FORM 10-QSECURITIES AND EXCHANGE COMMISSION
				WASHINGTON, DC  20549[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
				SECURITIES EXCHANGE ACT OF 1934
				For the quarterly period ended June 30, 2007OR[  ]   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 0-20979INDUSTRIAL SERVICES OF AMERICA, INC.(Exact Name of Registrant as specified in its Charter)
  Florida
				59-0712746(State or other jurisdiction of
				(IRS EmployerIncorporation or Organization)
				Identification No.)
  7100 Grade Lane, PO Box 32428
				Louisville, Kentucky  40232
				(Address of principal executive offices)(502) 368-1661
				(Registrant's Telephone Number, Including Area Code)Check whether the registrant (1) has filed
				all Reports required to be filed by Section 13 or 15(d) of the
				Securities Exchange Act of 1934 during the preceding 12 months
				(or for such shorter period that the registrant was required to
				file such reports), and (2) has been subject to such filing
				requirements for the past 90 days. Yes X   No ___Indicate by check mark whether the
				registrant is a large accelerated filer, an accelerated filer,
				or a non-accelerated filer.  See definition of "accelerated
				filer and large accelerated filer" in Rule 12b-2 of the Exchange
				Act.
				(Check one):  Large accelerated filer ___ 
				Accelerated filer ___  Non-accelerated filer XIndicate by
				check mark whether the registrant is a shell company (as defined
				in Rule 12b-2 of the Exchange Act).  Yes ___  No X
				
				Indicate the
				number of shares outstanding of each of the issuer's classes of
				common stock, as of June 30, 2007:  3,640,899.


INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIESINDEXPage No.Part I
				Financial InformationCondensed Consolidated Balance SheetsJune 30, 2007 (Unaudited) and December
				31, 2006
				3Condensed Consolidated Statements ofOperations - Three Months EndedJune 30, 2007 and 2006 (Unaudited)
				5Condensed Consolidated Statements ofOperations - Six Months EndedJune 30, 2007 and 2006 (Unaudited)
				6Condensed Consolidated Statements of
				Shareholders' EquityJune 30, 2007 and December 31, 2006
				(Unaudited)
				7Condensed Consolidated Statements ofCash Flows - Six Months EndedJune 30, 2007 and 2006 (Unaudited)
				8Notes to Condensed ConsolidatedFinancial Statements (Unaudited)
				9Management's Discussion and Analysisof Financial Condition and Resultsof Operations
				15Part II
				Other Information
				22


PART I -- FINANCIAL INFORMATIONITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSASSETS
  June 30,
				2007
				(Unaudited)
				
				December 31,
				2006Current assetsCash and cash equivalents
				$    1,452,261
				
				$   1,331,807Accounts receivable - trade (after
				allowance 
				    for doubtful accounts of $100,000 in 2007
				    and 2006)
				7,454,314
				
				5,026,441Net investment in sales-type leases
				59,031
				
				50,586Inventories
				3,863,407
				
				3,428,226Deferred income taxes
				124,548
				
				106,725Other
				201,016
				
				88,113Total current assets
				13,154,577
				
				10,031,898Net property and equipment
				8,440,653
				
				8,152,606Other AssetsGoodwill
				560,005
				
				560,005Net investment in sales-type leases
				154,283
				
				186,215Notes receivable -- related party
				221,546
				
				238,566Other assets
				191,003
				
				162,5271,126,837
				
				1,147,313$  22,722,067
				
				$ 19,331,817____________________See accompanying notes to consolidated financial statements.3.
    INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSCONTINUEDLIABILITIES AND STOCKHOLDERS' EQUITY
  June 30,
				2007(Unaudited)
				
				December 31,
				2006Current liabilitiesCurrent maturities of long term debt
				$    154,607
				
				$     149,431Current maturities of capital lease
				obligation
				231,398
				
				228,533Accounts payable
				5,035,228
				
				4,545,057Dividends payable
				364,090
				
				-Income tax payable
				459,977
				
				1,185,717Other current liabilities
				498,227
				
				399,062Total current liabilities
				6,743,527
				
				6,507,800Long-term liabilitiesLong-term debt
				4,700,965
				
				2,790,460Capital lease obligation
				122,502
				
				67,853Deferred income taxes
				158,479
				
				219,3994,981,946
				
				3,077,712CommitmentsStockholders' equityCommon stock, $.005 par value, 10,000,000
				shares authorized,
				    4,295,000 shares issued in 2007 and 2006,
				    3,640,899 shares outstanding in 2007 and 2006
				21,475
				
				21,475Additional paid-in capital
				3,194,816
				
				3,194,816Retained earnings
				8,485,279
				
				7,234,990Treasury stock, 654,101 shares at average
				costin 2007 and 2006
				(704,976)
				
				(704,976)10,996,594
				
				9,746,305$  22,722,067
				
				$
				19,331,817____________________See accompanying notes to consolidated financial statements.4.
    INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTHREE MONTHS ENDED JUNE 30, 2007 AND 2006(UNAUDITED)
  2007
				
				2006Revenue from
				services
				$  3,648,276
				
				$  3,768,974Revenue from product sales
				15,879,820
				
				13,933,660Total Revenue
				19,528,096
				
				17,702,634Cost of
				goods sold for services
				3,405,183
				
				3,522,132Cost of
				goods sold for product sales
				13,174,595
				
				11,872,693Reduction of
				cost of goods sold
				(107,266)
				
				(150,000)Total Cost of goods sold
				16,472,512
				
				15,244,825Selling, general and administrative expense
				1,649,201
				
				1,450,284Income before other income (expense)
				1,406,383
				
				1,007,525Other income (expense)Interest
				expense
				(71,395)
				
				(69,584)Interest
				income
				32,791
				
				36,354Gain/(loss) on sale of assets
				(5,613)
				
				27,207Other income
				305
				
				3,092(43,912)
				
				(2,931)Income before income taxes
				1,362,471
				
				1,004,594Income tax provision
				541,172
				
				401,837Net income
				$     821,299
				
				$     602,757Basic earnings per share
				$           0.22
				
				$           0.17Diluted earnings per share
				$           0.22
				
				$           0.17Weighted shares outstanding:Basic
				3,640,899
				
				3,574,306Diluted
				3,640,899
				
				3,590,214____________________See accompanying notes to consolidated financial statements.5.
    INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSSIX MONTHS ENDED JUNE 30, 2007 AND 2006(UNAUDITED)
  2007
				
				2006Revenue from services
				$   7,492,503
				
				$  7,713,893Revenue from product sales
				29,940,342
				
				24,472,761Total Revenue
				37,432,845
				
				32,186,654Cost of goods sold for services
				6,927,882
				
				7,171,613Cost of goods sold for product sales
				24,928,942
				
				20,818,686Reduction of cost of goods sold
				(142,544)
				
				(300,000)Total Cost of goods sold
				31,714,280
				
				27,690,299Selling, general
				and administrative expense
				3,013,208
				
				2,800,137Income before
				other income (expense)
				2,705,357
				
				1,696,218Other income
				(expense)Interest expense
				(113,852)
				
				(96,969)Interest income
				61,764
				
				64,576Gain/(loss) on sale of assets
				(11,388)
				
				24,926Other income
				22,358
				
				10,054(41,118)
				
				2,587Income before
				income taxes
				2,664,239
				
				1,698,805Income tax
				provision
				1,049,860
				
				679,522Net income
				$  1,614,379
				
				$  1,019,283Basic earnings
				per share
				$           0.44
				
				$           0.29Diluted earnings
				per share
				$           0.44
				
				$           0.29Weighted shares
				outstanding:Basic
				3,640,899
				
				3,567,639Diluted
				3,640,899
				
				3,582,308____________________See accompanying notes to
				consolidated financial statements.6.


