers for the three month periods ended March 31, 2018 and 2017. The Company elects to use the practical expedient as it relates to significant financing components as the Company expects, at the contract inception, that the period between when the Company transfers a promised good and when the customer pays for that good will be one year or less.

Ferrous and nonferrous revenue

Ferrous and non-ferrous contracts contain one performance obligation which consists of the shipment of a stated quantity of a stated product to be delivered within a stated time frame. Ferrous and non-ferrous revenue contracts are primarily short term contracts, typically completed within 30 days. Ferrous and non-ferrous transaction prices are stated in the contract with no variable considerations present. As ferrous and non-ferrous contracts contain one performance obligation, the total transaction price is allocated to the shipment of materials.When multiple loads are included in one contract, the stated price per gross tons is applied to the shipment weight in order to determine transaction price. Ferrous and non-ferrous revenue is recognized when the Company satisfies the shipment of materials per the contract. The shipment and delivery of material typically occurs on the same day. No contract assets or contract liabilities were recognized for the three month periods ended March 31, 2018 and 2017.

Revenue from auto parts operations and other revenue

Revenue from auto parts primarily consists of individual transactions by customers who enter the Company’s premises and purchase auto parts by cash or credit card. Related to these sales, a customer may be charged a core charge. The customer has 30 days to return the core and receive a refund of the core charge.Additionally, customers have the option to separately purchase a warranty related to certain goods purchased. Total core charges and warranty sales are immaterial in aggregate accounting for less than 1% of revenue from auto parts operations and other revenue. Sale prices, core charges and warranties are tracked separately and recognized as revenue when the purchase is completed.No contract assets or contract liabilities were recognized for the three month periods ended March 31, 2018 and 2017.

Fair Value

The Company carries certain of its financial assets and liabilities at fair value on a recurring basis. These financial assets and liabilities are composed of cash and cash equivalents. Long-term debt is carried at cost, and the fair value is disclosed herein. In addition, the Company measures certain assets, such as long-lived assets, at fair value on a non-recurring basis to evaluate those assets for potential impairment. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued

In accordance with applicable accounting standards, the Company categorizes its financial assets and liabilities into the following fair value hierarchy:

Level 1 – Financial assets and liabilities with values based on unadjusted quoted prices for identical assets or liabilities in an active market. Examples of Level 1 financial instruments include active exchange-traded securities.

Level 2 – Financial assets and liabilities with values based on quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Examples of Level 2 financial instruments include various types of interest-rate and commodity-based derivative instruments, and various types of fixed-income investment securities. Pricing models are utilized to estimate fair value for certain financial assets and liabilities categorized in Level 2.2.

~~NOTE~~ 1 ~~– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued~~

Level 3 – Financial assets and liabilities with values based on prices or valuation techniques that require inputs that are both unobservable in the market and significant to the overall fair value measurement. These inputs reflect management’s judgment about the assumptions that a market participant would use in pricing the asset or liability, and are based on the best available information, some of which is internally developed.

When determining the fair value measurements for financial assets and liabilities carried at fair value on a recurring basis, the Company considers the principal or most advantageous market in which it would transact and ~~consider~~considers assumptions that market participants would use when pricing the asset or liability. When possible, ISA looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets and liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets, and the Company uses alternative valuation techniques to derive fair value measurements.

The Company uses the fair value methodology outlined in the related accounting standards to value the assets and liabilities for cash and debt. All of our cash is defined as Level 1 and all our debt is defined as Level 2.2.

In accordance with this guidance, the following table represents our fair value hierarchy for Level 1 and Level 2 financial instruments at ~~September 30,~~March 31, 2018 and December 31, 2017 (in thousands):


	Fair Value at Reporting Date Using								Fair Value at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
March 31, 2018:									Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
Assets:	Level 1		Level 2			Total			Level 1		Level 2			Total
Cash and cash equivalents	$	852	$	—		$	852		$	880	$	—		$	880
Liabilities:
Current maturities of long-term debt	$	—	$	(5,181	)	$	(5,181	)	$	—	$	(5,874	)	$	(5,874	)
Long-term debt, related parties		—		(1,327	)		(1,327	)		—		(1,335	)		(1,335	)

	Fair Value at Reporting Date Using
December 31, 2017:	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
Assets:	Level 1		Level 2			Total
Cash and cash equivalents	$	841	$	—		$	841
Liabilities:
Current maturities of long-term debt	$	—	$	(5,018	)	$	(5,018	)
Long-term debt, related parties		—		(1,331	)		(1,331	)

The Company had no transfers in or out of Levels 1 or 2 fair value measurements, and no activity in Level 3 fair value measurements for the ~~nine~~three month periods ended ~~September 30, 2017~~March 31, 2018 or ~~2016~~2017.

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued

Common Stock and Share-based Compensation Arrangements

The Company has a Long Term Incentive Plan adopted in 2009 ("LTIP") under which it may grant equity awards for up to 2.4 million shares of common stock, which are reserved by the Board of Directors for issuance of equity awards. The Company provides compensation benefits by granting stock options and other share-based awards to employees and directors. The exercise price of each option is equal to the market price of the Company's stock on the date of grant. The maximum term of the option is five years. The plan is accounted for based on FASB’s authoritative guidance titled "ASC 718 - Compensation - Stock Compensation." The Company recognizes share-based compensation expense for the fair value of the awards, on the date granted, on a straight-line basis over their vesting term (service period). Compensation expense is recognized only for share-based payments expected to vest. The Company estimates forfeitures at the date of grant based on the Company's historical experience and future expectations.

The Company uses the grant date stock price to value the Company's restricted stock units. The fair value of each restricted stock unit is estimated on the date of grant.

The Company uses the Modified Black-Scholes-Merton option-pricing model to value the Company's stock options for each employee stock option award. See Note 7 ~~- Share Based~~– Share-Based Compensation and Other Compensation ~~Agreements.~~Agreements. Using these option pricing models, the fair value of each stock option award is estimated on the date of grant.

There are two significant inputs into the stock option pricing models: expected volatility and expected term. The Company estimates expected volatility based on traded option volatility of the Company's stock over a term equal to the expected term of the option granted. The expected term of stock option awards granted is derived from historical exercise experience under the Company's stock option plans and represents the period of time that stock option awards granted are expected to be outstanding.

~~NOTE~~ 1 ~~– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued~~

The expected term assumption incorporates the contractual term of an option grant, as well as the vesting period of an award. The risk-free interest rate is based on the implied yield on a U.S. Treasury constant maturity with a remaining term equal to the expected term of the option granted. The assumptions used in calculating the fair value of stock-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if factors change and different assumptions are used, stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate, and only recognize expense for those shares expected to vest. If the actual forfeiture rate is materially different from the estimate, the stock-based compensation expense could be significantly different from what was recorded in the current period.

Treasury shares or new shares are issued for exercised options. The Company does not expect to repurchase any additional shares within the following annual period to accommodate the exercise of outstanding stock options.

Under the LTIP, the Company may grant any of these types of awards: non-qualified and incentive stock options; stock appreciation rights; and other stock awards including stock units, restricted stock units, performance shares, performance units and restricted stock. The performance goals that the Company may use for such awards will be based on any one or more of the following performance measures: cash flow; earnings; earnings per share; market value added or economic value added; profits; return on assets; return on equity; return on investment; revenues; stock price; or total shareholder return.

The LTIP is administered by a committee selected by the Board consisting of two or more outside members of the Board. The Committee may grant one or more awards to our employees, including our officers, our directors and consultants, and will determine the specific employees who will receive awards under the plan and the type and amount of any such awards. A participant who receives shares of stock awarded under the plan must hold those shares for six months before the participant may dispose of such shares.

~~Subject to shareholder approval and restrictions on exercisability set forth in a Stock Option Agreement entered into on December 2, 2013 between the Company and Algar (the~~ “Stock Option Agreement”), the Company granted Algar an option to purchase a total of 1.5 million shares (in four tranches) of Company common stock (the "Algar Options") at an exercise price per share of $5.00. The Algar Options were not issued under the LTIP. ~~The Company's shareholders approved the Algar Options on October 15, 2014. OnSeptember 30, 2016~~, the Company and Algar mutually agreed to terminate the Management Agreement between them dated as of December 1, 2013. As part of the agreement to terminate the Management Agreement, the Stock Option Agreement was also terminated. See ~~Note 6 - Related Party Transactions for further details.~~

~~The Company used the Lattice-Based model to value the Company's stock options for the Algar Options due to market and performance conditions prior to~~ ~~September 30, 2016~~.~~See Note 7 - Share Based Compensation~~ ~~and Other Compensation Agreements. The fair value of the Algar Options was estimated at the end of each quarter for~~ ~~the third and fourth tranches due to ongoing performance conditions. For the first two tranches, the conditions for vesting were met.~~

~~Other Comprehensive Income~~

The Company previously entered into interest rate swaps to assist in managing commodity price risk. The effective portions of changes in the fair value of the derivatives were recorded as a component of other comprehensive income. The Company fully settled the previously outstanding interest rate swap in December 2015. During 2016 and 2017, the Company did not use any derivative instruments, including commodity hedges to assist in managing commodity price risk. As such, the Company has no activity in other comprehensive income and has no Condensed Consolidated Statements of Comprehensive Income included in the financial statements.

Subsequent Events

The Company has evaluated the period from ~~September 30, 2017~~March 31, 2018 through the date the financial statements herein were issued for subsequent events requiring recognition or disclosure in the financial statements and identified the following:

The Company ~~entered into a lease agreement~~filed an insurance claim related to ~~lease a portion~~roofs on certain of its Louisville, Kentucky facility with 7100 Grade Lane LLC, a related party, effective October 1, 2017 (the "7100 Lease"). The lease replaces a lease the Company previously held with the related party for the same properties, 7100 and 7020 Grade Lane, that wasbuildings due to ~~expire December 31, 2017 (the "7100 Prior Lease"). See Note 4 - Lease Commitments~~weather related damage and Note 6 - Related Party Transactions for additional information. The lease is for a period of seven years with rent payments of $37.5 thousand per month for the first five years. For each of the following one year periods, the annual rent increases the lesser of (a) the percentage change in the CPI over the preceding twelve months, or (b) 2% of the previous year's annual rent. The Company has the option to extend the lease for two additional consecutive terms, each such extended term to be for a period of five years. In addition, the Company is responsible for real estate taxes, insurance, utilities and maintenance expense.

In addition, the Company entered into an agreement and promissory note (the "Back Rent Agreement"), effective October 1, 2017, to pay 7100 Grade Lane LLC $345.8 thousand for back rent past due and owed under the 7100 Prior Lease (see facility rent payable to related parties in Note 6 - Related Party Transactions) withreceived an initial payment in the third quarter of ~~$100.0 thousand due as~~2016. Subsequent to March 31, 2018, the Company received an additional payment from its insurance company for $659.9 thousand. This amount is gross of ~~the signing of the Back Rent Agreement with six consecutive monthly payments of $41.0 thousand each, beginning November 1, 2017.~~certain related fees and expenses. The Company ~~paid~~will record the ~~initial payment~~gain in the second quarter of ~~$100.0 thousand and the first payment of $41.0 thousand as of the date the financial statements herein were issued.~~2018.

