As filed with the Securities and Exchange Commission on May | ||
Registration No. 333- | ||
UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549 | ||
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FORM S-3 | ||
REGISTRATION STATEMENT | ||
Under | ||
THE SECURITIES ACT OF 1933 | ||
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INDUSTRIAL SERVICES OF AMERICA, INC. | ||
(Exact name of registrant as specified in its charter) | ||
Florida | 59-0172746 | |
(State or other jurisdiction | (I.R.S. Employer | |
7100 Grade Lane | ||
P.O. Box 32428 | ||
Louisville, KY 40232 | ||
(502) | ||
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) | ||
Michael P. Shannonhouse, Esq. | ||
7100 Grade Lane | ||
Louisville, KY 40213 | ||
(502) | ||
(Name, address, including zip code, and telephone number, including area code, of agent for service) | ||
Copy To: | ||
Alex P. Herrington, Jr., Esq. | ||
Stites & Harbison, PLLC | ||
400 West Market Street, Suite 1800 | ||
Louisville, Kentucky 40202 | ||
(502) 587-3400 | ||
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Approximate date of commencement of proposed sale to the public: | ||
From time to time after this Registration Statement becomes effective. | ||
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If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [ ] | ||
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.ý | ||
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] | ||
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] | ||
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] | ||
CALCULATION OF REGISTRATION FEE | ||
Title of Each Class of | Amount | Proposed | Proposed | Amount of | Amount | Proposed | Proposed | Amount of |
Common Stock (par value $0.005 per share) | 40,000 shares | $2.50 | $100,000.00 | $12.67 | 40,000 shares | $1.25 | $50,000.00 | $5.35 |
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended, based on the exercise price for the common stock under |
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The | |
The information in this prospectus is not complete and may be changed. | |
SUBJECT TO COMPLETION, DATED MAY | |
PROSPECTUS | |
INDUSTRIAL SERVICES OF AMERICA, INC. | |
This prospectus is part of a Registration Statement which registers an aggregate of 40,000 shares of common stock of Industrial Services of America, Inc., which we | |
Mr. | |
· | block trades in which the brokers or dealers so engaged will attempt to sell shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
· | purchases by a broker or dealer as principal and resale by a broker or dealer for its account pursuant to this Prospectus; |
· | ordinary brokerage transactions and transactions in which the broker solicits purchasers; |
· | in privately negotiated transactions not involving a broker or dealer; and |
· | a combination of any of these methods of sale. |
Mr. | |
The Settlement Agreement permits Mr. Lassak to engage in a variable prepaid forward contract, or other similar arrangements, to hedge against market risk with respect to all or part of the 40,000 shares. | |
In effecting sales, brokers or dealers engaged to sell shares may arrange for other brokers or dealers to participate. Brokers or dealers engaged to sell shares will receive compensation in the form of commissions or discounts in amounts that Mr. | |
Industrial Services lists its common stock on the Nasdaq | |
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. | |
The date of the prospectus is |
TABLE OF CONTENTS | ||
Page | ||
| 1 | |
Risk Factors | 2 | |
Industrial Services | 4 | |
Selling Shareholder | 4 | |
Plan of Distribution | 5 | |
Use of Proceeds | 6 | |
Transfer Agent | 6 | |
Legal Matters | 6 | |
Experts | 6 | |
Where You Can Find More Information | 7 | |
Incorporation of Documents That We File with the Commission | 7 |
Prospectus Summary | ||
About this Prospectus | ||
No person is authorized to give any information or make any representation not contained or incorporated by reference in this prospectus in connection with the offer contained in this | ||
This prospectus does not constitute an offer to sell or the solicitation of any offer to buy any security other than the securities covered by this prospectus, nor does it constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. | ||
The Company | ||
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The Company was incorporated under the laws of the State of Florida in October, 1953, as Alson Manufacturing, Inc. Industrial Services is an integrated solid waste management consulting company engaged in the business of ferrous, non-ferrous and fiber recycling, retail and industrial waste management, and waste handling equipment sales and service. | |
Corporate Information | |
Our principal executive offices are located at 7100 Grade Lane, P.O. Box 32428, Louisville, Kentucky 40232 and our telephone number is (502) 368-1661. | |
Forward-Looking Statements | |
This prospectus and the documents incorporated by reference in this prospectus contain forward-looking statements within the meaning of the federal securities laws. | |
