RELATED PARTY TRANSACTIONS

Property and equipment payments to K&R, LLC.:

During the six month period ended June 30, 2015, we were involved in various transactions with related parties, including an affiliated company, K&R, LLC ("K&R"), which is wholly-owned by Kletter Holdings LLC, the sole member of which was Harry Kletter, our founder and former Chief Executive Officer. After Mr. Kletter's passing in January 2014, our Chairman of the Board and interim Chief Executive Officer, Orson Oliver, assumed the role of executor of Mr. Kletter’s estate and President of Kletter Holdings LLC. As of June 30, 2015, 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. See Note 5 - Lease Commitments for additional information relating to the rent and lease agreements with K&R.

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 a piece of the Company's real property located at 1565 East 4th Street in Seymour, Indiana. The Company was permitted and has used the deposited funds for general corporate purposes. The Company was informed by K&R that K&R was no longer interested in acquiring the property, however the Company may repay K&R at a later date to be determined.

As of June 30, 2015 and December 31, 2014, we had $32.2 thousand for both periods in accounts receivable from K&R pertaining to payments made by ISA on their behalf.

Board of Directors' fees and consulting fees:

For the six month period ended June 30, 2015 and June 30, 2014, we had outstanding unpaid Board of Directors' fees of $160.0 thousand and $26.0 thousand. We expensed financial consulting fees of $25.0 thousand during 2015 to one of our directors.

Management services payments to Algar, Inc.:

On December 2, 2013, we entered into a Management Services Agreement (the "Management Agreement") with Algar, Inc. ("Algar"). Under the Management Agreement, Algar provides us with day-to-day senior executive level services. Algar will also provide business, financial, and organizational strategy and consulting services, as our board of directors may reasonably request from time to time.

On December 2, 2013, in connection with the Management Agreement, our board of directors appointed Sean Garber as President. Under the Management Agreement, we will reimburse Algar for the portion of Mr. Garber’s salary that is attributable to Algar’s services under the Management Agreement in an amount not to exceed $20.8 thousand per month, or $250.0 thousand per year plus other expenses. During the six month periods ended June 30, 2015 and June 30, 2014, we expensed for both periods, management fees of $125.0 thousand to Algar for the portion of Mr. Garber's salary. Other management fees expensed in regards to Algar in connection with the Management Agreement were $16.9 thousand and $65.1 thousand, respectively for the six month periods ended June 30, 2015 and June 30, 2014. As of June 30, 2015 and December 31, 2014, we had $26.7 thousand and $33.9 thousand in accounts payable for management fees to Algar.

Per the Management Agreement, Algar earned a bonus in an amount equal to 10.0% of any year-over-year increase in the Company’s adjusted pre-tax income for the year ending December 31, 2014 in the amount of $428.0 thousand. The unpaid amount is recorded as a current liability entitled "Payable to related party" in the amount of $378.0 thousand as of June 30, 2015.

Scrap material purchases from Algar, Inc:

During the six month period ended June 30, 2015 and June 30, 2014, we purchased scrap material in the amount of $520.0 thousand and $916.3 thousand from Algar. As of June 30, 2015 and December 31, 2014, we had $5.4 thousand and $88.4 thousand in accounts payable pertaining to scrap material purchases to Algar.

Scrap material sales to Algar, Inc:

During the six month period ended June 30, 2015 and June 30, 2014, we sold scrap material in the amount of $61.6 thousand and $269.3 thousand to Algar. As of June 30, 2015 and December 31, 2014, we had $58.1 thousand and $84.6 thousand in accounts receivable pertaining to scrap material sales from Algar.

Other sales to Algar, Inc:

During the six month period ended June 30, 2015, we provided logistical services of $22.4 thousand, IT services of $8.3 thousand and equipment sales of $2.7 thousand to Algar. As of June 30, 2015, we had $36.4 thousand in accounts receivable pertaining to other sales to Algar.

Scrap material sales to Metal X, LLC:

During the six month period ended June 30, 2015 and June 30, 2014, we sold scrap material in the amount of $1.5 million and $889.7 thousand to MetalX, LLC. As of June 30, 2015 and December 31, 2014, we had $327.1 thousand and $250.3 thousand in accounts receivable from MetalX, LLC. For additional information regarding MetalX, LLC, see Note 10 - "Financing and Related Matters" to the Condensed Consolidated Financial Statements.

Real estate sale to LK Property Investments, LLC.

On April 30, 2015, ISA Real Estate LLC, the wholly-owned subsidiary of the Company, agreed to sell to LK Property Investments, LLC, an entity principally owned by Daniel M. Rifkin, CEO of MetalX LLC, a scrap metal recycling company headquartered in Waterloo, Indiana, and the principal owner of Recycling Capital Partners, LLC, a 4.4 acre parcel of real estate, located at 6709 Grade Lane, Louisville, KY, 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.

Real estate lease with LK Property Investments, LLC.

On April 30, 2015, the Company entered into a lease agreement with LK Property Investments, LLC, for a portion of the 4.4 acre parcel of real estate located at 6709 Grade Lane, Louisville, KY in the amount of $3.0 thousand per month. The lease terminates on April 14, 2019, but the Company has the right to 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.

Real estate sale to SG&D Ventures, LLC.

On May 18, 2015, ISA Real Estate LLC, a wholly-owned subsidiary of the Company, agreed to sell to SG&D Ventures, LLC, an entity owned by shareholders of Algar, including Sean Garber, the Company’s Vice Chairman of the Board and President, and the President of Algar, approximately 1-acre parcel of non-essential real estate, located at 7017 Grade Lane, Louisville, KY, for an aggregate purchase price equal to independent third-party appraisal amount of $350.0 thousand. The Company received an appraisal of the Parcel equal to $350.0 thousand from an independent third party before the sale. The purchase consideration consisted of $300.0 thousand in cash from the Purchaser and a credit of $50.0 thousand against bonus compensation previously accrued but not paid to Algar as described below. The Company expects to use the cash proceeds from the the sale of the real estate primarily for debt reduction and working capital. This transaction closed on May 19, 2015. The gain on sale of this asset was $1.1 thousand.

A summary of all the Company's related party transactions, in thousands, as of June 30, 2015 and December 31, 2014 and for the six months ended June 30, 2015 and June 30, 2014 is as follows:



	2015			2014
Balance sheet accounts:
Accounts receivable	$	453.8		$	367.1
Deposits (included in other long-term assets)	$	42.1		$	42.1
Accounts payable	$	192.1		$	148.2
Deposit payable	$	500.0		$	500.0
Bonus payable	$	378.0		$	428.0
Accrued rent payable	$	763.6		$	577.7


Income statement activity (Six months ended):
Revenue from product sales & services	$	1,595.1		$	1,195.4
Scrap material purchases	$	520.0		$	916.3
Management fee expense	$	141.9		$	190.1
Management services bonus	$	—		$	340.0
Director and consulting fee expense	$	115.0		$	115.0
Rent expense (property)	$	323.0		$	323.0
Lease expense (equipment)	$	63.0		$	63.0
Gain (loss) on sale of assets	$	(100.9	)	$	—