1211

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL, Continued

Impact of Recently Issued Accounting Standards

In May 2014, the FASB issued ASU ~~2014-09,~~ 2014-09,Revenue from Contracts with Customers (Topic ~~606)~~606). The amendments in ASU ~~2014-09~~2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards ~~(e.g.~~(e.g., insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. ~~Early application is not permitted.~~On January 1, 2018, the Company adopted ASU 2014-09 using the retrospective approach. The Company ~~is evaluating the potential~~noted no financial impact ~~of the adoption of ASU 2014-09~~ on the Condensed Consolidated Financial ~~Statements. The Company does not expect~~Statements as a ~~material impact from~~result of the adoption of ~~ASU 2014-09 on the Condensed Consolidated Financial Statements.~~

this amended guidance. In ~~August 2014, the FASB issued ASU No.~~ ~~2014-15,~~ Presentation of Financial Statements-Going Concern (Subtopic 205-40). The amendments in ASU 2014-15 are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments were effective for annual periods ending after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU 2014-15 in the fourth quarter of 2016 and noted no material impact fromaddition, the adoption onof this new accounting standard resulted in increased disclosure, including qualitative and quantitative disclosures about the ~~Condensed Consolidated Financial Statements.~~

~~In July 2015,~~nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See the ~~FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle~~Revenue Recognition section of ~~inventories valued under the First-In, First-Out ("FIFO") or weighted average methods from the lower~~Note 1 – Summary of ~~cost or market to the lower of cost~~Significant Accounting Policies and ~~net realizable value. ASU 2015-11 was effective~~General for ~~reporting periods beginning after December 15, 2016 including interim periods within those annual periods. The Company adopted the standard in the fourth quarter of 2016 and noted no material~~ ~~impact from the adoption on the Condensed Consolidated Financial Statements~~additional information.

In November 2015, the FASB issued ASU ~~2015-17,~~ 2015-17,Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent on the consolidated balance sheet. ASU ~~2015-17~~2015-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Upon adoption, ASU ~~2015-17~~2015-17 may be applied either prospectively or retrospectively. The Company adopted the standard in the first quarter of 2017 and noted no material impact from the adoption on the Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. ~~2016-02,~~ 2016-02,Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions. This ASU leaves the accounting for the organizations that own the leased assets largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

The amendments in ASU ~~2016-02~~2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU ~~2016-02~~2016-02 on the Condensed Consolidated Financial Statements.

In June 2016, the FASB issued ASU ~~2016-13,~~ 2016-13, Financial Instruments - Credit Losses, which provides guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU ~~2016-13~~2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company is evaluating the potential impact of ASU ~~2016-13~~2016-13 on the Condensed Consolidated Financial Statements.

In August 2016, the FASB issued ASU ~~2016-15,~~2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues. ASU ~~2016-15~~2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. ~~Early adoption is permitted as of the beginning of an interim or annual reporting period.~~ Upon adoption, ASU ~~2016-15~~2016-15 should be applied retrospectively. The Company is evaluating the potential impact of ASU ~~2016-15~~2016-15 on the Condensed Consolidated Financial Statements, but does not expect a material impact from the adoption of ASU ~~2016-15~~2016-15 on the Condensed Consolidated Financial Statements.

No other new accounting pronouncements issued or effective during the reporting period had, or is expected to have, a material impact on our Condensed Consolidated Financial Statements.

Certain assumptions are made regarding future demand and net realizable value in order to assess whether inventory is properly recorded at the lower of cost or NRV. Assumptions are based on historical experience, current market conditions and remaining costs of processing (if any) and disposal. If the anticipated future selling prices of scrap metal and finished steel products should decline, the Company would re-assess the recorded NRV of the inventory and make any adjustments believed necessary in order to reduce the value of the inventory (and increase cost of sales) to the lower of cost or NRV.

The Company did not have a lower of cost or NRV inventory write-down in the ~~nine~~three month ~~period~~periods ended ~~September 30,~~ March 31, 2018 and 2017.

Some commodities are in saleable condition at acquisition. The Company purchases these commodities in small amounts until it has a truckload of material available for shipment. Some commodities are not in saleable condition at acquisition. These commodities must be sorted, shredded, cut or baled. ISA does not have work-in-process inventory that needs to be manufactured to become finished goods. The Company includes processing costs in inventory for all commodities by weight.

On February 29, 2016, the Company closed on new financings with MidCap and paid off all remaining amounts due to the Company's previous lender Wells Fargo. Additionally, on February 29, 2016, the Company converted certain amounts payable to related parties into unsecured term notes payable to the same related parties as more fully described in Note 6 - – Related Party ~~Transactions.~~Transactions. On March 31, 2017, the Company entered into an amendment to increase the line of credit, subject to the satisfaction of certain borrowing base restrictions (which have been satisfied), and extend the maturity date more fully described below. On June 23, 2017, in connection with the purchase of equipment to be used in the operation of the Company's business, the Company issued notes totaling $129.0 thousand principal amount due to a related party. See Note 6 -– Related Party ~~Transactions.~~Transactions.

On February 29, 2016, the Company entered into the 2016 Loan, which, as initially entered into, provided a $6.0 million senior, secured asset-based line of credit with MidCap. The Company could borrow up to the sum of (a) 85% of the value of its eligible domestic accounts receivable; (b) the lesser of (i) $2.5 million and (ii) 75% of the net orderly liquidation value of eligible inventory; and (c) the lesser of (i) $500,000 and (ii) 40% of appraised net forced liquidation value of eligible fixed assets (the "Equipment Sublimit"). The Equipment Sublimit amortizes monthly on a straight line basis over sixty (60) months with no reduction to the overall line of credit availability. As described below, the 2016 Loan was amended on March 31, 2017.

Proceeds from this loan were used to pay transaction expenses, pay off and close the remaining balance on the Wells Fargo revolving line of credit and fund working capital requirements.

The interest rate on the 2016 Loan is equal to the prime rate ~~(4.25%~~(4.75% as of ~~September 30, 2017)~~March 31, 2018) plus 250 basis points (2.50%). In the Event of a Default (as defined in the 2016 Loan Agreement), the interest rate will increase by 300 basis points (3.00%). The 2016 Loan also has a monthly collateral-monitoring fee equal to 27.5 basis points (0.275%) of the average daily balance outstanding, an annual facility fee of 100 basis points (1.00%) and an unused line fee equal to an annual rate of 50 basis points (0.50%) of the average undrawn portion of the 2016 Loan.

The 2016 Loan has a maturity date of February 28, 2020 based on the amendment described below. The borrowings under the revolving credit agreement are classified as short-term obligations under GAAP as the agreement with MidCap contains a subjective acceleration clause and requires the Company to maintain a lockbox arrangement with the lender.

The Company iswas subject to a prepayment fee of $120.0 thousand if the 2016 Loan iswas terminated or prepaid prior to the one year anniversary of the loan. The Company is subject to a prepayment fee of $60.0 thousand if the 2016 Loan is terminated or prepaid subsequent to the one year anniversary of the loan, but prior to the maturity date. ~~The~~ ~~$60.0 thousand fee is reduced to~~ ~~zero~~ ~~if the~~ ~~2016~~ ~~Loan is refinanced by an FDIC insured institution after~~ ~~eighteen months from February 29, 2016.~~

The 2016 Loan Agreement contains a minimum line availability covenant equal to $350.0 thousand. This covenant may be replaced by a Fixed Charge Coverage Ratio ("FCCR") covenant once the Company has achieved a FCCR of 1.0x on an annualized basis.

The Company granted MidCap a first priority security interest in all of the assets of ISA pursuant to the terms of a Security Agreement.

The Company is allowed to sell or refinance up to $3.0 million in fair market value of real property provided (i) the proceeds from such refinance or sale remain with the Company; and (ii) no event of default exists at the time of such refinance or sale.

On March 31, 2017, the Company and each of its wholly-owned subsidiaries entered into an amendment to the 2016 Loan with MidCap ("First Amendment"). The First Amendment increased the line of credit from $6.0 million to $8.0 million and extended the maturity date to February 28, 2020. As amended, the line of credit permits the Company to borrow an amount under the 2016 Loan equal to the lesser of (A) $8.0 million; and (B)(i) 85% of the value of the Company’s eligible domestic accounts receivable, plus (ii) the lesser of (x) $2.5 million and (y) 75% of the net orderly liquidation value of eligible inventory, plus (iii) the lesser of (x) $400,000 and (y) 40% of appraised net forced liquidation value of eligible fixed assets, plus (iv) the lesser of (x) $1.75 million and (y) 45% of the appraised value of certain properties owned by the Company (subject to MidCap's receipt of any third-party or internal approvals it may require in its discretion), minus (v) any amount which MidCap may require from time to time, pursuant to terms of the agreement, in order to secure amounts owed to MidCap under the agreement. The First Amendment contains a minimum line availability covenant equal to $350.0 thousand, the same as the original 2016 Loan. This covenant may be replaced by a FCCR covenant once the Company has achieved an FCCR of 1.1x on an annualized basis. The Company paid underwriting fees of $20.0 thousand at closing.

On April 26, 2017, certain borrowing base restrictions were satisfied with MidCap which resulted in an increase in availability of $1.75 million.

The amended 2016 Loan had availability of ~~$2.2~~$1.7 million as of ~~September 30, 2017~~March 31, 2018.

Debt as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 consisted of the following:

The annual contractual maturities of long-term debt (in thousands) for the next five twelve-month periods and thereafter ending ~~September 30~~March 31 are as follows:

The Company paid and capitalized loan fees in the amount of ~~$124.9~~$94.1 thousand during the ~~nine~~three month period ended ~~September 30, 2017~~March 31, 2018.

Amounts owed to K&R, LLC and 7100 Grade Lane LLC are more fully described in Note 6 -– Related Party Transactions ~~and the Subsequent Events section of Note 1 - Summary of Significant Accounting Policies and General.~~

The Company leased a portion of its Louisville, Kentucky facility from a related party (see Note 6 - Related Party Transactions) under an operating lease that was due to expire December 31, 2017 (the "7100 Prior Lease"). The lease amount was $53.8 thousand per month. Effective October 1, 2017, the Company entered into a new lease agreement with a related party for the same property (the "7100 Lease") that terminates and replaces the 7100 Prior Lease. The lease is for a period of seven years with rent payments of $37.5 thousand per month for the first five years. For each of the following one year periods, the annual rent increases the lesser of (a) the percentage change in the CPI over the preceding twelve months, or (b) 2% of the previous year's annual rent. The Company has the option to extend the lease for two additional consecutive terms, each such extended term to be for a period of five years. ~~See~~In addition, the ~~Subsequent Events section of Note 1 - Summary of Significant Accounting Policies~~Company is responsible for real estate taxes, insurance, utilities and ~~General.~~ maintenance expense.

The Company signed a lease, effective December 1, 2014, to lease a facility in the Seymour, Indiana area. This lease is for a period of three years. The Company has the option to extend the lease for three (3) additional three (3) year periods. Rent is $8.0 thousand per month and increases each year by $0.2 thousand per month. In the event ISA exercises the option to renew the lease for a second three-year term, at the end of the second three-year term, ISA has the option to purchase the property.

~~The Company signed a lease, effective October 1, 2014, to lease~~ ~~three~~ ~~cranes for~~ $28.9 thousand per month (the "Crane Lease"). This lease was for a period of five years. On May 1, 2016, the Company entered into an amendment to the Crane Lease, whereby the lease converted from an operating lease to a capital lease. See details below in Capital Leases section.

~~The Company~~ ~~previously leased~~ ~~equipment from a related party (see Note~~ 6 ~~- Related Party Transactions) under an operating lease for a monthly payment of$5.0 thousand.~~ ~~The lease expired~~ ~~May 2016~~.

The Company leased a lot in Louisville, Kentucky for a term that commenced in March 2012 and ended in February 2016. The monthly payment amount from March 2012 through February 2014 was $3.5 thousand. Beginning March 2014, the monthly payment amount increased to $3.8 thousand for the remaining term. As of August 31, 2015, the Company entered into a settlement to abandon the leased property and paid the remaining balance of scheduled payments over a 19 month period, ending March 31, 2017.