These forward-looking statements include, among others, our expectations and assumptions concerning the following aspects of our business: | |
· | our financial condition and future operating results; |
· | competitive conditions within the ferrous, non-ferrous and fiber recycling and waste management industries; and |
· | future economic conditions. |
These statements may be found under "Risk Factors". Forward-looking statements are typically identified by the use of terms such as "may," "will," "expect," "anticipate," "estimate," "believe," "intend," "future" and similar words, although some forward-looking statements may be expressed differently. | |
You should be aware that our actual results could differ materially from those contained in the forward-looking statements. You should consider carefully the statements under "Risk Factors" and other sections of this prospectus, as well as other documents that we file with the Commission, which describe various risks and uncertainties that could cause our actual results to differ from those set forth in the forward-looking statements. | |
Purchasers of our common stock should not place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to republish revised forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date of this prospectus. | |
Risk Factors | |
You should carefully consider the following risks and uncertainties and all other information contained in this prospectus, or incorporated herein by reference, before you decide whether to purchase our common stock. | |
If any of the following risks, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations, cash flows or prospects could be materially adversely affected. | |
The loss of our customer contract with Home Depot has resulted in reduced revenues for us that we may not be able to replace. | |
We lost our contract with Home Depot and we may be unable to replace in whole the lost revenue generated from that customer and necessarily the gross profit received therefrom. The Home Depot contract represented 56%, 51% and 57% of our revenue for 2005, 2004 and 2003, respectively, and 21%, 20% and 16% of our gross profit for 2005, 2004 and 2003, respectively. | |
Notwithstanding the loss of this contract, we are seeking new customers to replace this lost revenue and gross profit. To date, we have not consummated a contract with any new customers who generate significant revenue and gross profit for us, but we are in discussions with some potential customers who may generate such revenue and gross profit. Although we may not be able to replenish this lost revenue from the management service segment of our business, we believe that the remaining segments of our business will generate increased revenue, particularly in the recycling business, and gross profit to offset in the near term the lost gross profit derived from the Home Depot contract. | |
Our business has increasing involvement in ferrous, non-ferrous and fiber recycling. Currently, the prices of | |
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Many companies offer or are engaged in the development of products or the provisions of services that may be or are competitive with our current products or services, although we do not believe any competition offers the unique mixture of the services and products we provide in the waste management area. Many entities have substantially greater financial, technical, manufacturing, marketing, distribution and other resources than we possess. In addition, the industry is constantly changing as a result of consolidation that may create additional competitive pressures in our business environment. | |
An increase in the price of fuel may adversely affect our business. | |
Our operations are dependent upon fuel, which we generally purchase in the open market on a daily basis. Direct fuel costs include the cost of fuel and other petroleum-based products used to operate our fleet of cranes and heavy equipment. We are also susceptible to increases in indirect fuel costs, which include fuel surcharges from vendors. During 2003, 2004 and 2005, we experienced increases in the cost of fuel and other petroleum-based products. A portion of these increases we passed on to our customers. However, because of the competitive nature of the industry, there can be no assurance that we will be able to pass on current or future increases in fuel prices to our customers. Due to political instability in oil-producing countries, fuel prices may continue to increase significantly in 2006. A significant increase in fuel costs could adversely affect our business. | |
We could incur substantial costs in order to comply with, or to address any violations under, environmental laws that could significantly increase our operating expenses and reduce our operating income. | |
Our operations are subject to various environmental statutes and regulations, including laws and regulations addressing materials used in the | |
Our financial statements are based upon estimates and assumptions that may differ from actual results. | |