INDUSTRIAL SERVICES OF AMERICA, INC.
				AND SUBSIDIARIES
				CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
				SIX MONTHS ENDED JUNE 30, 2007(UNAUDITED)_________________________________________________________________________________________________________________________AdditionalCommon
				Stock
				
				Paid-in
				
				Retained
				
				Treasury
				StockShares
				
				Amount
				
				Capital
				
				Earnings
				
				Shares
				
				Cost
				
				TotalBalance as of
				December 31, 2006
				
				4,295,000
				
				$21,475
				
				$3,194,816
				
				$7,234,990
				
				(654,101)
				
				$ (704,976)
				
				$9,746,305Cash
				dividend
				
				-
				
				-
				
				-
				
				(364,090)
				
				-
				
				-
				
				(364,090)Net income
				
				-
				
				-
				
				-
				
				1,614,379
				
				-
				
				-
				
				1,614,379Balance as of
				June 30, 2007
				
				4,295,000
				
				$21,475
				
				$3,194,816
				
				$8,485,279
				
				(654,101)
				
				$ (704,976)
				
				$10,996,594_________________________See
				accompanying notes to consolidated financial statements.7.




---



INDUSTRIAL SERVICES
			OF AMERICA, INC. AND SUBSIDIARIESCONDENSED
			CONSOLIDATED STATEMENTS OF CASH FLOWSSIX MONTHS ENDED
			JUNE 30, 2007 AND 2006(UNAUDITED)




2007
			
			2006Cash flows from operating
			activitiesNet income
			$  1,614,379
			
			$  1,019,283Adjustments to reconcile net income to
			    net cash from operating activities:Depreciation and amortization
			916,643
			
			862,833Deferred
			income taxes
			(78,743)
			
			-(Gain)/loss on sale of property and equipment
			11,388
			
			(24,926)Change in assets and liabilitiesReceivables
			(2,427,873)
			
			(3,084,258)Net investment in sales-type leases
			23,487
			
			36,125Inventories
			(435,181)
			
			(601,301)Other assets
			(141,379)
			
			(73,067)Accounts payable
			490,171
			
			(1,563,524)Other current liabilities
			(626,575)
			
			(564,260)Net cash from operating activities
			(653,683)
			
			(3,993,095)Cash flows from investing
			activitiesProceeds from sale of property and equipment
			46,950
			
			33,100Purchases of property and equipment
			(1,072,828)
			
			(727,421)Payments from related party
			17,020
			
			9,266Net cash from investing activities
			(1,008,858)
			
			(685,055)Cash flows from financing
			activitiesPurchases of common stock
			-
			
			(16,338)Issuance of common stock
			-
			
			63,600Payments on capital lease obligation
			(132,686)
			
			(63,662)Proceeds from long-term debt
			4,350,000
			
			4,000,000Payments on long-term debt
			(2,434,319)
			
			-Net cash from financing activities
			1,782,995
			
			3,983,600Net increase/(decrease) in cash
			120,454
			
			(694,550)Cash at beginning of period
			1,331,807
			
			1,721,301Cash at end of period
			$ 1,452,261
			
			$   1,026,751Supplemental
			disclosure of cash flow informationCash paid for
			interest
			$     113,852
			
			$     96,969Cash paid for
			taxes
			1,854,343
			
			330,539Supplemental
			disclosure of noncash investing and financing activities:Accrued dividends payable
			364,090
			
			-Equipment
			purchased under capital leases
			190,200
			
			120,395____________________See
			accompanying notes to consolidated financial statements.8.




---



INDUSTRIAL
	SERVICES OF AMERICA, INC. AND SUBSIDIARIES  NOTES TO
	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)  NOTE 1 -- BASIS OF PRESENTATION  The accompanying unaudited condensed consolidated
	financial statements have been prepared in accordance with U. S. generally
	accepted accounting principles 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 U. S. generally accepted accounting principles for complete
	consolidated financial statements.  The information furnished includes all
	adjustments, which are, in the opinion of management, necessary to present
	fairly our financial position as of June 30, 2007 and the results of our
	operations and changes in our cash flows for the periods ended June 30, 2007
	and 2006.  Results of operations for the period ended June 30, 2007 are not
	necessarily indicative of the results that may be expected for the entire
	year.  Additional information, including the audited December 31, 2006
	consolidated financial statements and the Summary of Significant Accounting
	Policies, is included our Annual Report on Form 10-K for the year ended
	December 31, 2006 on file with the Securities and Exchange Commission.  NOTE 2 --
	ESTIMATES  In preparing the condensed consolidated financial
	statements in accordance with U. S. generally accepted accounting principles
	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.  Future results could differ from the current
	estimates.  NOTE 3 -- LONG TERM DEBT
	AND NOTES PAYABLE TO BANK  On December 22, 2006, we
	executed a new revolving credit facility with Branch Banking and Trust
	Company increasing the borrowing line from $5.0 million to $10.0 million to
	provide us with working capital to support the current needs of our
	business.  This revolving credit facility has a three year term expiring
	December 22, 2009, and provides for advances of up to eighty percent (80%)
	of our eligible accounts receivable and up to forty percent (40%) of
	eligible inventory, and up to one hundred percent (100%) of the net book
	value of our eligible equipment less an outstanding indebtedness on the
	equipment.  The revolving credit facility bears interest at the one month
	LIBOR rate, as published in the Wall Street Journal, plus two and
	twenty-five one-hundredths percent (2.25%) per annum which was 7.57% as of
	June 30, 2007, and is secured by all our assets (except rental fleet
	equipment).  The balance of the credit facility at June 30, 2007 was
	$3,000,000.  The revolving credit facility contains certain restrictive and
	financial covenants.  At June 30, 2007, we were in compliance with all
	restrictive covenants and the entire amount of our credit facility less our
	outstanding borrowings was available for borrowings.  We also have a note payable to Fifth Third Bank secured by our rental fleet
	equipment with a fixed interest rate of 6.83% and monthly payments of
	$23,047.  The maturity date under this agreement is June 2011 with a
	ten-year amortization schedule.  The balance on the note was $1,855,572 at
	June 30, 2007 and $1,929,016 at December 31, 2006.  NOTE 4 -- SEGMENT
	INFORMATION  Our operations
	include three primary segments:  ISA Recycling, Computerized Waste Systems
	(CWS), and Waste Equipment Sales & Service (WESSCO).  ISA Recycling provides
	products and services to meet the needs of its customers related to ferrous,
	non-ferrous and fiber recycling at two locations in the Midwest.  CWS
	provides waste disposal services including contract negotiations with
	service providers, centralized billing, invoice auditing, and centralized
	dispatching.  WESSCO sells, leases, and services waste handling and
	recycling equipment.  Our three reportable
	segments are determined by the products and services that each offers.  The
	recycling segment generates its revenues based on buying and selling of
	ferrous, non-ferrous and fiber scrap; CWS's revenues consist of charges to
	customers for waste disposal services; and WESSCO sales and lease income
	comprise the primary source of revenue for this segment.  The components of
	the column labeled "other" are selling, general and administrative expenses
	that are not directly related to the three primary segments.  We evaluate segment
	performance based on gross profit or loss and the evaluation process for
	each segment includes only direct expenses and selling, general and
	administrative costs, omitting any other income and expense and income
	taxes.  FOR THE 
				SIX MONTHS ENDED
				JUNE 30, 2007
				ISA
				RECYCLING
				