On April 30, 2015, the Company entered into a lease agreement with LK Property Investments LLC ("LK Property") (see Note 6 - Related Party Transactions), for a portion of the 4.4 acre parcel of real estate located at 6709 Grade Lane, Louisville, Kentucky in the amount of $3.0 thousand per month. The lease terminates on April 14, 2019, but the Company has the right to terminate the lease and vacate the leased premises upon 90 days notice. The Company is required to reimburse the lessor for 40% of the property taxes on the parcel during the term.

On March 3, 2018, the Company entered into a lease agreement to lease a piece of equipment for $0.6 thousand per month. The lease is for a period of five years.

Future minimum lease payments for operating leases for the next five twelve-month periods ending ~~September 30~~March 31 of each year and thereafter, in thousands, as of ~~September 30, 2017~~March 31, 2018, reflective of the new lease agreement, are as follows:

Total lease expense for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017 was ~~$614.3~~$153.6 thousand and ~~$775.7~~$206.9 thousand, respectively.

On May 1, 2016, the Company entered into an ~~amendment~~amended agreement to ~~the~~lease three cranes (the "Crane Lease"). The Crane Lease ~~whereby the lease is extended through~~expires April 30, 2021. Payments are $14.5 thousand per month for the first twelve months following the amendment date, followed by monthly payments of $31.3 thousand thereafter for the remainder of the lease term. There is no bargain purchase option associated with the Crane Lease. Based on the new lease terms, the Company classified the Crane Lease as a capital lease. At inception, the Company recorded a capital lease obligation of $1.3 million. The Company used a weighted average cost of capital of 9.3% to calculate the capital lease obligation. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018, the Company ~~has~~ recorded ~~$192.7~~$64.2 thousand in depreciation expense and ~~$84.4~~$23.9 thousand in interest expense related to the Crane Lease. The net book value and the related accumulated depreciation of the Crane ~~lease~~Lease were ~~$920.8~~$792.3 thousand and ~~$364.0~~$492.5 thousand, respectively, at ~~September 30,~~March 31, 2018. For the three months ended March 31, 2017, the Company recorded $64.2 thousand in depreciation expense and $28.9 thousand in interest expense related to the Crane Lease. The net book value and the related accumulated depreciation of the Crane Lease were $1.0 million and $428.3 thousand, respectively, at December 31, 2017.

The Company entered into a capital lease, effective June 2017, to lease two pieces of equipment (the "Forklift Lease"). The lease is for a period of six years and the payments are $1.4 thousand per month. The Company has the option to purchase the equipment for a purchase price of $1.00 per item of equipment upon the expiration of the lease. At inception, the Company recorded a capital lease obligation of $75.2 thousand. The Company used a weighted average cost of capital of 10.0% to calculate the capital lease obligation. For the ~~nine~~ threemonths ended ~~September 30, 2017~~March 31, 2018, the Company has recorded $~~4.1~~3.1 thousand in depreciation expense and ~~$2.5~~$1.7 thousand in interest expense related to the Forklift Lease. The net book value and the related accumulated depreciation of the Forklift Lease were ~~$71.1~~$64.8 thousand and ~~$4.1~~$10.5 thousand, respectively, at ~~September 30,~~March 31, 2018. The net book value and the related accumulated depreciation of the Forklift Lease were $67.9 thousand and $7.3 thousand, respectively, at December 31, 2017.

Future minimum lease payments for the next five twelve-months periods ending ~~September 30~~March 31 of each year, in thousands, as of ~~September 30, 2017~~March 31, 2018 are as follows:

~~Nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016~~:

Three months endedMarch 31, 2018~~September 30, 2017~~ compared to three months ended March 31, 2017~~September 30, 2016~~:

NOTE 6 -– RELATED PARTY TRANSACTIONS

During the periods ended ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017, the Company was involved in various transactions with related parties. A summary of transactions and related balances are as follows. The table at the end of this note should be used in referencing all below paragraphs.

K&R, LLC ("K&R") and 7100 Grade Lane, LLC ("7100 LLC"):

The Company is involved in various transactions with K&R and 7100 LLC, which are wholly-owned by Kletter Holdings LLC, the sole member of which was Harry Kletter, the Company's founder and former Chief Executive Officer. After Mr. Kletter's passing in January 2014, ~~the Company's Chairman of the Board and interim Chief Executive Officer,~~ Orson Oliver assumed the roles of executor of Mr. Kletter’s estate and President of Kletter Holdings LLC. Mr. Oliver was the Company's Chairman of the Board and interim Chief Executive Officer from 2014 until his resignation on March 26, 2018. Mr. Oliver continues to be a member of the Company's Board of Directors. As of ~~September 30, 2017~~March 31, 2018, Mr. Kletter’s estate, K&R and the Harry Kletter Family Limited Partnership collectively, beneficially own in excess of 20% of the Company's issued and outstanding shares.

The Company ~~leases~~leased a portion of the Louisville, Kentucky facility from 7100 LLC (previously from K&R) under an operating lease, the "7100 Prior Lease," expiring December 2017. Effective October 1, 2017, the Company entered into a new lease agreement with 7100 LLC for the same property (the "7100 Lease") that terminates and replaces the 7100 Prior Lease. ~~Additionally, the Company leased equipment from K&R under operating leases that expired May 2016.~~ See Note 4 - – Lease Commitments for additional information relating to the rent and lease agreements with K&R. ~~See the Subsequent Events section of Note 1 - Summary of Significant Accounting Policies and General.~~

During 2015 and continuing into 2017, the Company deferred a portion of these lease payments. A portion of this deferral was converted into a term note during 2016 as described below. The remaining portion of this deferral was converted into a promissory note effective October 1, ~~2017.~~ ~~See the Subsequent Events section of Note 1 - Summary of Significant Accounting Policies and General.~~ 2017 as described below.

On September 13, 2013, K&R made a $500.0 thousand refundable, non-interest bearing deposit with the Company related to K&R's potential purchase of the Company's formerly owned real property located at 1565 East 4th Street in Seymour, Indiana. The Company was permitted and used the deposited funds for general corporate purposes. K&R did not acquire the property. Under the Company's lending arrangements, a refund of the deposit to K&R would have to be approved by the Company's lenders. This amount was converted into a term note during 2016 as described below.

As of ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017, the Company had balances related to K&R and 7100 LLC pertaining to refundable lease and property deposits due to and from the Company, rents payable from the Company, notes payable due from the Company, accrued interest due from the Company, interest expense, and rent expense.

On February 29, 2016, K&R assigned its interest in the 7100 Lease to another entity, 7100 LLC, also controlled by Mr. Kletter’s estate. At that time, the total amount due to the estate’s various entities, which amounted to approximately $1.5 million and is inclusive of the $500.0 thousand noted above, became a subordinated, unsecured debt (the "Kletter Notes") owed by the Company. A portion of the amount, approximately $620.3 thousand, is owed to K&R, with the remaining amount, approximating $883.8 thousand, owed to 7100 LLC. Interest will accrue monthly at a per annum rate of 5.0%. Interest accrued until April 30, 2017, at which time interest is paid as due. Until maturity on December 31, 2020, the Kletter Notes are subject to intercreditor agreements between the respective Note holder and MidCap. This amount of $1.5 million represents all net amounts due to Kletter estate entities as of February 29, 2016 with the exception of a $32.0 thousand deposit owed by K&R to the Company. If the Company sells property it owns at 7110 Grade Lane in Louisville, Kentucky, the Company shall make a principal payment to K&R of $500.0 thousand. Otherwise, all remaining principal is due at maturity.

On June 23, 2017, the Company entered into two agreements (referred to as the “Handler Agreement” and the “Crane Agreement”) with K&R, each for the purchase of equipment to be used in the operation of the Company’s business.

Under the Handler Agreement, the Company purchased a hydraulic scrap handler from K&R for a purchase price of ~~$90,000,~~$90.0, thousand, with a ~~$9,000~~$9.0 thousand down payment and a 24-month promissory note ("Handler Note") in the face principal amount of the remaining ~~$81,000.~~$81.0 thousand. The Handler Note is interest free and provides for payments in equal monthly installments of ~~$3,375.~~$3.4 thousand. Under the Handler Note, payments commenced on July 1, 2017. Upon a default, the Handler Note will bear interest at 1% per annum.

Under the Crane Agreement, the Company purchased a 2011 Komatsu crane from K&R for a purchase price of ~~$60,000,~~$60.0 thousand, with a ~~$12,000~~$12.0 thousand down payment and a 24-month promissory note ("Crane Note") in the face principal amount of the remaining ~~$48,000.~~$48.0 thousand. The Crane Note is interest free and provides for payments in equal monthly installments of ~~$2,000.~~$2.0 thousand. Under the Crane Note, payments commenced on July 1, 2017. Upon a default, the Crane Note will bear interest at 1% per annum.

The Crane Note and the Handler Note are each secured by a security interest in the subject equipment and ~~any~~ proceeds the Company derives from the equipment.

~~Algar, Inc. ("Algar"~~The Company entered into an agreement and promissory note (the "Back Rent Agreement"):, effective October 1, 2017, to pay 7100 LLC $345.8 thousand for back rent past due and owed under the 7100 Prior Lease with an initial payment of $100.0 thousand paid at the signing of the Back Rent Agreement with six consecutive monthly payments of $41.0 thousand each, beginning November 1, 2017.

~~Management Services Payments to Algar:~~

NOTE 6 - – RELATED PARTY TRANSACTIONS, Continued

~~On December 2, 2013, the Company and Algar entered into a Management Services Agreement (the “Management Agreement”). On September 30, 2016 (the "Termination Effective Date"),~~ ~~the Company and Algar mutually agreed to terminate the Management Agreement pursuant to the Termination Agreement. See the details below.~~

Under the Management Agreement, Algar provided the Company with day-to-day senior executive level operating management services. Algar also provided business, financial, and organizational strategy and consulting services, as the Company’s board of directors reasonably requested from time to time.

~~In connection with the Management Agreement, the Company's board of directors appointed Sean Garber as President and as a member of the board of directors.~~

Under the Management Agreement, the Company reimbursed Algar for the portion of Mr. Garber’s salary that was attributable to Algar’s services under the Management Agreement in an amount not exceeding $20.8 thousand per month, or $250.0 thousand per year plus other expenses. Also, under the Management Agreement, Algar was to be paid a bonus in an amount equal to 10.0% of any year-over-year increase in the Company’s adjusted pre-tax income during the term. The term of the Management Agreement was effective December 1, 2013 and originally expired on ~~December 31, 2016, subject to earlier termination upon mutual agreement or upon circumstances set forth in the agreement.~~ On ~~September 30, 2016~~, ~~the Company and Algar mutually agreed to terminate the Management Agreement.~~

For the year ended December 31, 2014, Algar earned a bonus of $428.0 thousand that was accrued by ISA. This amount was reduced by $50.0 thousand related to the real estate sale to SG&D, an entity owned by shareholders of Algar, including Mr. Garber. The bonus payable was further reduced on August 5, 2015, when the Company entered into a Stock Purchase Agreement with Algar, whereby the Company issued 50.7 thousand shares of its common stock to Algar for aggregate consideration equal to $189.0 thousand based on the fair value of the Company's common stock. The consideration was payable in the form of a reduction of the Company’s $378.0 thousand accrued but unpaid bonus compensation ~~due~~ ~~to Algar as of August 5, 2015. During the year ended December 31, 2016, the Company paid Algar the remaining~~ ~~$189.0 thousand~~ ~~related to the accrued but unpaid bonus compensation related to the bonus earned in~~ ~~2014~~.