We have prepared our financial statements in accordance with U.S. generally accepted accounting principles and necessarily include amounts based on estimates and assumptions we made. Actual results could differ from these amounts. Significant items subject to such estimates and assumptions include the carrying value of long-lived assets, valuation allowances for accounts receivable, liabilities for potential litigation, claims and assessments, and liabilities for environmental remediation and deferred taxes. | |
We depend on our senior management team and the loss of any member could prevent us from implementing our business strategy. | |
Our success is dependent on the management and leadership skills of our senior management team. We have not entered into employment agreements with any of our senior management personnel. The loss of any members of our management team or the failure to attract and retain additional qualified personnel could prevent us from implementing our business strategy and continuing to grow our business at a rate necessary to maintain future profitability. | |
Seasonal changes may adversely affect our business and operations. | |
Our operations may be adversely affected by periods of inclement weather, which could decrease the collection and shipment volume of recycling materials. | |
Risks Related to Our Common Stock | |
Future sales of our common stock could depress our market price and diminish the value of your investment. | |
Future sales of shares of our common stock could adversely affect the prevailing market price of our common stock. If our existing shareholders sell a large number of shares, or if we issue a large number of shares, the market price of our common stock could significantly decline. Moreover, the perception in the public market that our existing shareholders and in particular members of the Kletter family might sell shares of common stock could depress the market for our common stock. | |
The market price for our common stock may be volatile. | |
In recent periods, there has been volatility in the market price for our common stock. In addition, the market price of our common stock could fluctuate substantially in the future in response to a number of factors, including the following: | |
· | our quarterly operating results or the operating results of our companies in the waste management or ferrous, non-ferrous and fiber recycling industry; |
· | changes in general conditions in the economy, the financial markets |
· | loss of significant customers, as was the case with the loss of Home Depot; and |
· | increases in materials and other costs. |
In addition, in recent years the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance. These broad market fluctuations may materially adversely affect our stock price, regardless of our operating results. | |
We historically have not paid any cash dividends and although we | |
We have not paid any cash dividends on our common stock except on one occasion in September 21, 2004 and we may choose to continue this practice of non-payment of dividends in order to fund working capital, for use in our business operations and in the expansion of our business. | |
Our principal shareholders have the ability to exert significant control in the matters requiring shareholder vote and could delay, deter or prevent a change in control of Industrial Services. | |
As of May | |
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Industrial Services, Mr. Kletter and | |
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Mr. | |
The following table sets forth as of May | |
Owned | To Be Owned | |||
Name | Number(1) | Percent(2) | Number | Percent |
Jerry Falkner | 40,000 | 1.1% | -0- | -0- |
Owned | To Be Owned | |||
Name | Number(1) | Percent(2) | Number | Percent |
Andrew M. Lassak | 40,001 | 1.1% | -1- | -0- |
(1) | Includes all shares of Industrial Services common stock subject to the option. | ||
(2) | Calculated on the basis of | ||
The purpose of this prospectus is to permit Mr. | |||
Mr. | |||
· | block trades in which the brokers or dealers so engaged will attempt to sell shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; | ||
· | purchases by a broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus; | ||
· | ordinary brokerage transactions and transactions in which the broker solicits purchasers; | ||
· | in privately negotiated transactions not involving a broker or dealer; and | ||
· | a combination of any of these methods of sale. | ||
Mr. | |||
The Settlement Agreement permits Mr. Lassak to engage in a variable prepaid forward contract, or other similar arrangements, to hedge against market risk with respect to all or part of the 40,000 shares. If Mr. Lassak enters any written agreement with respect to such arrangements, he is to immediately notify Industrial Services in order to permit it to make appropriate disclosures in the Registration Statement and in this prospectus with regard to those arrangements. As of the date of this prospectus, Mr. Lassak has not notified Industrial Services that he has entered into any such arrangement. | |||