				COMPUTERIZED
				WASTE
				SYSTEMS
				
				WASTE
				EQUIPMENT
				SALES &
				SERVICES
				
				OTHER
				
				SEGMENT
				TOTALSRecycling revenues
				$  28,895,786
				
				$                 -
				
				$               -
				
				$               -
				
				$
				28,895,786Equipment sales, serviceand leasing revenues
				-
				
				-
				
				1,044,556
				
				-
				
				1,044,556Management fees
				-
				
				7,492,503
				
				-
				
				-
				
				7,492,503Cost of goods sold
				(24,498,867)
				
				(6,785,338)
				
				(430,075)
				
				-
				
				(31,714,280)Selling, general andadministrative expenses
				(991,421)
				
				(546,046)
				
				(352,844)
				
				(1,122,897)
				
				(3,013,208)Segment
				profit (loss)
				$    3,405,498
				
				$      161,119
				
				$    261,637
				
				$ (1,122,897)
				
				$ 2,705,357Segment
				assets
				$  15,089,053
				
				$   1,707,170
				
				$ 2,056,591
				
				$  3,869,253
				
				$22,722,067
  FOR THE 
				SIX MONTHS ENDED
				JUNE 30, 2006
				ISA
				RECYCLING
				
				COMPUTERIZED
				WASTE
				SYSTEMS
				
				WASTE
				EQUIPMENT
				SALES &
				SERVICES
				
				OTHER
				
				SEGMENT
				TOTALSRecycling revenues
				$ 23,566,384
				
				$                  -
				
				$               -
				
				$               -
				
				$
				23,566,384Equipment sales, serviceand leasing revenues
				-
				
				-
				
				906,377
				
				-
				
				906,377Management fees
				-
				
				7,713,893
				
				-
				
				-
				
				7,713,893Cost of goods sold
				(20,382,864)
				
				(6,871,613)
				
				(435,822)
				
				-
				
				(27,690,299)Selling, general andadministrative expenses
				(654,021)
				
				(768,579)
				
				(300,721)
				
				(1,076,816)
				
				(2,800,137)Segment
				profit (loss)
				$   2,529,499
				
				$        73,701
				
				$    169,834
				
				$ (1,076,816)
				
				$ 1,696,218Segment
				assets
				$ 13,148,841
				
				$   1,925,529
				
				$ 2,089,022
				
				$  3,716,575
				
				$20,879,967
  FOR THE 
				THREE MONTHS ENDED
				JUNE 30, 2007
				ISA
				RECYCLING
				
				COMPUTERIZED
				WASTE
				SYSTEMS
				
				WASTE
				EQUIPMENT
				SALES &
				SERVICES
				
				OTHER
				
				SEGMENT
				TOTALSRecycling revenues
				$ 15,364,200
				
				$          
				       -
				
				$               -
				
				$               -
				
				$
				15,364,200Equipment sales, serviceand leasing revenues
				-
				
				-
				
				515,620
				
				-
				
				515,620Management fees
				-
				
				3,648,276
				
				-
				
				-
				
				3,648,276Cost of goods sold
				(12,965,403)
				
				(3,297,917)
				
				(209,192)
				
				-
				
				(16,472,512)Selling, general andadministrative expenses
				(606,503)
				
				(263,115)
				
				(171,705)
				
				(607,878)
				
				(1,649,201)Segment profit (loss)
				$   1,792,294
				
				$        87,244
				
				$    134,723
				
				$  (607,878)
				
				$
				 1,406,383Segment assets
				$ 15,089,053
				
				$   1,707,170
				
				$ 2,056,591
				
				$ 3,869,253
				
				$22,722,067FOR THE 
				THREE MONTHS ENDED
				JUNE 30, 2006
				ISA
				RECYCLING
				
				COMPUTERIZED
				WASTE
				SYSTEMS
				
				WASTE
				EQUIPMENT
				SALES &
				SERVICES
				
				OTHER
				
				SEGMENT
				TOTALSRecycling revenues
				$ 13,463,085
				
				$                 -
				
				$               -
				
				$               -
				
				$
				13,463,085Equipment sales, serviceand leasing revenues
				-
				
				-
				
				470,575
				
				-
				
				470,575Management fees
				-
				
				3,768,974
				
				-
				
				-
				
				3,768,974Cost of goods sold
				(11,660,202)
				
				(3,372,132)
				
				(212,491)
				
				-
				
				(15,244,825)Selling, general andadministrative expenses
				(347,227)
				
				(361,911)
				
				(163,261)
				
				(577,885)
				
				(1,450,284)Segment profit (loss)
				$   1,455,656
				
				$   
				    34,931
				
				$      94,823
				
				$ (577,885)
				