~~As of the Termination Effective Date, the Company and Algar mutually terminated the Management Agreement.~~The Termination Agreement provided that in satisfaction of all amounts owed to Algar under the Management Agreement, the Company paid Algar: (i) $20,880 on the Termination Effective Date, (ii) an aggregate amount equal to $50,000, paid in ~~three~~ ~~equal monthly installments on the last day of October, November and December 2016 (full amount accrued at~~ ~~September 30, 2016), and (iii) an amount equal to~~ ~~ten~~ ~~percent of the decrease, if any, in reported “Loss before income taxes” for the nine months ended~~ ~~September 30, 2016~~ ~~as reported on the Condensed Consolidated Statements of Operations in the Company’s Quarterly Report on Form 10-Q for the period ended~~ ~~September 30, 2016~~, (the “3Q 2016 Form 10-Q”) as filed with the U.S. Securities and Exchange Commission, over the Company’s reported “Loss before income taxes” for the nine months ended September 30, 2015 as reported in the 3Q 2016 Form 10-Q (the "Accrued Bonus Payment"). The Company paid the Accrued Bonus Payment in the amount of $180.0 thousand on March 31, 2017. The Termination Agreement also provided for the cancellation of the Stock Option Agreement as of the Termination Effective Date.~~Mr. Garber and Mr. Oliver terminated the Irrevocable Proxies that were received in connection with the Management Agreement as of the Termination Effective Date.Mr. Garber resigned all offices with the Company and his director position as of the Termination Effective Date.~~

~~Other transactions with Algar:~~

~~During~~ ~~2016~~, the Company participated in various other transactions with Algar. The Company sold scrap to Algar, bought scrap from Algar, leased equipment to and from Algar, and provided logistical and IT services to Algar. Related to these transactions, the Company had related income and expense during ~~2016~~.

Board of Directors' fees and consulting fees:

The Company pays board and committee fees to non-employee directors. Related to these transactions, the Company has accounts payable balances to the Board of Directors for fees and consulting fees, along with related expense at and as of ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017.

LK Property Investments ~~LLC:~~

~~On April 30, 2015, ISA Real Estate LLC sold to LK Property, an entity principally owned by Daniel M. Rifkin, CEO of MetalX,~~ LLC ("~~MetalX"~~LK Property") (a related party), a scrap metal recycling company headquartered in Waterloo, Indiana, and the principal owner of Recycling Capital Partners, LLC ("RCP") (a related party), a 4.4 acre parcel of real estate, located at ~~6709~~: Grade Lane, Louisville, Kentucky, for a purchase price of $1.0 million. The Company used the proceeds from the sale primarily for debt reduction and working capital. The loss on sale of this asset was $102.0 thousand.

On April 30, 2015, the Company entered into a lease agreement with LK Property, for a portion of the 4.4 acre parcel of real estate located at 6709 Grade Lane, Louisville, Kentucky in the amount of $3.0 thousand per month. The lease terminates on April 14, 2019, but the Company has the right to terminate the lease and vacate the leased premises upon 90 days notice. The Company is required to reimburse the lessor for 40% of the property taxes on the parcel during the term.

~~NOTE~~ 6 ~~- RELATED PARTY TRANSACTIONS, Continued~~ LK Property is an entity principally owned by Daniel M. Rifkin, CEO of MetalX LLC ("MetalX"), a scrap metal recycling company headquartered in Waterloo, Indiana, and the principal owner of Recycling Capital Partners, LLC ("RCP").

MetalX:

During 2017 ~~and~~ ~~2016~~, the Company held accounts receivables balances from MetalX related to scrap sales. For additional information regarding MetalX, see Note 9 - – Financing and Related ~~Matters.~~Matters.

Related party balances as of and for the three months ended March 31, 2018 and 2017 are as follows, in thousands:

2017

2016
K&R, LLC and 7100 LLC:

Deposit amounts owed to the Company by related parties
(1)
$
42

$
42

Prepaid expenses to related parties
(1)

43

—

Notes payable to related parties
(3)

1,617

1,504

Accrued interest to related parties
(2)

—

63

Facility rent payable to related parties
(2)

346

176

Equipment rent payable to related parties
(2)

15

15

Facility rent expense to related parties
(4)

484

484

Equipment rent expense to related parties
(4)

—

25

Interest expense to related parties
(4)

56

44

Algar, Inc.:

Bonus payable to Algar
(2), (5)
$
—

$
180

Revenue from scrap sales to Algar
(4), (6)

—

7

Revenue from logistical services to Algar
(4), (6)

—

48

Revenue from IT services to Algar
(4), (6)

—

16

Scrap material purchases from Algar
(4), (6)

—

1,204

Management fee expense
(4), (6)

—

238

Bonus expense to Algar
(4), (6)

—

180

Rental income from Algar
(4), (6)

—

16

Other expenses to Algar
(4), (6)

—

14

Board of Directors: *

Accounts payable to the Board of Directors for fees
(2)
$
46

$
144

Board of director fee expense
(4)
160

168

LK Property Investments, LLC:

Lease deposit to LK Property
(1)
$
3

$
3

Prepaid expenses to related parties
(1)

3

—

Accounts payable to LK Property
(2)

1

—

Rent expense to LK Property**
(4)

27

27

MetalX, LLC:

Accounts receivable from MetalX
(1)
$
—

$
105

Revenue from product sales to MetalX
(4)

188

116

		2018		2017
K&R and 7100 LLC:
Deposit amounts owed to the Company by related parties	(1)	$	42	$	42
Prepaid expenses to related parties	(1)		—		43
Notes payable to related parties	(3)		1,584		1,600
Facility rent payable to related parties	(2)		41		123
Facility rent expense to related parties	(4)		113		161
Interest expense to related parties	(4)		19		19

Board of Directors: *
Accounts payable to the Board of Directors for fees	(2)	$	—	$	50
Board of director fee expense	(4)		58		88

LK Property:
Lease deposit to LK Property	(1)	$	3	$	3
Prepaid expenses to related parties	(1)		—		3
Accounts payable to LK Property	(2)		2		—
Rent expense to LK Property**	(4)		9		9

MetalX:
Accounts receivable from MetalX	(1)	$	—	$	1
Revenue from product sales to MetalX	(4)		—		188

* Excludes insignificant amount of travel reimbursement.

**Excludes amounts reimbursed to LK ~~Properties~~Property for utilities and property tax.

(1) Included in receivable and other assets from related parties on the Condensed Consolidated Balance Sheets; balances are as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017.

(2) Included in payable and accrued expenses to related parties on the Condensed Consolidated Balance Sheets; balances are as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017.

(3) Included in current maturities of long-term ~~liabilities~~debt, related parties and long-term debt, related parties on the Condensed Consolidated Balance Sheets; balance is as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017.

(4) Included in the Condensed Consolidated Statements of Operations; amounts are for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 and ~~September 30, 2016~~.

~~(5) The 2016 balance includes the bonus payable amount at December 31, 2016 as this amount was earned on September 30, 2016 while Algar was a related party. The bonus payable was paid on~~ March 31, ~~2017.~~ 2017

~~(6) The Company excluded all 2017 balances related to Algar as the related party relationship ended on September 30, 2016.~~.

2119

Following is a summary of stock option activity and number of shares reserved for outstanding options:

*Securities available for grant include securities available for stock option grants and RSUs.

~~As described in Note~~ 1 ~~- Summary of Significant Accounting Policies and General and Note~~ 6 ~~- Related Party Transactions, as of December 1, 2013, subject to shareholder approval (which was received during~~ ~~2014) and vesting provisions, the Company granted options to purchase a total of~~ ~~1.5 million shares of its common stock to Algar at a per share exercise price of $5.00 pursuant to the Management Agreement. At the annual meeting of shareholders of the Company on October~~ 15, ~~2014, shareholders approved the issuance of these options. The first~~ 375.0 thousand share options vested and became exercisable on December 1, 2013. The second 375.0 thousand share options vested and became exercisable after the market price of the Company's common stock reached ~~$6.00 per share during~~ ~~2014. The third~~ 375.0 thousand share options would have vested and become exercisable only if and after the market price of the Company's common stock reached $8.00 per share or Company revenue following an acquisition increased by $90.0 million. The fourth 375.0 thousand share options would have vested and become exercisable only if and after the market price of the Company's common stock reached $9.00 per share or Company revenue following an acquisition increased by $120.0 million. On September 30, 2016, the Company and Algar mutually agreed to terminate the Management Agreement between them dated as of December 1, 2013. In connection with the termination of the Management Agreement, the Stock Option Agreement was also terminated. See ~~Note~~ 6 ~~- Related Party Transactions for further details.~~

~~In January 2015,~~March 28, 2018, the Company awarded options to purchase ~~20.0~~31.0 thousand shares of the Company's common stock to its Chief ~~Financial~~Executive Officer. These options ~~were~~are scheduled to vest over a three year period, with 1/3 vesting on the first anniversary of the grant date and 1/63 ~~vesting~~ every~~six~~twelve months thereafter until the three year anniversary of the grant date. The exercise price per share of the options ~~was $5.71,~~is $2.46, the fair value of the underlying common stock as of the grant date. ~~These~~The options ~~were cancelled on June 15, 2016. See below for further details.~~expire March 28, 2023.

The weighted average assumptions relating to the valuation of the Company's stock options awarded in 2018 are shown below.

On March 25, 2016, our Compensation Committee granted 32.0 thousand restricted stock units (“RSUs”) to the Company’s Chief Financial Officer (the “CFO”), under the LTIP pursuant to a Restricted Stock Unit Grant Agreement (the ~~“RSU Agreement”). The RSUs were granted to the CFO in lieu of other compensation and as partial payment of the CFO’s bonus related to certain milestone accomplishments during~~ ~~2015~~ ~~and early~~ ~~2016~~. The grant date fair value is based on the Company's closing common stock price on the day immediately prior to the date of grant. The grant date fair value was $90.2 thousand and has been recognized as expense in the accompanying Condensed Consolidated Statement of Operations. ~~Each RSU vested on April 1, 2016 and represents the right to receive~~ ~~one~~ ~~share of the Company’s common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU Agreement and the Plan.~~

On March 29, 2016, the Compensation Committee granted 11.4 thousand RSUs to an employee under the LTIP pursuant to an RSU agreement. The grant date fair value is based on the Company's closing common stock price on the day immediately prior to the date of grant. The grant date fair value was $32.0 thousand and will be recognized as expense beginning in the second quarter of 2016. Each RSU ~~vests~~vested on March 29, 2018 and ~~represents~~represented the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU Agreement and the Plan.

On June 15, 2016, at the Company's annual meeting, the Company's shareholders approved a one-time stock option exchange for the CFO as an alternative to a direct repricing of options previously granted to the CFO. The stock option exchange allowed the Company to cancel 170.0 thousand stock options, including 20.0 thousand granted in January 2015, previously granted to the CFO in exchange for the grant of 90.0 thousand RSUs to the CFO. The RSUs vest as follows if and to the extent that the CFO remains employed by the Company through each of the following dates: (i) on July 1, 2016, 50.00% (45,000) of the RSUs vest and become nonforfeitable; (ii) on December 31, 2016, 12.50% (11,250) of the RSUs vest and become nonforfeitable; (iii) on June 30, 2017, 12.50% (11,250) of the RSUs vest and become nonforfeitable; (iv) on December 31, 2017, 12.50% (11,250) of the RSUs vest and become nonforfeitable; and (v) on June 15, 2018, 12.50% (11,250) of the RSUs vest and become nonforfeitable. Each RSU represents the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU Agreement and the Plan. The CFO has continued his employment bywith the Company through ~~September 30, 2017~~March 31, 2018 and the related 67,500 RSUs vested and became nonforfeitable.

On March 28, 2018, the Company granted an aggregate of 18.0 thousand RSUs to six employees under the LTIP pursuant to RSU agreements. The grant date fair value is based on the Company's closing common stock price on the date of grant. The grant date fair value was $44.3 thousand and will be recognized as expensed beginning in the second quarter of 2018. Each RSU vests on March 28, 2021 and represents the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU agreements and the LTIP.