In effecting sales, brokers or dealers engaged to sell shares may arrange for other brokers or dealers to participate. Brokers or dealers engaged to sell shares will receive compensation in the form of commissions or discounts in amounts that Mr. | |||
Industrial Services will receive no proceeds from any sales of our common stock by Mr. | |||
We intend to use any proceeds we receive from issuing our common stock | |||
The Transfer Agent for the shares of our common stock is the Registrar and Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016, (800) 866-1340. | |||
The validity of the common stock offered in this prospectus will be passed upon for us by Stites & Harbison, PLLC. | |||
Experts | |||
The audited consolidated financial statements of Industrial Services of America, Inc. and Subsidiaries incorporated in this | |||
The audited consolidated financial statements of Industrial Services of America, Inc. and Subsidiaries incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2004, have been so incorporated in reliance on the report of Crowe Chizek and Company LLC, independent auditors, given on the authority of said firm as experts in auditing and accounting. | |||
Where You Can Find More Information | |||
Industrial Services is subject to the informational requirements of Section 12(g) of the Securities Exchange Act of 1934, and, accordingly, files reports, proxy statements and other information with the | |||
We list our common stock on the Nasdaq | |||
We have filed with the Commission a registration statement on Form S-3 under the Securities Act, | |||
Incorporation Of Documents That We File With The Commission | |||
The Commission allows us to "incorporate by reference" into this prospectus the information we file with it, which means that we can disclose important information to you by referring you to those documents. Information incorporated by reference is part of this prospectus, except for any information that is superseded by information included directly in this prospectus. Later information filed with the Commission will update and supersede this information and will be incorporated into this prospectus by reference. | |||
We incorporate in this prospectus the following documents filed with the Commission: | |||
Our Annual Report on Form 10-K for the year ended December 31, | |||
· | Our Definitive Proxy Statement on Schedule 14A filed on April | ||
· | Our current reports on Form 8-K | ||
Our Quarterly Report on Form 10-Q for the quarter ended March 31, | |||
The description of our common stock contained in our registration statement on Form S-1, dated May 22, 1969; and | |||
· | All of the filings pursuant to the Securities Exchange Act of 1934 after the date of the filing of the original Registration Statement and prior to the effectiveness of the Registration Statement. | ||
You may request a copy of these documents, at no cost, by written or oral request to: | |||
Industrial Services of America, Inc. | |||
Attn: Chief Executive Officer | |||
7100 Grade Lane | |||
P.O. Box 32428 | |||
Louisville, Kentucky 40232 | |||
(502) 368-1661 | |||
PART II | |||||
INFORMATION NOT REQUIRED IN THE PROSPECTUS | |||||
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION | |||||
The estimated expenses in connection with the issuance and distribution of the securities being registered are set forth in the following table. | |||||
SEC Registration Fee | $ | ||||
Legal Fees and Expenses | 7,500.00* | ||||
Accounting Fees and Expenses | 5,000.00* | ||||
Miscellaneous | 500.00* | ||||
Total | $ | ||||
*Estimated | |||||
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. | |||||
a. Article XII of the Certificate of Amendment of Certificate of Incorporation of Industrial Services provides: | |||||
The corporation shall indemnify any and all of its directors or officers or former directors or officers or any person who may have served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party by reason of being or having been directors or officers or a director or officer of the corporation, or of such other corporation, except in relation to matters as to which any such director or officer or former director or officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under any by-laws, | |||||
b. Section 607.0850 of the Florida Statutes generally permits Industrial Services to indemnify its directors, officers, employees or other agents who are subject to any third-party actions because of their service to Industrial Services if such persons acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of Industrial Services. If the proceeding is a criminal one, such person must also have had no reasonable cause to believe his conduct was unlawful. In addition, Industrial Services may indemnify its directors, officers, employees or other agents who are subject to derivative actions against expenses and amounts paid in settlement which do not exceed, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, including any appeal thereof, actually and reasonably incurred in connection with the defense or settlement of such proceeding, if | |||||