				$ 1,007,525Segment assets
				$ 13,148,841
				
				$   1,925,529
				
				$ 2,089,022
				
				$3,716,575
				
				$20,879,967
   NOTE 5
	-- INVENTORIES  Our inventories primarily consist of ferrous and non-ferrous
	scrap metals and are valued at the lower of average purchased cost or
	market. Quantities of inventories are determined based on our inventory
	systems and are subject to periodic physical verification using estimation
	techniques including observation, weighing and other industry methods. We
	would recognize inventory impairment when the market value, based upon
	current market pricing, falls below recorded value or when the estimated
	volume is less than the recorded volume of the inventory.  We would record
	the loss in cost of goods sold in the period during which we identified the
	loss.  Some commodities are in saleable condition at acquisition. 
	We purchase these commodities in small amounts until we have a truckload of
	material available for shipment.  Some commodities are not in saleable
	condition at acquisition.  These commodities must be torched, sheared or
	baled.  We do not have work-in-process inventory that needs to be
	manufactured to become finished goods.  We include processing costs in
	inventory for all commodities.  Ferrous inventory of $2,163,316 at June 30,
	2007 was comprised of $1,003,283 in raw materials and $1,160,033 of finished
	goods.  Non-ferrous inventory of $1,655,393 at June 30, 2007 was comprised
	of $416,946 in raw materials and $1,238,447 of finished goods.  Ferrous
	inventory of $1,667,937 at December 31, 2006 was comprised of $382,445 in
	raw materials and $1,285,492 of finished goods.  Non-ferrous inventory of
	$1,678,655 at December 31, 2006 was comprised of $451,289 in raw materials
	and $1,227,366 of finished goods.  We charged $1,321,566 in general and
	administrative processing costs to cost of sales for the six months ended
	June 30, 2007 and $2,353,435 for the year ended December 31, 2006.  Inventory also includes all
	types of industrial waste handling equipment and machinery held for resale
	such as compactors, balers, and containers.  Other inventory includes
	cardboard and baling wire.  Inventories as of June 30, 2007 and December 31,
	2006 consist of the following:  June 30,2007
				
				December 31,2006Ferrous
				materials
				$ 2,163,316
				
				$ 1,667,937Non-ferrous
				materials
				1,655,393
				
				1,678,655Waste
				equipment machinery
				19,426
				
				56,200Other
				25,272
				
				25,434Total
				inventories
				$ 3,863,407
				
				$ 3,428,226
  NOTE
	6 -- LEASE COMMITMENTS  Operating Leases:  We
	lease our Louisville, Kentucky facility from a related party under an
	operating lease expiring December 2007.  The rent was adjusted in January
	2003 per the agreement to monthly payments of $42,106 through
	December 2007.  In addition, we are also responsible for real estate taxes,
	insurance, utilities and maintenance expense.  We
	lease a facility in Dallas, Texas for management services operations.  The
	agreement provided that monthly payments of $2,457 were paid through
	September 2005.  The lease was renewed effective October 1, 2005 for a
	period of two years with monthly payments of $2,525.  We also lease other
	machinery and equipment under operating leases which expire through July
	2009.  We lease a facility in
	Lexington, Kentucky for $4,500 per month; the lease terminates December 31,
	2012.  We have subleased this property for a term commencing March 1, 2007
	and ending December 31, 2012 for $4,500 per month.   If for any reason the
	sub lessee defaults, we remain liable for the remainder of the lease
	payments through December 31, 2012.  On February 6, 2007, we
	leased 7.7 acres of real property, including a 38,000 square foot warehouse
	and a 400 square foot office, in Pineville, Louisiana for $5,250 per month
	for twenty-four months beginning March 1, 2007 and ending February 28, 2009,
	with an option to purchase the property for a purchase price of $575,000.  Future minimum lease payments for operating leases as of June 30, 2007 are
	as follows:  2007
				
				$      427,9442008
				
				137,5572009
				
				54,4642010
				
				54,0002011
				
				31,500Future minimum lease payments
				
				$     705,465
  Total
	rent expense for the six months ended June 30, 2007 and 2006 was $424,789
	and $391,561, respectively.  Capital Leases:  We lease various pieces of equipment which qualify
	as capital leases.  These lease arrangements require monthly lease payments
	expiring at various dates through April 2010.  The following is a summary of assets held under
	capital leases which are included in property and equipment:  2007
				
				2006Equipment
				
				$   1,239,353
				
				$      757,513Less
				accumulated depreciation
				
				388,253
				
				168,904$      851,100
				
				$     588,609
  The
	following is a schedule of future annual minimum lease payments under the
	capitalized lease arrangements, together with the present value of net
	minimum lease payments at June 30, 2007.  2007
				
				$   145,2532008
				
				124,1872009
				
				70,8752010
				
				15,850Total future minimum lease payments
				
				356,165Lessamount representing interest
				
				(2,265)Present value of net minimumlease payments
				
				353,900Less current portion
				
				(231,398)Capital Lease Obligations
				
				$   122,502
  NOTE  7 -- CASH DIVIDEND  The Board of Directors, at
	our May 15, 2007 annual meeting, declared a cash dividend payment of ten
	cents per share for shareholders of record as of June 15, 2007 with a
	payment date of July 20, 2007.  Accordingly, the dividend was accrued as of
	June 30, 2007.   NOTE 8 --
	PER SHARE DATA  The computation for basic and diluted earnings per share is as follows:  Six months
	ended June 30, 2007 compared to six months ended June 30, 2006:  2007
				
				2006Basic earnings per shareNet income
				$   1,614,379
				
				$  1,019,283Weighted average shares outstanding
				3,640,899
				
				3,567,639Basic earnings per share
				$             .44
				
				$             .29Diluted earnings per shareNet income
				$   1,614,379
				
				$  1,019,283Weighted average shares outstanding
				3,640,899
				
				3,567,639Add dilutive effect of assumed exercising of 
				  stock options
				-
				
				14,669Diluted weighted average sharesoutstanding
				3,640,899
				
				3,582,308Diluted earnings per share
				$             .44
				
				$             .29
  Three months
	ended June 30, 2007 compared to three months ended June 30, 2006:  2007
				