On March 28, 2018, the Company granted 40.6 thousand RSUs to the CEO under the LTIP pursuant to an RSU agreement. The grant date fair value is based on the Company's closing common stock price on the date of grant. The grant date fair value was $100.0 thousand and will be recognized as expensed beginning in the second quarter of 2018. Each RSU vests on March 28, 2021 and represents the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU agreement and the LTIP.

Under a retention agreement with the Company's CFO dated March 25, 2016, the Company will pay the CFO bonuses of $100.0 thousand and $125.0 thousand on each of December 31, 2016 and December 31, 2017, respectively, as long as he remains employed with the Company on those dates. The December 31, 2016 bonus of $100.0 thousand was paid during the three month period ended March 31,, 2017. IfThe December 31, 2017 bonus of $125.0 thousand was paid during the ~~CFO's employment is terminated without cause during~~ ~~2017~~three~~, the Company is required to pay him an amount equal to $125.0 thousand times the quotient of the number of full months employed in~~ ~~2017~~ month period ended ~~divided by~~ 12March 31, 2018.

On September 30, 2016, the Company entered into retention agreements ("Retention Agreements") with certain management employees (individually "Staff Member"). Under the Retention ~~Agreement,~~Agreements, if the Staff Member remains continuously employed by the Company through and including the date which is the first to occur of: (a) the date of a change in control of the Company; (b) the date the Staff Member is terminated without cause; and (c) December 31, 2017, the Company will pay the Staff Member a bonus in an amount equal to 25% of the Staff Member's then-current annual base salary. ~~At September 30, 2016, the Company estimated this liability to be $132.7 thousand.~~ The Company ~~evaluates~~paid the ~~liability on an ongoing basis, and will expense~~retention amounts of $135.9 thousand during the ~~liability through~~ ~~December~~three month period ended March 31, ~~2017~~ ~~unless determined otherwise. The Company has accrued $106.2 thousand as of~~ ~~September 30, 2017~~2018.

On March 26, 2018, the Board appointed Todd L. Phillips as CEO of the Company. In connection with Mr. Phillips’ appointment as CEO, the Company entered into an Amended and Restated Employment Agreement with Mr. Phillips on March 26, 2018 (the “Employment Agreement”). The Employment Agreement is effective as of January 1, 2018, with the one year initial term ending on December 31, 2018. After expiration of the initial term, the term will be automatically extended for additional 12-month periods thereafter if neither party gives written notice to the other within 30 days before expiration of the original 12-month period or any renewal period thereafter of that party’s desire to terminate the Employment Agreement. Pursuant to the Employment Agreement, Mr. Phillips will earn an annual base salary of $300,000, subject to adjustment by the Board. Mr. Phillips will be eligible to receive an annual performance-based bonus that provides him an opportunity to earn a target bonus equal to 50% of his then-current base salary. Pursuant to the Employment Agreement, Mr. Phillips is also entitled to receive annual equity compensation awards, consisting of RSUs and Options. Each award will consist of (A) that number of RSUs equal in Value (as defined in the Employment Agreement) on the date of the grant to 33.33% of Mr. Phillips’ base salary, and (B) that number of Options equal in Value (as defined in the Employment Agreement) on the date of the grant to 16.67% of Mr. Phillips’ base salary. The RSUs will be subject to three year cliff vesting, with the entire award vesting 36 months from the grant date. The Options will vest over a three year period, with 1/3 vesting on each annual anniversary of the grant date. The exercise price per share of the Options will be equal to the fair market value of the Company’s common stock on the grant date.

The Company has litigation from time to time, including employment-related claims, none of which the Company currently believes to be material.

Our operations are subject to various environmental statutes and regulations, including laws and regulations addressing materials used in the processing of our products. In addition, certain of our operations are subject to federal, state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. Failure to maintain or achieve compliance with these laws and regulations or with the permits required for our operations could result in substantial operating costs and capital expenditures, in addition to fines and civil or criminal sanctions, third party claims for property damage or personal injury, cleanup costs or temporary or permanent discontinuance of operations. Certain of the Company's facilities have been in operation for many years and, over time, the Company and other predecessor operators of these facilities have generated, used, handled and disposed of hazardous and other regulated wastes. Environmental liabilities in material amounts could exist, including cleanup obligations at these facilities or at off-site locations where the Company disposed of materials from its operations, which could result in future expenditures that the Company cannot currently estimate and which could reduce its profits. The Company records liabilities for remediation and restoration costs related to past activities when its obligation is probable and the costs can be reasonably estimated. Costs of future expenditures for environmental remediation are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Costs of ongoing compliance activities related to current operations are expensed as incurred. Such compliance has not historically constituted a material expense to the Company.

On June 13, 2014, the Company issued 857,143 shares of the Company's common stock pursuant to a Securities Purchase Agreement (the "Securities Purchase Agreement") to RCP, an investment entity principally owned by Daniel M. Rifkin, the founder and CEO of MetalX, for an aggregate purchase price of $3.0 million. Pursuant to the Securities Purchase Agreement, the Company also issued to RCP a five year warrant to purchase 857,143 additional shares of the Company's common stock, exercisable 6 months after the date of the Securities Purchase Agreement for an exercise price of $5.00 per share and expiring June 13, 2019. The net proceeds were allocated between common stock and warrants based on the relative fair value of the common stock and the warrants. The Securities Purchase Agreement provides RCP with preemptive rights and a right of first refusal with respect to future securities offerings by the Company. The Company used the proceeds from the Securities Purchase Agreement for general corporate purposes including debt reduction, growth initiatives, capital expenditures, and review of potential acquisitions.

On June 13, 2014, in connection with the Securities Purchase Agreement, the Company and the Investor entered into a Registration Rights Agreement (the "Registration Rights Agreement"), under which the Company (a) prepared and filed a registration statement no later than December 12, 2014 and (b) caused the registration statement to be declared effective by the Securities and Exchange Commission no later than February 1, 2015 for (i) agreed to resales of the common stock issued to the Investor under the Securities Purchase Agreement, and (ii) agreed to resales of any shares of common stock issuable upon exercise of the warrant.

The Registration Rights Agreement requires the Company to pay the Investor a loss of liquidity fee for certain periods after February 1, 2015 when the registration statement is not effective or its use is suspended. The Registration Rights Agreement contains customary representations, warranties and covenants, and customary provisions regarding rights of indemnification between the parties with respect to certain applicable securities law liabilities.

On June 13, 2014, in connection with the Securities Purchase Agreement, the Company and RCP entered into a Director Designation Agreement (the "Director Designation Agreement") pursuant to which RCP will have the right to designate, and require the Company's Board to appoint, up to two directors (each, a "Designated Director"). As of the date of this report, RCP had the right to designate one director. A Designated Director will hold office until (i) his or her term expires and such Designated Director's successor designated by RCP has been appointed or (ii) such Designated Director's earlier death, disability, disqualification, resignation or removal, and RCP shall have the right to appoint any successor to such Designated Director. RCP's designation rights terminate at such time that RCP and its affiliates collectively hold less than 5% of the Company's outstanding common stock. Pursuant to the Director Designation Agreement, the Company and RCP agreed that the designation and appointment of the Designated Director nominees will not violate applicable law and will not cause the Company to become delisted from any securities exchange or other trading market.

The following discussion and analysis should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes thereto included elsewhere in this report.

The following discussion and analysis contains certain financial predictions, forecasts and projections which constitute “forward-looking statements” within the meaning of the federal securities laws. Actual results could differ materially from those financial predictions, forecasts and projections and there can be no assurance that we will achieve such financial predictions, forecasts and projections. Factors that could affect financial predictions, forecasts and projections include availability of liquidity, fluctuations in commodity prices and any conditions internal to our major customers, including loss of their accounts and other factors as listed in our Form 10-K for the year ended December 31, ~~2016~~2017, as filed with the Securities and Exchange Commission.

Industrial Services of America, Inc. (herein “ISA,” the “Company,” “we,” “us,” “our,” or other similar terms) is a Louisville, Kentucky-based company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities and buys used autos in order to sell used auto parts. We purchase, process and sell ferrous and non-ferrous scrap metal to steel mini-mills, integrated steel makers, foundries, refineries and processors. We purchase ferrous and non-ferrous scrap metal primarily from industrial and commercial generators of steel, aluminum, copper, brass, stainless steel and other metals as well as from scrap dealers and retail customers who deliver these materials directly to our facilities. We process scrap metal through our sorting, cutting, baling, and shredding operations. The shredding operations, which had previously been idled in May 2015, were restarted in May 2017. Our non-ferrous scrap recycling operations consist primarily of collecting, sorting and processing various grades of copper, aluminum, stainless steel and brass. Our used automobile yard primarily purchases automobiles so that retail customers can locate and remove used parts for purchase.

Our core business is now focused on the metal recycling industry. During 2016, we announced that the Company formed a special committee of independent board members to evaluate various growth and strategic options. During the first quarter of 2017, the special committee concluded its work and reported to the Board. The Board accepted the special committee's recommendation to focus on returning our core recycling business to profitability. We intend to do this by increasing efficiencies and productivity, which included the commercial restart of our auto shredder in the second quarter of 2017. We ~~intend to run~~operate the auto shredder in the normal course of business subject to market conditions and operating needs. We will also evaluate other various options and remain alert for possible strategic partnerships, joint ventures and mergers/acquisitions.

The Company announced on October 4, 2016 the Company and Algar, Inc. ("Algar") mutually agreed to terminate the Management Agreement between us, pursuant to the Agreement to Terminate Management Services among the Company, Algar, and Sean Garber dated as of September 30, 2016. Effective September 30, 2016, Mr. Garber resigned from all positions with the Company, including as President. Also, on September 30, 2016, the Company’s Chief Financial Officer was appointed to serve in the additional role as President.

~~Our cash requirements generally consist of working capital, capital expenditures and debt service.~~ ~~Influenced by the scrap metal market downturn from late~~ ~~2014~~ ~~through~~ ~~2016~~, our sources of liquidity during this time primarily consisted of proceeds from asset and equity sales as well as the idling of the auto shredder and refinancing of our working capital line of credit. Additional information, including the steps the Company took, is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, on file with the Securities and Exchange Commission.

Furthermore, on February 29, 2016, the Company refinanced its Wells Fargo debt with a new lender, MidCap Business Credit LLC ("MidCap"). On March 31, 2017, the Company entered into the First Amendment to the ~~2016~~ ~~Loan, which extended the maturity date of the Company's line of credit and increased the line of credit from $6.0~~ ~~million to $8.0~~ million, subject to the satisfaction of certain borrowing base restrictions as more fully described in the accompanying Notes to Condensed Consolidated Financial Statements. On April 26, 2017, certain borrowing base restrictions were satisfied with MidCap which resulted in an increase in availability of $1.75 million.

Cash flows generated from operations and our revolving credit facility are significant sources of ongoing liquidity. We have also been able to manage liquidity by deferring certain rent payments made to related parties through October 1, 2017, as well as deferring capital ~~expenditures.~~expenditures during 2017. See Note 6 - – Related Party Transactions in the accompanying Notes to Condensed Consolidated Financial Statements for additional information. We actively manage our working capital and associated cash requirements and continually seek more effective use of cash. As of ~~September 30, 2017~~March 31, 2018, we held cash and cash equivalents of $0.9 million. We drew $~~2.2~~0.9 million on our revolving credit facility during the ~~nine~~three month period ended ~~September 30, 2017~~March 31, 2018. We expect operating cash flow and borrowings under our working capital line of credit to be sufficient to meet our ongoing obligations.