Furthermore, Florida Statutes Section 607.0831 provides, in general, that no director shall be personally liable for monetary damages to Industrial Services or any other person for any statement, vote, decision, or failure to act, regarding corporate management or policy, unless: (a) the director breached or failed to perform his duties as a director; and (b) the director's breach of, or failure to perform, those duties constitutes (i) a violation of criminal law, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful, (ii) a transaction from which the director derived an improper personal benefit, either directly or indirectly, (iii) a circumstance under which the liability provisions of Florida Statutes Section 607.0834 are applicable, (iv) in a proceeding by or in the right of Industrial Services to procure a judgment in its favor or by or in the right of a shar eholder, conscious disregard for the best interest of Industrial Services, or willful misconduct, or (v) in a proceeding by or in the right of someone other than Industrial Services or a shareholder, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property. The term "recklessness," as used above, means the action, or omission to act, in conscious disregard of a risk: (a) known, or so obvious that it should have been known, to the director; and (b) known to the director, or so obvious that it should have been known, to be so great as to make it highly probable that harm would follow from such action or omission. | |||||
In addition, Industrial Services carries insurance permitted by the laws of Florida on behalf of directors, officers, employees or agents which may cover, among other things, liabilities under the Securities Act. | |||||
Item 16. EXHIBITS. | |||||
The following documents are filed as Exhibits to this Registration Statement: | |||||
4.1 | -- |
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5.1 | -- | Opinion of Stites & Harbison, PLLC, regarding the legality of the shares of common stock being registered | |||
23.1 | -- | Consent of Mountjoy & Bressler, LLP | |||
23.2 | -- | Consent of Crowe Chizek and Company LLC | |||
| -- | Consent of Stites & Harbison, PLLC (included in Exhibit 5.1 to this Registration Statement on Form S-3 and incorporated herein by reference) | |||
24.1 | -- | Power of Attorney (included on signature page) | |||
Item 17. UNDERTAKINGS. | |||||
(a) The undersigned | |||||
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: | ||||
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | ||||
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. | ||||
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. | ||||
provided, however,that the undertakings set forth in paragraphs | |||||
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new | ||||
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | ||||
(b) The undersigned registrant hereby undertakes that, for | |||||
(c) | |||||
Signatures | |
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Louisville, Commonwealth of Kentucky, on May | |
INDUSTRIAL SERVICES OF AMERICA, INC. | |
By:/s/ Harry Kletter | |
Harry Kletter | |
Chairman and Chief Executive Officer | |
Power of Attorney | |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Harry Kletter and Alan Schroering, or either one of them, as his attorney in fact, to sign on his behalf individually and in each capacity stated below any amendments to this registration statement (including post-effective amendments) as the registrant deems appropriate, and to file the same, with exhibits thereto and other documents in connection therewith, including without limitation, a registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933 with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. | |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. |
Signature | Title | Date | ||
/s/ Harry Kletter | Chairman and Chief Executive Officer | May | ||
Harry Kletter | (Principal Executive Officer) | |||
/s/ Alan | Treasurer and Chief Financial Officer | May 24, 2006 | ||
Alan Schroering | (Principal Financial Officer and Principal Accounting Officer) |
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/s/ Bob Cuzzort | Director | May | ||
Bob Cuzzort | ||||
/s/ Roman Epelbaum | Director | May | ||
Roman Epelbaum | ||||
/s/ David Lester | Director | May | ||
David Lester | ||||
/s/ | Director | May | ||
Orson Oliver | ||||
INDEX TO EXHIBITS | ||
Exhibit | Description of Exhibit | |
4.1 | -- |
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5.1 | -- | Opinion of Stites & Harbison, PLLC, regarding the legality of the shares of common stock being registered |
23.1 | -- | Consent of Mountjoy & Bressler, LLP |
23.2 | -- | Consent of Crowe Chizek and Company LLC |
| -- | Consent of Stites & Harbison, PLLC (included in Exhibit 5.1 to this Registration Statement on Form S-3 and incorporated herein by reference) |
24.1 | -- | Power of Attorney (included on signature page) |