				2006Basic earnings per shareNet income
				$     821,299
				
				$     602,757Weighted average shares outstanding
				3,640,899
				
				3,574,306Basic earnings per share
				$             .22
				
				$            .17Diluted earnings per shareNet income
				$     821,299
				
				$     602,757Weighted average shares outstanding
				3,640,899
				
				3,574,306Add dilutive effect of assumed exercising of 
				  stock options
				-
				
				15,908Diluted weighted average sharesoutstanding
				3,640,899
				
				3,590,214Diluted earnings per share
				$             .22
				
				$             .17
   NOTE 9 -- SUBSEQUENT EVENTS  On August 2, 2007, we named Brian G. Donaghy, age 31, ISA President and
	Chief Operating Officer for an initial term commencing on August 2, 2007 and
	ending on the termination date of December 31, 2011.  Mr. Donaghy had served
	as our acting COO from January 1, 2007 until August 2, 2007.  From 2001 to
	present, Mr. Donaghy owned and operated Industrial Logistic Services, LLC, a
	scrap metal and waste transportation company that leases property from ISA. 
	From May 2004 to December 2006, Mr. Donaghy assisted ISA as a consultant in
	its ferrous and non ferrous operations.  In connection with his selection as
	President and Chief Operating Officer, we entered into an executive
	employment agreement with him.  The executive employment agreement
	stipulates that Mr. Donaghy will receive a base salary of $3,000 per week
	plus benefits.  Mr. Donaghy will be entitled to participate in all medical
	and hospitalization, group life insurance, retirement, and any and all other
	welfare and fringe benefit plans.  We will provide Mr. Donaghy with a term
	life insurance policy with a death benefit not to exceed $50,000.  We will
	also provide Mr. Donaghy with a monthly car payment allowance the amount of
	which will not exceed $1,000 per month, which will be used by Mr. Donaghy to
	acquire an automobile selected by him with our concurrence.  Also, upon
	execution of the agreement, Mr. Donaghy will receive a signing bonus of
	20,000 shares of ISA's common stock, worth $215,800 at the date of execution
	of the agreement, based on the share price on that date.  Using a 40% income
	tax rate, the compensation expense related to the common stock is $.036 per
	share.  Additionally, during the initial term of the agreement, Mr. Donaghy
	will be entitled to receive 20,000 shares of ISA's common stock per year,
	provided that certain conditions have been met, including that Mr. Donaghy
	has completed a full year of employment and that our EBITDA exceeds $4.5
	million for the previous calendar year, taking into account the cost to ISA
	of the issuance of the shares.  The first measurement period for
	determining the right to receive the share award is calendar year 2008;
	therefore, the possible first award of shares would not occur until no later
	than April 1, 2009.  The measurement periods would then be the calendar
	years 2009 through 2011, with the possible awards occurring during the first
	quarters of the years after the applicable measurement periods.  In no event
	will Mr. Donaghy receive more than 100,000 shares of ISA's common stock.  We may
	terminate Mr. Donaghy's employment with or without cause.  If we terminate
	Mr. Donaghy's employment without cause, then through the initial term of the
	agreement or any applicable one year renewal period, we will continue to pay
	Mr. Donaghy his base salary as well as certain employee benefits.  We are
	also required to grant Mr. Donaghy any shares of ISA common stock that he
	would have been entitled to receive during the initial term of the agreement
	had we not terminated him.  If we terminate Mr. Donaghy's employment for
	cause, or if Mr. Donaghy voluntarily terminates his employment, or if his
	employment ends as a result of his death, we must pay him his accrued base
	salary through the termination date or date of death, as applicable,
	including any employee benefits that he is entitled to receive on that
	date.  He will also be entitled to receive any shares of ISA common stock
	that he would have been entitled to receive for the year in which the
	termination or his death occurred, as applicable.  If Mr. Donaghy's
	employment ends as a result of his incapacity, he shall be entitled to receive
	either worker's compensation benefits or insured benefits as provided by the
	ISA disability policy.  He will also be entitled to receive any shares of
	ISA common stock that he would have been entitled to receive for the year in
	which he became incapacitated.  On August 2, 2007, Industrial Logistic Services sold its assets to us
	pursuant to a 5-year installment sale for $1,110,040.  We pay the seller
	$100,000 at the time of execution of the asset purchase agreement and
	$20,000 per month for 60 months reflecting a seven percent (7%) interest
	payment on the outstanding balance plus principal amortization for a total
	of $1,200,000.  The assets sold from the trucking business include tractor
	trailers, trucks and containers.  As ratified
	by our board of directors on August 2, 2007, we entered into an employment
	agreement, effective as of April 4, 2007, with James K. Wiseman, III, age
	53, pursuant to which he became our scrap manager.   This employment
	agreement ends on April 4, 2012, and provides for additional one year
	renewal terms thereafter.  Our board of directors, at the same meeting,
	appointed Mr. Wiseman as our vice president of ISA recycling.  Pursuant to
	Mr. Wiseman's employment agreement, we will pay him an annual base salary of
	$136,500.  He may also be eligible for bonus compensation from time to
	time.  In addition, we will provide Mr. Wiseman with a $550 car allowance,
	as well as allowances to cover his fuel and cell phone expenses.  Mr.
	Wiseman will also be eligible to participate in our employee benefits and
	deferred compensation plans that are generally available to our employees.  We may
	terminate Mr. Wiseman's employment with or without cause.  If Mr. Wiseman
	voluntarily terminates his employment or if we terminate Mr. Wiseman's
	employment for any reason, including if Mr. Wiseman dies or becomes
	incapacitated, we must pay him his accrued salary, earned bonus
	compensation, vested deferred compensation and any employee benefits he may
	be entitled to receive on the date of the termination.  Additionally, if we
	terminate his employment without cause, we must also continue to pay his
	base salary through the end of the initial term of his employment agreement.   ITEM 2:  MANAGEMENT'S
	DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.  The following discussion