~~During~~ ~~2015, the Company had certain loans with KY Bank and Wells Fargo. As of December 31, 2014, the Company was in default under the Wells Fargo loans and during the second half of~~ ~~2015~~ ~~entered into a Forbearance Agreement with Wells Fargo whereby the~~ ~~due~~ ~~dates on the loans were accelerated and the Company was required to take certain actions.~~

~~During~~ ~~2015, as more fully described in~~ ~~the Company's Annual Report on Form 10-K for the year ended December 31, 2016 on file with the Securities and Exchange Commission, the Company took steps to pay down debt and increase liquidity.~~

See Note 1 - – Summary of Significant Accounting Policies and General ~~and~~ , Note 3 ~~- Long Term~~ – Long-Term Debt and Notes Payable to Bank and Note 4 – Lease Commitments in the accompanying Notes to Condensed Consolidated Financial Statements for further details on ~~long term~~ debt and notes ~~payable.~~payable, capital and operating leases and related party obligations.

The borrowings under the line of credit are classified as short-term obligations under GAAP as the agreement with the lender contains a subjective acceleration clause and requires the Company to maintain a lockbox arrangement with the lender. However, the contractual maturity date of the line of credit is February 28, 2020.

~~Nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016~~

~~The following table presents, for the periods indicated, the percentage relationship that certain captioned items in our Condensed Consolidated Statements of Operations bear to total revenue:~~

~~Total revenue~~ ~~increased~~ $~~15.5~~ ~~million or~~ ~~59.4%~~ ~~to $41.5~~ ~~million in the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~compared to $26.0~~ ~~million in the same period in~~ ~~2016~~.

~~Ferrous revenue~~ ~~increased~~ $~~6.9~~ ~~million or71.8%~~ ~~to $16.5~~ ~~million in the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~compared to $9.6~~ ~~million in the same period in~~ ~~2016. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016, the Company experienced an increase in the average selling price ("ASP") of ferrous material of $~~82 ~~per gross ton, or~~ ~~44.9%, partially as a result of the shredder restart that led to a favorable shift in the ferrous sales mix. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016, the Company experienced an increase in ferrous material shipments of~~ ~~9.5~~ ~~thousand tons, or~~ ~~17.9%~~. ~~Tons shipped were negatively impacted by the shredder restart due to the inherent nature of the shredding process.~~

~~Nonferrous revenue~~ ~~increased~~ $~~8.8~~ ~~million or~~ ~~58.4%~~ ~~to $23.9~~ ~~million in the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~compared to $15.1~~ ~~million in the same period in~~ ~~2016~~. ~~Nonferrous material shipments~~ ~~increased~~ by ~~5.7~~ ~~million pounds, or~~ ~~27.4%, along with~~ ~~an increase~~ ~~in the ASP of nonferrous material of $0.18~~ ~~per pound, or~~ ~~24.3%, for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~nine~~ ~~months ended~~ ~~September 30, 2016~~.

~~Total cost of sales~~ ~~increased~~ $~~13.5~~ ~~million or~~ ~~53.3%~~ ~~to $38.9~~ ~~million in the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~compared to $25.4~~ ~~million for the same period in~~ ~~2016. The increase in cost of sales is directly related to the increase in revenue.~~

~~Total cost of sales as a percent of revenue was lower during the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~as compared to the same period in~~ ~~2016. The metals commodity markets improved during the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~as compared to the same period in~~ ~~2016~~, which allowed for improved gross margins, partially offset by startup expenses the Company incurred due to the restart of the shredder operations. These startup expenses consisted primarily of repairs and maintenance expenses, utilities expenses, and personnel expenses.

~~SG&A expenses~~ ~~decreased~~ $~~0.7million to $2.8million in the~~ ~~nine~~ ~~month period ended~~ ~~2017compared to $3.5million in the same period in~~ ~~2016~~.~~SG&A expenses decreased primarily due to a decrease in share based compensation expense of $300.2~~ ~~thousand related to share based compensation expense and a decrease in amounts paid to Algar for management expense of $251.6 thousand.~~

~~Other income (expense) was expense of $611.0~~ ~~thousand for the~~ ~~nine~~ ~~month period ended~~ ~~September 30, 2017~~ ~~compared to expense of $52.0~~ ~~thousand for the~~ ~~nine~~ ~~month period ended~~ ~~September 30, 2016. This $559.0~~ ~~thousand change is a result of (i) a $323.0~~ ~~thousand~~ ~~increase~~ ~~in interest expense, which is a result of the increased outstanding balance on the line of credit offset by (ii) a $28.0~~ ~~thousand~~ ~~increase~~ ~~in the gain on sale of assets, which was primarily due to a gain on a vehicle sold during the first quarter of~~ ~~2017~~, ~~and a decrease in other income of $264.0 thousand which was primarily due to a $233.3 gain on insurance proceeds in the third quarter of 2016.~~

~~The income tax provision~~ ~~decreased~~ $~~68.0~~ ~~thousand to $9.0~~ ~~thousand in the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~compared to $77.0~~ ~~thousand in the same period in~~ ~~2016. The effective tax rates in~~ ~~2017~~ ~~and~~ ~~2016~~ ~~were (1.1)% and (2.6~~)%, respectively, based on federal and state statutory rates. Due to recurring operating losses being incurred, at December 31, 2013, we recorded nearly a full valuation allowance, which is continuing through ~~September 30, 2017. We also have several state and franchise taxes payable based on gross receipts. The Company is currently under a property tax audit and has accrued an estimate of potential assessments.~~

~~Net loss for the~~ ~~nine~~ ~~month period ended~~ ~~2017~~ ~~was $825.0~~ ~~thousand compared to $3.0~~ ~~million for the same period of~~ ~~2016. This was a~~ ~~decrease~~ ~~of $2.2~~ ~~million, or~~ ~~72.4%~~.

Three months ended ~~September 30, 2017~~March 31, 2018 compared to three months ended ~~September 30, 2016~~March 31, 2017

The following table presents, for the periods indicated, the percentage relationship that certain captioned items in our Condensed Consolidated Statements of Operations bear to total revenue:

Total revenue increased $~~5.0~~1.6 million or ~~50.7%~~12.7% to $~~14.9~~14.7 million in the ~~third~~first quarter of ~~2017~~2018 compared to $~~9.9~~13.0 million in the same period in ~~2016~~2017. ~~The increase was primarily a result of~~ ~~the startup of the shredder operations and~~ ~~higher average selling prices (ASP) coupled with a related increase in nonferrous and ferrous volumes.~~

Ferrous revenue increased $~~3.0~~2.4 million or ~~80.5%~~53.2% to $~~6.6~~7.0 million in the ~~third~~first quarter of ~~2017~~2018 compared to $~~3.7~~4.6 million in the same period in ~~2016~~2017. For the three months ended ~~September 30, 2017~~March 31, 2018 compared to three months ended ~~September 30, 2016~~March 31, 2017, the ~~Company experienced an increase in the ASP~~average selling price ("ASP") of ferrous material ofincreased $~~105~~113 per gross ton, or ~~58.3%~~43%, partially as a result of the shredder restart that led to a favorable shift in the ferrous sales mix and partially due to market improvements. For the three months ended ~~September 30, 2017~~March 31, 2018 compared to three months ended ~~September 30, 2016~~March 31, 2017, ~~the Company experienced an increase in~~ ferrous material shipments ofincreased ~~2.9~~0.4 thousand tons, or ~~14.1%~~2%~~. Tons shipped were negatively impacted by~~, despite the negative impact from the shredder ~~restart due to the~~restart. The inherent nature of the shredding ~~process.~~process produces less saleable product volume but at a higher quality level, thereby increasing the ASP. Ferrous revenue includes non-commodity revenue such as service fees, transportation and returns and allowances; the ASP calculation excludes these non-commodity revenues.

~~Nonf~~Non-ferrous revenue ~~increased~~decreased $~~2.1~~0.7 million or ~~37.1%~~8.5% to $~~7.9~~7.3 million in the ~~third~~first quarter of ~~2017~~2018 compared to $~~5.8~~8.0 million in the same period in ~~2016~~2017. For the ~~Nonferrous~~three months ended March 31, 2018 compared to three months ended March 31, 2017, the ASP of non-ferrous material increased $0.20 per pound, or 20% and non-ferrous material shipments ~~increased~~decreased by ~~1.1~~1.8 million pounds, or ~~13.8%~~22%~~, along with an increase in~~. Non-ferrous revenue includes non-commodity revenue such as service fees, transportation and returns and allowances; the ASP ~~of nonferrous material of $0.15~~ ~~per pound, or~~ ~~20.5%, for the~~ ~~three~~ ~~months ended~~ ~~September 30, 2017~~ ~~compared to~~ ~~three~~ ~~months ended~~ ~~September 30, 2016~~.calculation excludes these non-commodity revenues.

Total cost of sales increased $~~4.2~~1.4 million or ~~42.4%~~11.3% to $~~14.0~~13.4 million in the three month period ended ~~2017~~2018 compared to $~~9.8~~12.1 million for the same period in ~~2016~~2017. The increase ~~in cost~~was a result of ~~sales is primarily related to the~~an increase in ~~revenue.~~ferrous material shipments and higher average prices on a per-unit basis in our ferrous and non-ferrous operations, offset slightly by a decrease in non-ferrous material shipments.

Total cost of sales as a percent of revenue decreased during the three month period ended ~~2017~~2018 as compared to the same period in ~~2016~~2017. ~~The metals commodity markets improved~~This improvement was a result of generally increasing ASP during 2018 as well as favorable sales mix that resulted from the ~~third~~ ~~quarter~~startup of ~~2017~~ ~~as compared~~the shredder. This was partially offset by startup expenses the Company incurred due to the ~~same period~~restart of the shredder operations in ~~2016, which allowed for improved gross margins~~.May 2017. These startup expenses consisted primarily of repairs and maintenance expenses, utilities expenses and personnel expenses.

SG&A expenses decreased $~~0.2~~0.1 million to $0.9 million in the three month period ended ~~2017~~2018 compared to $~~1.1~~1.0 million in the same period in ~~2016~~2017. SG&A expenses decreased primarily due to a decrease in ~~amounts paid to Algar for management~~consulting expense of ~~$117.1~~$61.4 thousand, a decrease in director fees of $30.5 thousand and a decrease in stock option expense of $22.4 thousand.

Other income (expense) was expense of $~~257.0~~242.0 thousand for the three month period ended ~~September 30, 2017~~March 31, 2018 compared to ~~income~~expense of $~~108.0~~153.0 thousand for the three month period ended ~~September 30, 2016~~March 31, 2017. This $~~365.0~~89.0 thousand change is a result of (i) an $~~111.0~~59.0 thousand increase in interest expense, which is a result of the increased outstanding balance on the line of credit offset by (ii) decrease in ~~other income of $254.0 thousand which was primarily due to a $233.3~~ gain on ~~insurance proceeds in the third quarter~~sale of ~~2016~~assets of $28.0 thousand.

The income tax provision ~~decreased~~increased $~~35.0~~1.0 thousand to $~~2.0~~8.0 thousand in the three month period ended ~~2017~~2018 compared to $~~37.0~~7.0 thousand in the same period in ~~2016~~2017. The effective tax rates in ~~2017~~2018 and ~~2016~~2017 were (~~1.1~~18.2)% and (~~4.1~~2.7)%, respectively, based on federal and state statutory rates. Due to recurring operating losses being incurred, at December 31, 2013, we recorded nearly a full valuation allowance, which is continuing through ~~September 30, 2017~~March 31, 2018. We also have several state and franchise taxes payable based on gross receipts. The Company is currently under a property tax audit and has accrued an estimate of potential assessments.

Net ~~loss~~income for the ~~third~~first quarter of ~~2017~~2018 was $~~177.0~~36.0 thousand compared to a net loss of $~~938.0~~271.0 thousand for the same period of ~~2016~~2017. This was a ~~decrease~~an increase of $~~761.0~~307.0 thousand, or ~~81.1%~~113.3%.