	and analysis should be read in conjunction with our 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 the fluctuations in the commodity price index 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,
	2006, as filed with the Securities and Exchange Commission.  General  We are primarily focusing
	our attention now and in the future towards our recycling business segment. 
	We sell processed ferrous and non-ferrous scrap material to end-users such
	as steel mini-mills, integrated steel makers, foundries and refineries.  We
	purchase ferrous and non-ferrous scrap material primarily from industrial
	and commercial generators of steel, iron, aluminum, copper, stainless steel
	and other metals as well as from other scrap dealers who deliver these
	materials directly to our facilities. We process these materials by sorting,
	shearing, cutting and/or baling. We will also continue to focus on
	initiating growth in our management services business segment and our waste
	and recycling equipment sales, service and leasing division.  We continue to pursue a
	growth strategy in the waste management services arena by adding new
	locations of existing customers as well as marketing our services to
	potential customers.  Currently, we service 1,730 customer locations
	throughout the United States and we utilize an active database of over 6,300
	vendors to provide timely, thorough and cost-effective service to our
	customers.  Our goal is to remain
	dedicated to the recycling, management services, and equipment industry
	while sustaining steady growth at an acceptable profit, adding to our net
	worth, and providing positive returns for stockholders.  We intend to
	increase efficiencies and productivity in our core business while remaining
	alert for possible acquisitions, strategic partnerships, mergers and
	joint-ventures that would enhance our profitability.  We have operating locations
	in Louisville, Kentucky, Seymour, Indiana, and Dallas, Texas and a new
	facility in New Albany, Indiana.  We closed our Lexington location in the
	first quarter of 2007.  We do not have operating locations outside the
	United States.  Liquidity and Capital
	Resources  As of June 30, 2007 we held
	cash and cash equivalents of $1,452,261.  We currently maintain a
	$10.0 million senior revolving credit facility with the Branch Banking and
	Trust Company.  This revolving credit facility has a three year term,
	provides for advances of up to eighty percent (80%) of our eligible accounts
	receivable and up to forty percent (40%) of eligible inventory, and up to
	one hundred percent (100%) of our net book value of eligible equipment less
	an outstanding indebtedness on the equipment.  The revolving credit facility
	bears interest at the one month LIBOR rate, as published in the Wall Street
	Journal, plus two and twenty-five one-hundredths percent (2.25%) per annum,
	7.57% as of June 30, 2007, and is secured by all our assets (except rental
	fleet equipment).  As of June 30, 2007 we had borrowed $3,000,000 and as of
	December 31, 2006 we had borrowed $1,010,875 against this credit line.  The
	revolving credit facility contains certain restrictive and financial
	covenants.  At June 30, 2007, we were in compliance with all restrictive
	covenants.  We also have a $2.0 million
	loan with Fifth Third Bank secured by our rental fleet equipment. 
	Indebtedness under this loan agreement accrues interest at a fixed interest
	rate of 6.83%.  The maturity date under this agreement is June 2011 with a
	ten-year amortization schedule.  As of June 30, 2007 we had borrowed
	$1,855,572 and as of December 31, 2006 we had borrowed $1,929,016 against
	this loan.  The terms of the loan agreement place certain restrictive
	covenants on us, including maintenance of a specified tangible net worth,
	debt to net worth and EBITDA ratio.  Consequently, these covenants restrict
	our ability to incur as much additional debt as we may desire for future
	growth.  At June 30, 2007, we were in compliance with all restrictive
	covenants.  During the first two quarters of 2007, we paid $1,072,828 for land,
	improvements, property and equipment.  We paid $241,785 for property in
	New Albany, Indiana, located across the Ohio River from Louisville,
	Kentucky, the site of our headquarters.  In the recycling segment we
	paid $513,585 for cranes, shear rebuild, scales, trailers, and other
	operating equipment.  Additionally we purchased an excavator via a
	capital lease valued at $190,200.  In the equipment sales, leasing and
	service segment, we purchased $247,195 in rental equipment that we located
	at customer sites.  This rental fleet equipment consists of solid waste
	handling and recycling equipment such as compactors, pre-crushers,
	containers and balers. It is our intention to continue to pursue this
	market.  We purchased $70,263 of office equipment.  We also
	reclassified $460,516 of construction-in-progress to capital assets.  Also, the Board of
	Directors at its June 21, 2007 meeting announced authorization to proceed
	with the purchase of a TSC 80 SXS shredder and complementary facility
	improvements totaling five million dollars. The selection of the TSC 80 SXS
	shredding plant will allow us to provide better quality scrap to our
	consumers, while at the same time broadening the type of scrap that we can
	process.  Our intention is to process many types of heavy grades of scrap
	that we presently process by shearing and to make specialty shredder grades
	of material for specific consumers.  We plan to finance the purchase of the
	shredder using our $10 million senior revolving credit facility or by
	attracting new capital.  The project is scheduled for completion in 2008.  We have a purchasing card
	with a credit limit of $6.0 million.  We included the balance due on the
	purchasing card as part of accounts payable.  The outstanding balance on the
	purchasing card at June 30, 2007 was $717,088 with a due date of July 27,
	2007.  The card accrues interest at prime plus 5.9% after the first
	twenty-five days of the purchase; our intention is to pay off the full
	balance every month so as to not incur finance charges.  To date we have not
	incurred any interest charges on this purchasing card.  The card requires
	monthly minimum payments on any balance outstanding at month end.  We
	receive rebates on an annual basis for all purchases made with the card.  We expect that existing
	cash flow from operations and available credit under our existing credit
	facilities will be sufficient to meet our cash needs during the remainder of
	2007.  Results of Operations  The following table
	presents, for the years indicated, the percentage relationship that certain
	captioned items in our Consolidated Statements of Operations bear to total
	revenues and other pertinent data:  Six months ended June 30,2007
				
				2006Statements of Operations Data:Total Revenue
				.............................................................................
				100.0%
				
				100.0%Cost of goods
				sold........................................................................
				84.7%
				
				86.0%Selling, general and administrative expenses
				..............................
				8.1%
				
				8.7%Income before other
				expenses......................................................
				7.2%
				
				5.3%
  Six months ended June
	30, 2007 compared to six months ended June 30, 2006  Total revenue increased
	$5,246,191 or 16.3% to $37,432,845 in 2007 compared to $32,186,654 in 2006. 
	Recycling revenue increased $5,329,402 or 20.2% to $28,895,786 in 2007
	compared to $23,566,384 in 2006.  This is primarily due to a 22%
	increase in price of commodities in the recycling market.  Management
	services revenue decreased $221,390 or 2.9% to $7,492,503 in 2007 compared
	to $7,713,893 in 2006.  Equipment sales, service and leasing revenue
	increased $138,179 or 15.2% to $1,044,556 in 2007 compared to $906,377 in
	2006.  This increase is due to an increase
	in rental revenue.  Total cost of goods sold
	increased $4,023,981 or 14.5% to $31,714,280 in 2007 compared to $27,690,299
	in 2006.  Recycling cost of goods sold increased $4,116,003 or 20.2% to
	$24,498,867 in 2007 compared to $20,382,864 in 2006.  This is primarily due
	to 25% higher commodity purchase prices in the recycling market.  Management
	services cost of goods sold decreased $86,275 or 1.3% to $6,785,338 in 2007
	compared to $6,871,613 in 2006.  Additionally, we reduced cost of goods sold
	by $142,544 in 2007 and by $300,000 in 2006 due to a change in management's
	estimate related to the liability associated with this operation which
	includes the contract settlement with our former customers.  Equipment
	sales, service and leasing cost of goods sold decreased $5,747 or 1.3% to
	$430,075 in 2007 compared to $435,822 in 2006.  Selling, general and
	administrative expenses increased $213,071 or 7.6% to $3,013,208 in 2007
	compared to $2,800,137 in 2006.  As a percentage of revenue, selling,
	general and administrative expenses were 8.0% in 2007 compared to 8.7% in
	2006.  The primary driver of the increase in total expenses is property
	repairs and maintenance, which increased $202,650 due to repairs to the
	premises.  Other income (expense) decreased $43,705 to other
	expense of ($41,118) in 2007 compared to other income of $2,587 in 2006. 
	This was primarily due to an increase in loss on disposal of assets of
	$36,314 and an increase in interest expense of $16,883.  Income tax provision
	increased $370,338 to $1,049,860 in 2007 compared to $679,522 in 2006.  The
	effective tax rate in 2007 was 39.4% compared to 40.0% in 2006 based on
	federal and state statutory rates.  Three months ended June
	30, 2007 compared to three months ended June 30, 2006  Total revenue increased
	$1,825,462 or 10.3% to $19,528,096 in 2007 compared to $17,702,634 in 2006. 
	Recycling revenue increased $1,901,115 or 14.1% to $15,364,200 in 2007
	compared to $13,463,085 in 2006.  This is primarily due to a 62% increase in
	price of commodities in the recycling market.  Management services revenue
	decreased $120,697 or 3.2% to $3,648,276 in 2007 compared to $3,768,974 in
	2006.  Equipment sales, service and leasing revenue increased $45,044 or
	9.6% to $515,620 in 2007 compared to $470,575 in 2006.  This increase is due
	to an increase in rental revenue.  Total cost of goods sold
	increased $1,227,687 or 8.1% to $16,472,512 in 2007 compared to $15,244,825
	in 2006.  Recycling cost of goods sold increased $1,305,200 or 11.2% to
	12,965,403 in 2007 compared to $11,660,202 in 2006.  This is due to 40%
	higher commodity purchase prices in the recycling market.  Management
	services cost of goods sold decreased $74,215 or 1.0% to $3,297,917 in 2007
	compared to $3,372,132 in 2006.  Additionally, we reduced cost of goods sold
	by $107,266 in 2007 and by $150,000 in 2006 due to a change in management's
	estimate related to the liability associated with this operation with
	includes the contract settlement with our former customers.  Equipment
	sales, service and leasing cost of goods sold decreased $3,298 or 1.6% to
	$209,192 in 2007 compared to $212,491 in 2006.  Selling, general and
	administrative expenses increased $198,917 or 13.7% to $1,649,201 in 2007
	compared to $1,450,284 in 2006.  As a percentage of revenue, selling,
	general and administrative expenses were 8.4% in 2007 compared to 8.2% in
	2006.  The primary driver of the increase in total expenses is property
	repairs and maintenance, which increased $198,000 due to property
	improvements.  Other
	expense increased $40,981 to $43,912 in 2007 compared to $2,931 in 2006
	primarily due to a decrease in gain/increase in loss on sale of assets.  Income tax provision increased $139,335 to $541,172 in 2007 compared to
	$401,837 in 2006.  The effective tax rate in 2007 was 39.7% compared to
	40.0% in 2006 based on federal and state statutory rates.  Financial condition at June 30, 2007 compared to December 31, 2006 Cash and cash equivalents
	increased $120,454 to $1,452,261 as of June 30, 2007 compared to $1,331,807
	as of December 31, 2006.  We used net cash from
	operating activities of $653,683 for the six months ended June 30, 2007. 
	Primarily this was due to an increase in accounts receivable of $2,427,873.  We used net cash from
	investing activities of $1,008,858 for the six months ended June 30, 2007. 
	Primarily, we purchased recycling and rental fleet equipment of $1,072,828. 
	The rental fleet equipment consists of solid waste handling and recycling
	equipment such as compactors, containers and balers. It is our intention to
	continue to pursue this market.  Our net cash from financing
	activities of $1,782,995 for the six months ended June 30, 2007 is primarily
	due to the advance of $4,350,000 on our line of credit offset by payments on
	debt of $2,434,319.  Accounts receivable trade
	increased $2,427,873 or 48.3% to $7,454,314 as of June 30, 2007 compared to
	$5,026,441 as of December 31, 2006.  This change is primarily due to an
	increase in selling prices in the Recycling segment.  Inventories consist
	principally of ferrous and nonferrous scrap materials and waste equipment
	machinery held for resale.  We value inventory at the lower of cost or
	market.  Inventory increased $435,181 or 13% to $3,863,407 as of June 30,
	2007 compared to $3,428,226 as of December 31, 2006.  Inventory aging for the
	period ended June 30, 2007 (Days Outstanding):  Description
				
				1-30
				
				31-60
				
				61-90
				
				Over 90
				
				TotalWaste
				equipment machinery
				
				$             -
				
				$           -
				
				$           -
				
				$  19,426
				
				$    19,426Ferrous
				materials
				
				1,074,037
				
				612,846
				
				441,365
				
				35,068
				
				2,163,316Non-ferrous
				materials
				
				1,403,515
				
				122,982
				
				54,321
				
				74,575
				
				1,655,393Other
				
				25,272
				
				-
				
				-
				
				-
				
				25,272$2,502,824
				
				$ 735,828
				
				$ 495,686
				
				$ 129,069
				
				$3,863,407
  Inventory aging for the year ended December 31, 2006
	(Days Outstanding):  Description
			