Financial condition at ~~September 30, 2017~~March 31, 2018 compared to December 31, ~~2016~~2017

Cash and cash equivalents increased $~~326.0~~39.0 thousand to $~~852.0~~880.0 thousand as of ~~September 30, 2017~~March 31, 2018 from $~~526.0~~841.0 thousand as of December 31, ~~2016~~2017.

Net cash used in operating activities was $~~1.5~~0.4 million for the ~~nine~~three month period ended ~~September 30, 2017~~March 31, 2018. The net cash used in operating activities is primarily due to ~~a net loss of $0.8~~ ~~million,~~ an increase in receivables of $~~2.2~~1.1 million, an increase in inventories of $~~0.3~~0.4 million, an increase in other assets of $0.2 million, and a decrease in payables and accrued expenses to related parties of $~~0.2~~0.1 million. These cash uses in operating activities were partially offset by net income of $36.0thousand, an increase in accounts payable of $0.9 million, depreciation of $0.5million, a decrease in receivables from related parties of $~~59.0~~47.0 thousand, ~~depreciation of $1.7~~ ~~million,~~ and stock option expense of $~~90.0~~9.0 thousand. The Company had $~~75.0~~104.0 thousand of capital expenditures in ~~2017~~2018.

Net cash from financing activities was $~~1.9~~0.6 million for the ~~nine~~three month period ended ~~September 30, 2017~~March 31, 2018. In the ~~nine~~three month period ended ~~September 30, 2017~~March 31, 2018, we received net proceeds from debt of $~~2.2~~0.9 million less capitalized loan fees in the amount of $~~125.0~~94.0 ~~thousand.~~thousand and a decrease in checks in excess of bank of $0.1 million.

Accounts receivable trade after allowances for doubtful accounts increased $~~2.2~~1.1 million or ~~65.6%~~26.6% to $~~5.6~~5.3 million as of ~~September 30, 2017~~March 31, 2018 compared to $~~3.4~~4.2 million as of December 31, ~~2016~~2017 due to ~~a substantial increase in volume in the quarter ended~~ ~~September 30, 2017, as well as modest~~increased shipments and commodity price increases. In general, the accounts receivable balance fluctuates due to the quantity and timing of shipments, commodity prices and receipt of customer payments.

Accounts receivables from related parties decreased $~~59.0~~47.0 thousand to $~~91.0~~45.0 thousand as of ~~September 30, 2017~~March 31, 2018 compared to $~~150.0~~92.0 thousand as of December 31, ~~2016~~2017. This decrease was due to timing of cash receipts.

Inventories consist principally of ferrous and ~~nonferrous~~non-ferrous scrap materials. We value inventory at the lower of cost or net realizable value. Inventory increased $~~0.3~~0.4 million, or ~~9.0%~~7.8%, to $~~3.7~~5.5 million as of ~~September 30, 2017~~March 31, 2018 compared to $~~3.4~~5.1 million as of December 31, ~~2016~~2017. This increase is primarily driven by ~~pricing increases resulting in~~higher commodity prices and increased volumes ~~and inventory levels~~ during the ~~third~~first quarter of ~~2017~~2018 compared to the fourth quarter of ~~2016~~2017.

Inventory aging for the period ended ~~September 30, 2017~~March 31, 2018 (Days Outstanding):

Inventory aging for the period ended December 31, ~~2016~~2017 (Days Outstanding):

Inventory in the 60 days or less categories compared to total inventory ~~remained consistent~~increased slightly at ~~96.0%~~95.5% as of ~~September 30, 2017~~March 31, 2018 compared to ~~95.4%~~93.3% as of December 31, ~~2016~~.2017. Inventory greater than 60 days compared to total inventory ~~remained consistent~~decreased slightly at ~~4.0%~~4.5% as of~~September 30, 2017~~March 31, 2018 compared to ~~4.6%~~6.7% as ofDecember 31, ~~2016~~2017.

Accounts payable trade increased $~~92.0~~886.0 thousand or ~~5.7%~~49.7% to $~~1.7~~2.7 million as of ~~September 30, 2017~~March 31, 2018 compared to $~~1.6~~1.8 million as of December 31, ~~2016~~2017. The accounts payable balance fluctuates due to timing of purchases from and payments made to our vendors.

Payables and accrued expenses to related parties decreased $~~0.2~~0.1 million to $~~0.4~~49.0 ~~million~~thousand as of ~~September 30, 2017~~March 31, 2018 compared to $~~0.6~~0.2 million as of December 31, ~~2016~~2017. This decrease is largely a result of a decrease in the ~~bonus~~facility rent payable to ~~Algar~~related parties of $~~180.0~~82.0 thousand. See Note 6 - – Related Party Transactions for additional information.

Working capital increased $~~0.4~~0.3 million to $~~2.1~~2.5 million as of ~~September 30, 2017~~March 31, 2018 compared to $~~1.7~~2.2 million as of December 31, ~~2016~~2017 as a result of the above noted items.

The following table provides information with respect to our known contractual obligations for the quarter ended ~~September 30, 2017~~March 31, 2018.

~~On February 29, 2016, the Company entered into a subordinated, unsecured debt with related parties, which converted amounts previously held as related party payables, in the amount of $1.5~~ ~~million. See Note~~ 6 ~~- Related Party Transactions for additional information.~~

~~On June 23, 2017, the Company entered into a debt agreement with K&R, LLC for the purchase of equipment to be used in the operation of the Company’s business~~. ~~See Note~~ 6 ~~- Related Party Transactions for additional information.~~

~~On May 1, 2016, the Company entered into an amendment to a previous operating lease, whereby the lease is extended through April 30, 2021.~~ ~~Based on the new lease terms, the Company classified the amended lease as a capital lease. At inception, the Company recorded a capital lease obligation of $1.3~~ ~~million.~~ ~~As of~~ ~~September 30, 2017, the Company has recorded $192.7thousand in depreciation expense and $84.4thousand in interest expense related to the capital lease.~~ ~~See Note~~ 4 ~~- Lease Commitments for additional information.~~

~~The~~ ~~Company entered into a capital lease, effective June 2017, to lease~~ ~~two~~ ~~pieces of equipment. The lease is for a period of~~ ~~six years~~ ~~and the payments are $0.7~~ ~~thousand per month. The Company has the option to purchase the equipment for a purchase price of $1.00~~ ~~per item of equipment upon the expiration of the lease.~~ ~~At inception, the Company recorded a capital lease obligation of $75.2 thousand.~~ ~~See Note~~ 4 ~~- Lease Commitments for additional information.~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards ~~(e.g.~~(e.g., insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. ~~Early application is not permitted.~~ On January 1, 2018, the Company adopted ASU 2014-09 using the retrospective approach. The Company ~~is evaluating the potential~~ noted no financial impact ~~of the adoption of ASU~~ ~~2014~~-09 on the Condensed Consolidated Financial ~~Statements. The Company does not expect~~Statements as a ~~material impact from~~result of the adoption of ~~ASU~~this amended guidance. In addition, the adoption of this new accounting standard resulted in increased disclosure, including qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See the Revenue Recognition section of ~~2014~~-09Note 1 – Summary of Significant Accounting Policies and General ~~on the Condensed Consolidated Financial Statements.~~for additional information.

~~In August 2014, the FASB issued ASU No.~~ ~~2014~~-15~~, Presentation of Financial Statements-Going Concern (Subtopic~~ ~~205~~-40~~). The amendments in ASU~~ ~~2014~~-15 are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments were effective for annual periods ending after December 15, 2016, including interim periods within that reporting period. The Company adopted ASU ~~2014~~-15 ~~in the fourth quarter of~~ ~~2016~~ ~~and noted no material impact from the adoption on its Condensed Consolidated Financial Statements~~.

~~In July 2015, the FASB issued ASU~~ ~~2015~~-11, ~~Inventory~~, which simplifies the measurement principle of inventories valued under the First-In, First-Out ("FIFO") or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU ~~2015~~-11 ~~was effective for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. The Company adopted the standard in the fourth quarter of~~ ~~2016~~ ~~and noted no material impact on its Condensed Consolidated Financial Statements.~~

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent on the consolidated balance sheet. ASU 2015-17 was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Upon adoption, ASU 2015-17 may be applied either prospectively or retrospectively. The Company adopted the standard in the first quarter of 2017 and noted no material impact on its Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the leased assets largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Condensed Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which provides guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company is evaluating the potential impact of ASU 2016-13 on the Condensed Consolidated Financial ~~Statements~~Statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. ~~Early adoption is permitted as of the beginning of an interim or annual reporting period.~~ Upon adoption, ASU 2016-15 should be applied retrospectively. The Company is evaluating the potential impact of ASU 2016-15 on its Condensed Consolidated Financial Statements. The Company does not expect a material impact from the adoption of ASU 2016-15 on the Condensed Consolidated Financial Statements.

No other new accounting pronouncements issued or effective during the reporting period had, or is expected to have, a material impact on our Condensed Consolidated Financial Statements.

ISA’s management, including ISA’s principal executive officer and principal financial officer, have evaluated the effectiveness of our “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934. Based upon ~~their~~this evaluation, our principal executive officer and principal financial and accounting officer concluded that, as of ~~September 30, 2017~~March 31, 2018, ISA’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that ISA files under the Exchange Act with the Securities and Exchange Commission (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to ISA’s management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure.

~~There~~On March 26, 2018, Orson Oliver resigned his position as Interim Chief Executive Officer and the Board appointed Todd L. Phillips as Chief Executive Officer. Mr. Phillips will serve as the Company's principal executive officer and principal financial and accounting officer. Other than the aforementioned, there were no changes in ISA’s internal control over financial reporting during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 that have materially affected, or are reasonably likely to materially affect, ISA’s internal control over financial reporting.

The Company has litigation from time to time, including employment-related claims, none of which the Company currently believes to be material.

The Company's operations are subject to various environmental statutes and regulations, including laws and regulations addressing materials used in the processing of products. In addition, certain of the Company's operations are subject to federal, state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. Failure to maintain or achieve compliance with these laws and regulations or with the permits required for operations could result in substantial operating costs and capital expenditures, in addition to fines and civil or criminal sanctions, third party claims for property damage or personal injury, cleanup costs or temporary or permanent discontinuance of operations. Certain of the Company's facilities have been in operation for many years and, over time, the Company and other predecessor operators of these facilities have generated, used, handled and disposed of hazardous and other regulated wastes. Environmental liabilities in material amounts could exist, including cleanup obligations at these facilities or at off-site locations where the Company disposed of materials from its operations, which could result in future expenditures that the Company cannot currently estimate and which could reduce its profits. The Company records liabilities for remediation and restoration costs related to past activities when its obligation is probable and the costs can be reasonably estimated. Costs of future expenditures for environmental remediation are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Costs of ongoing compliance activities related to current operations are expensed as incurred. Such compliance has not historically constituted a material expense to the Company.

There have been no material changes in our risk factors as previously disclosed in Part 1, “Item 1A. Risk Factors” of our Annual Report on Form 10-K, for the fiscal year ended December 31, ~~2016~~2017. You should carefully consider the risk factors in our ~~2016~~2017 Form 10-K, which could materially affect our business, financial condition or future results.

~~None.~~The following list sets forth information regarding all equity securities of the Company sold or granted by the Company during the period covered by this report that were not registered under the Securities Act of 1933, as amended (the “Securities Act”). The securities were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated under the Securities Act, which exempt transactions by an issuer not involving any public offering. The securities are non-transferable in the absence of an effective registration statement under the Securities Act or an available exemption therefrom, and all certificates are subject to a restrictive legend to that effect.

On March 28, 2018, as compensation for services to be provided, the Company granted an aggregate of 18.0 thousand RSUs to six employees under the LTIP pursuant to RSU agreements. Each RSU vests on March 28, 2021 and represents the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU agreements and the LTIP.