			1-30
			
			31-60
			
			61-90
			
			Over 90
			
			TotalWaste equipment
			machinery
			
			$     33,720
			
			$    22,480
			
			$            -
			
			$            -
			
			$     56,200Ferrous
			Materials
			
			864,489
			
			448,842
			
			166,509
			
			188,097
			
			1,667,937Non-ferrous
			materials
			
			1,467,679
			
			41,840
			
			42,989
			
			126,147
			
			1,678,655Other
			
			25,434
			
			-
			
			-
			
			-
			
			25,434$2,391,322
			
			$ 513,162
			
			$ 209,498
			
			$ 314,244
			
			$3,428,226
  Accounts payable trade increased $490,171 or 10.8% to
	$5,035,228 as of June 30, 2007 compared to $4,545,057 as of December 31,
	2006, primarily due to market conditions.  Working capital increased $2,886,952 to $6,411,050 as
	of June 30, 2007 compared to $3,524,098 as of December 31, 2006.  The
	increase was primarily driven by the $2.4 million increase in accounts
	receivable.   Contractual Obligations  The following table provides
	information with respect to our known contractual obligations for the
	quarter ended June 30, 2007.  Obligation Description
				Total
				Less
				than 1 year
				1-3 years
				3-5 years
				More
				than 5 yearsLong-Term Debt Obligations (1)
				$4,855,572
				$154,607
				$
				342,671
				$4,358,294
				$0Capital Lease Obligations (2)
				353,900
				231,398
				122,502
				0
				0Operating Lease Obligations (3)
				705,465
				427,944
				192,021
				85,500
				0Total
				$5,914,937
				$ 
				813,949
				$
				657,194
				$4,443,794
				$0
   (1)     We currently maintain a $10.0 million senior revolving credit
	facility with the Branch Banking and Trust Company.  Indebtedness under this
	credit facility accrues interest at BB&T's prime rate less one eighth.  The
	maturity date under this agreement is December 2009.  We have collateralized
	the credit facility with all our assets except our rental fleet.  We also have a $2.0 million loan agreement with Fifth Third Bank. 
	Indebtedness under this loan agreement accrues interest at a fixed interest
	rate of 6.83%.  The maturity date is June 2011 with a ten-year amortization
	schedule and is collateralized by our rental fleet equipment. (2)     We lease various pieces of equipment that qualify for capital lease
	treatment.  These lease arrangements require monthly lease payments expiring
	at various dates through April 2010.  (3)     We lease the Louisville, Kentucky facility from K&R, LLC, the sole
	member of which is Harry Kletter, our chief executive officer, under an
	operating lease expiring December 2007.  We have monthly rental payments of
	$42,106 through December 2007.  In the event of a change of control, the
	monthly payments become $62,500.  We also lease a management services
	operations facility and various pieces of equipment in Dallas, Texas for
	which monthly payments of $2,525 are due through September 2007.  We also
	lease security equipment for which monthly payments of $464 are due through
	July 2009.  We lease property in Lexington, Kentucky for which monthly
	payments of $2,250 are due through January 2012, and we lease property in
	Louisiana for which monthly payments of  $5,250 are due through February
	2009.  Impact of Recently Issued Accounting Standards  The Financial Accounting
	Standards Board has published SFAS No. 157, Fair Value Measurements,
	to eliminate the diversity in practice that exists due to the different
	definitions of fair value and the limited guidance for applying those
	definitions in GAAP that are dispersed among the many accounting
	pronouncements that require fair value measurements.  SFAS No. 157 defines
	fair value 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 (an exit price). SFAS No. 157 also stipulates that,
	as a market-based measurement, fair value measurement should be determined
	based on the assumptions that market participants would use in pricing the
	asset or liability, and establishes a fair value hierarchy that
	distinguishes between (a) market participant assumptions developed based on
	market data obtained from sources independent of the reporting entity
	(observable inputs) and (b) the reporting entity's own assumptions about
	market participant assumptions developed based on the best information
	available in the circumstances (unobservable inputs).  SFAS No. 157 is effective
	for financial statements issued for fiscal years beginning after November
	15, 2007, and interim periods within those fiscal years, although earlier
	application is encouraged.  Additionally, prospective application of the
	provisions of SFAS No. 157 is required as of the beginning of the fiscal
	year in which it is initially applied, except when certain circumstances
	require retrospective application.   ITEM 3:    QUANTITATIVE
	AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Fluctuating
	commodity prices affect market risk in our recycling segment.  We mitigate
	this risk by selling our product on a monthly contract basis.  Each month we
	negotiate selling prices for all commodities.  Based on these monthly
	agreements, we determine purchase prices based on a margin needed to cover
	processing and administrative expenses.  We are
	exposed to interest rate risk on our floating rate borrowings. As of June
	30, 2007, variable rate borrowings consisted of outstanding borrowings of
	$3.0 million under our credit agreement with BB&T.  This revolving credit
	facility bears interest at the one month LIBOR rate, as published in the
	Wall Street Journal, plus two and twenty-five one-hundredths percent (2.25%)
	per annum which was 7.57% as of June 30, 2007. Any increase in this rate
	would lead to higher interest expense. We do not have any interest rate
	swaps or caps in place, which would mitigate our exposure to fluctuations in
	the interest rate on this indebtedness. Based on our average anticipated
	borrowings under our credit agreement in fiscal 2007, a hypothetical
	increase or decrease in the LIBOR rate by 1% would increase or decrease
	interest expense on our variable borrowings by approximately $30,000 per
	year, with a corresponding change in cash flows.  ITEM 4:  CONTROLS AND PROCEDURES  (a)        Evaluation of disclosure controls and
	procedures.  Based on
	the evaluation of the ISA Chief Executive Officer and the ISA Chief
	Financial Officer of our disclosure controls and procedures as of June 30,
	2007, it has been concluded that the disclosure controls and procedures are
	effective for the purposes contemplated by Rules 13a-15(e) and 15d -- 15(e)
	promulgated by the Securities and Exchange Commission.  (b)        Changes in internal controls over financial
	reporting.  There have
	been no significant changes to ISA's internal controls or in other factors
	that have materially affected, or are reasonably likely to materially
	affect, these controls over financial reporting subsequent to June 30, 2007.    PART II -- OTHER INFORMATION   Item 1.   Legal Proceedings  On January 4, 2007, Lennox
	Industries, Inc., a commercial heating and air-conditioning manufacturer,
	filed suit against us in the Arkansas County, Arkansas Circuit Court in the
	case styled Lennox Industries, Inc. v. Industrial Services of America,
	Inc., Case No. CV-2007-004.  Because of settlement negotiations, Lennox
	did not serve us until May 23, 2007.  Lennox alleges that we breached a 2001
	contract with Lennox where we agreed to act as agent for Lennox, by our
	failure to properly evaluate, categorize, classify and value the production
	scrap and waste of Lennox, thereby brokering such products at prices below
	market value.  Lennox also alleges negligence and breach of fiduciary duty
	related to the same alleged failure.  The Lennox complaint does not state
	any specific monetary damages.  We have filed an answer denying all claims
	and we currently believe that the claims have no merit.  Item 1A.   Risk Factors  We
	have had no material changes from the risk factors reported in our Form 10-K
	for the year ended December 31, 2006, as filed with the Securities and
	Exchange Commission on March 27, 2007.   Item 2.   Unregistered Sales of Equity Securities and Use of
	Proceeds  None.  Item 3.   Defaults upon Senior Securities  None.  Item 4.   Submission of Matters to a Vote of Security Holders  (a)        At the Annual Meeting of Shareholders held on May
	15, 2007, the following proposals were adopted by the margins indicated:  (b)        PROPOSAL 1:  Annual Election of Directors.  The
	nominees for election as directors were Harry Kletter, Roman Epelbaum, Orson
	Oliver, Albert Cozzi and Richard Ferguson.  The seven director positions
	were filled based upon the five receiving the most votes:  For
				Withheld
				Broker Non-
				Votes AndAbstentionsHarry Kletter
				2,449,927
				7,900
				-Roman Epelbaum
				2,450,747
				7,080
				-Albert A. Cozzi
				2,442,747
				15,080
				-Richard E. Ferguson
				2,449,247
				8,580
				-Orson Oliver
				2,450,747
				7,080
				-
  (c)        PROPOSAL 2:  Ratification of Mountjoy & Bressler,
	LLP as our independent auditors.  For
				Against
				Broker Non-VotesAnd Abstentions2,454,332
				2,640
				855
    Item 5.   Other Information  None.  Item 6.   Exhibits  See exhibit index.    SIGNATURES  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.   INDUSTRIAL SERVICES OF AMERICA, INC.Date:  August 8, 2007
				/s/  Harry KletterChairman and Chief Executive Officer(Principal Executive and FinancialOfficer)Date:  August 8, 2007
				/s/ Alan L. SchroeringChief Financial Officer
    INDEX TO EXHIBITSExhibitNumber
				
				Description of Exhibits31.1
				
				Rule 13a-14(a) Certification
				of Harry Kletter for the Form 10-Q for the quarter ended June
				30, 2007.31.2
				
				Rule 13a-14(a) Certification
				of Alan Schroering for the Form 10-Q for the quarter ended June
				30, 2007.32.1
				
				Section 1350 Certification
				of Harry Kletter and Alan Schroering for the Form 10-Q for the
				quarter ended June 30, 2007.


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