Each employee had such knowledge and experience in financial and business matters that the employee was capable of evaluating the merits and risks of accepting the award of RSUs. The Company (i) provided each employee with the information described in Rule 502(b) of Regulation D a reasonable time before the Company granted the RSUs to the employee, (ii) made available to each employee the opportunity to ask questions and receive answers concerning the terms and conditions of the grant of RSUs and to obtain any additional information which the Company possessed or could acquire without unreasonable effort or expense to verify the accuracy of the information provided, and (iii) advised the employees of the limitations on resale in the manner described in Rule 502(d).

On March 28, 2018, as compensation for services, the Company granted 40.6 thousand RSUs to the CEO under the LTIP pursuant to an RSU agreement. Each RSU vests on March 28, 2021 and represents the right to receive one share of the Company's common stock upon the vesting of the RSU, subject to the terms and conditions set forth in the RSU agreement and the LTIP. The CEO is an accredited investor; moreover, the Company provided the CEO with the same information described in Rule 502(b) of Regulation D that it provided to the six employees.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Supplemental disclosure of cash flow information:
Cash paid for interest	$	199	$	133
Cash paid for taxes		14		2

	For the nine months ended
	September 30, 2017		September 30, 2016
	(in thousands)
Supplemental disclosure of cash flow information:
Cash paid for interest	$	498	$	186
Cash paid for taxes		2		2
Tax refunds received		5		5
Supplemental disclosure of noncash investing and financing activities:
Conversion of related party payables to long-term debt, related parties		—		1,504
Equipment additions financed by capital lease obligations		75		1,285
Equipment financed by related party debt		129		—


	September 30, 2017				March 31, 2018
	(unaudited)		December 31, 2016		(unaudited)		December 31, 2017
	(in thousands)				(in thousands)
Raw materials	$	2,296	$	2,222	$	3,713	$	3,046
Finished goods	862		805		1,062		1,366
Processing costs	589		410		729		694
Total inventories for sale	$	3,747	$	3,437	$	5,504	$	5,106

	Related Party		Other		Total		Related Party		Other		Total
2018	$	486	$	17	$	503
2019		470		—	470		$	486	$	103	$	589
2020		450		—	450			452		103	555
2021		450		—	450			450		79	529
2022		450		—	450			450		7	457
2023 and thereafter		927		—	927
2023								450		6	456
2024 and thereafter								675		—	675
Future minimum lease payments	$	3,233	$	17	$	3,250	$	2,963	$	298	$	3,261


Options	Number of shares (in thousands)		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2015	2,172		$	5.02	1.70 years	$	2.24
Cancelled	(1,670	)	5.10		—	2.18
Outstanding at December 31, 2016	502		$	4.78	2.07 years	$	2.43
Expired	(90	)		4.94	—		1.71
Outstanding at September 30, 2017	412		$	4.75	1.69 years	$	2.59
Exercisable at September 30, 2017	412		$	4.75	1.69 years	$	2.59
Securities available for grant at September 30, 2017*	1,750

	September 30,		December 31,		March 31,		December 31,
	2017		2016		2018		2017
	(unaudited)				(unaudited)
	(in thousands)				(in thousands)
Revolving credit facility with MidCap, see above description for additional details	$	5,181	$	2,942	$	5,874	$	5,018
K&R, LLC related party notes (See Note 6 - Related Party Transactions)	997		884		700		716
7100 Grade Lane LLC related party note (See Note 6 - Related Party Transactions)	620		620		884		884
	6,798		4,446		7,458		6,618
Less amounts classified as current maturities	5,245		2,942		5,938		5,082
	$	1,553	$	1,504	$	1,520	$	1,536

	Total		Principal		Interest		Total		Principal		Interest
2018	$	392	$	293	$	99
2019		392		322		70	$	392	$	307	$	85
2020		392		353		39		392		337		55
2021		204		196		8		392		370		22
2022	28		26		2			17		14		3
2023							20		19		1
	$	1,408	$	1,190	$	218	$	1,213	$	1,047	$	166


	2017			2016
	(in thousands, except per share information)
Basic loss per share
Net loss	$	(825	)	$	(2,990	)
Weighted average shares outstanding	8,077			8,042
Basic loss per share	$	(0.10	)	$	(0.37	)
Diluted loss per share
Net loss	$	(825	)	$	(2,990	)
Weighted average shares outstanding	8,077			8,042
Add dilutive effect of assumed exercising of stock options and warrants	—			—
Diluted weighted average shares outstanding	8,077			8,042
Diluted loss per share	$	(0.10	)	$	(0.37	)


	2017			2016
	(in thousands, except per share information)
Basic loss per share
Net loss	$	(177	)	$	(938	)
Weighted average shares outstanding	8,082			8,067
Basic loss per share	$	(0.02	)	$	(0.12	)
Diluted loss per share
Net loss	$	(177	)	$	(938	)
Weighted average shares outstanding	8,082			8,067
Add dilutive effect of assumed exercising of stock options and warrants	—			—
Diluted weighted average shares outstanding	8,082			8,067
Diluted loss per share	$	(0.02	)	$	(0.12	)


	2018		2017
	(in thousands, except per share information)
Basic income (loss) per share
Net income (loss)	$	36	$	(271	)
Weighted average shares outstanding	8,090		8,075
Basic income (loss) per share	$	0.00	$	(0.03	)
Diluted income (loss) per share
Net income (loss)	$	36	$	(271	)
Weighted average shares outstanding	8,090		8,075
Add dilutive effect of assumed exercising of stock options, RSUs and warrants	24		—
Diluted weighted average shares outstanding	8,114		8,075
Diluted income (loss) per share	$	0.00	$	(0.03	)

		2017		2016
K&R, LLC and 7100 LLC:
Deposit amounts owed to the Company by related parties	(1)	$	42	$	42
Prepaid expenses to related parties	(1)		43		—
Notes payable to related parties	(3)		1,617		1,504
Accrued interest to related parties	(2)		—		63
Facility rent payable to related parties	(2)		346		176
Equipment rent payable to related parties	(2)		15		15
Facility rent expense to related parties	(4)		484		484
Equipment rent expense to related parties	(4)		—		25
Interest expense to related parties	(4)		56		44

Algar, Inc.:
Bonus payable to Algar	(2), (5)	$	—	$	180
Revenue from scrap sales to Algar	(4), (6)		—		7
Revenue from logistical services to Algar	(4), (6)		—		48
Revenue from IT services to Algar	(4), (6)		—		16
Scrap material purchases from Algar	(4), (6)		—		1,204
Management fee expense	(4), (6)		—		238
Bonus expense to Algar	(4), (6)		—		180
Rental income from Algar	(4), (6)		—		16
Other expenses to Algar	(4), (6)		—		14

Board of Directors: *
Accounts payable to the Board of Directors for fees	(2)	$	46	$	144
Board of director fee expense	(4)		160		168

LK Property Investments, LLC:
Lease deposit to LK Property	(1)	$	3	$	3
Prepaid expenses to related parties	(1)		3		—
Accounts payable to LK Property	(2)		1		—
Rent expense to LK Property**	(4)		27		27

MetalX, LLC:
Accounts receivable from MetalX	(1)	$	—	$	105
Revenue from product sales to MetalX	(4)		188		116

		2018
Weighted average grant-date fair value of grants per option	$	1.61
Volatility		80.40	%
Risk-free interest rate		2.59	%
Expected life (in years)		5.00
Expected dividend yield		—	%


Restricted Stock Units	Number of shares (in thousands)		Weighted Average Remaining Contractual Term	Weighted Average Grant Date Fair Value		Number of shares (in thousands)		Weighted Average Remaining Contractual Term	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	45		1.05 years	$	2.23
Outstanding at December 31, 2017						22.6		0.35 years	$	2.37
Granted						58.6		3.00 years		2.46
Vested	(11	)				(11.4	)	—		2.63
Outstanding at September 30, 2017	34		0.48 years	$	2.28
Outstanding at March 31, 2018						69.8		2.55 years	$	2.40


	Nine months ended
	September 30,
	2017		2016
Statements of Operations Data:
Total revenue	100.0	%	100.0	%
Total cost of sales	93.8	%	97.6	%
Selling, general and administrative expenses	6.6	%	13.4	%
Loss before other expenses	(0.5	)%	(11.0	)%


	Three months ended				Three months ended
	September 30,				March 31,
	2017		2016		2018		2017
Statements of Operations Data:
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Total cost of sales	93.7	%	99.1	%	91.7	%	92.8	%
Selling, general and administrative expenses	5.8	%	11.1	%	6.3	%	8.0	%
Income (loss) before other expenses	0.6	%	(10.2	)%	2.0	%	(0.9	)%


	(in thousands, except days information)										(in thousands, except days information)
Description	1 - 30		31 - 60		61 - 90		Over 90		Total		1 - 30		31 - 60		61 - 90		Over 90		Total
Ferrous and non-ferrous materials	$	3,120	$	478	$	65	$	84	$	3,747
Ferrous and non-ferrous materials and auto parts											$	4,851	$	404	$	135	$	114	$	5,504


	Payments due by period (in thousands)										Payments due by period (in thousands)
	Total		Less than 1 year		1 - 2 years		3 - 5 years		More than 5 years		Total		Less than 1 year		1 - 2 years		3 - 4 years		More than 4 years
Obligation Description:
Long-term debt obligations	$	6,798	$	64	$	5,230	$	1,504	$	—	$	7,458	$	64	$	7,394	$	—	$	—
Operating lease obligations (1)	3,223		503		920		900		900		3,261		589		1,084		913		675
Capital lease obligations (1)	1,190		293		675		222		—		1,047		307		707		33		—
Total	$	11,211	$	860	$	6,825	$	2,626	$	900	$	11,766	$	960	$	9,185	$	946	$	675


(1)	See Note 4 - – Lease Commitments and Note 6 - – Related Party Transactions for detailed information related to the Company's operating and capital lease obligations.

		INDUSTRIAL SERVICES OF AMERICA, INC.
Date:	~~November 8, 2017~~May 10, 2018	~~By /s/ Orson Oliver~~
		~~Orson Oliver~~
		~~Chairman of the Board and Interim Chief Executive Officer~~
		~~(Principal Executive Officer)~~

~~Date:~~	~~November 8, 2017~~	By /s/ Todd L. Phillips
		Todd L. Phillips
		Chief Executive Officer, President and Chief Financial Officer
		(Principal Executive and Financial and Accounting Officer)



Exhibit Number		Description of Exhibits
10.1	*	~~All Net Lease,~~Amended and Restated Employment Agreement dated March 26, 2018, effective ~~as of October~~January 1, ~~2017,~~2018, between the Company and ~~7100 Grade Lane LLC~~Todd L. Phillips, including the Restricted Stock Unit Grant Agreement and the Non-Incentive Stock Option Agreement attached thereto as Annex A and Annex B, respectively. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K as filed on ~~November 1, 2017)(File No. 0-20979)~~
~~10.2~~	*	Back Rent Agreement, effective as of October 1, 2017, between the Company and 7100 Grade Lane LLC, including the Promissory Note, effective October 1, 2017, in the principal amount of $345,808 attached thereto. ~~(incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K as filed on November 1, 2017)~~March 26, 2018)(File No. 0-20979)
31.1		Rule 13a-14(a) Certification of ~~Orson Oliver for the Form 10-Q for the quarter ended September~~ ~~30, 2017~~.
~~31.2~~		~~Rule 13a-14(a) Certification of~~ Todd L. Phillips for the Form 10-Q for the quarter ended ~~September~~ ~~30, 2017~~March 31, 2018..
32.1		Section 1350 Certification of ~~Orson Oliver and~~ Todd L. Phillips for the Form 10-Q for the quarter ended ~~September 30, 2017~~March 31, 2018.
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