~~ITEM 1A. RISK FACTORS.~~

ITEM 1A.

RISK FACTORS.

Our ~~business,~~ financial condition, ~~results of operations,~~ cash flows and prospects, and the prevailing market price and performance of our common stock, may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this ~~2014~~2015 Form 10-K, as well as other written or oral statements made from time to time by us or by our authorized officers on our behalf, constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should note that forward-looking statements in this document speak only as of the date of this ~~2014~~2015 Form 10-K and we undertake no duty or obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we believe that the expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that our stockholders and prospective investors should consider include the following:

~~We have a history~~

Our stockholders will not be able to buy or sell shares of ~~significant operating losses and as such~~ our ~~future revenue and operating profitability are uncertain.~~common stock after we close our stock transfer books on the Final Record Date (as defined below).

~~Our~~

At the Company's Annual Meeting of Stockholders held on October 15, 2015, the Company's stockholders approved a proposal to dissolve the Company (the "Dissolution"), which provided the Board of Directors discretion to determine, within twelve months of such approval, when and whether to proceed with the approved Plan of Dissolution. If the Board of Directors determines to proceed with the Dissolution, we intend to close our stock transfer books and discontinue recording transfers of our common stock on the date on which we file our Certificate of Dissolution with the Delaware Secretary of State (the “Final Record Date”). After we close our stock transfer books, we will not record any further transfers of our common stock on our books except by will, intestate succession or operation of law. Therefore, shares of our common stock will not be freely transferable after the Final Record Date. All liquidating distributions from a liquidating trust, if any, or from us after the Final Record Date will be made to our stockholders pro rata according to their respective holdings of common stock as of the Final Record Date.

Following the Sale Transaction, we have no operating assets and we will need to significantly reduce our corporate and administrative expenses.

Following the Sale Transaction, the Company has no operating assets remaining and no revenue producing business or operations. We intend to retain only those persons required to maintain our corporate existence. As such, it is important that we take immediate steps to resolve remaining liabilities and reduce future ~~revenue~~costs and ~~operating profitability are difficult~~expenses in order to ~~predict and are uncertain.~~ preserve cash. The failure of the Company to take such steps promptly could result in a reduction in the amount of cash remaining for distribution to stockholders in connection with the proposed Dissolution.

We ~~have recorded significant losses from continuing operations for the years ended December 31, 2014, 2013, and 2012, respectively. We may~~will continue to incur ~~operating losses for~~ the ~~foreseeable future,~~expenses of complying with public company reporting requirements.

After the Sale Transaction, we will still have an obligation to comply with the applicable rules and regulations of the SEC, including reporting requirements under the Exchange Act. Following the Sale Transaction, our Board of Directors will consider options to reduce or eliminate such ~~losses~~costs such as, de-registering as an Exchange Act reporting company by way of a reverse stock split or otherwise in an effort to reduce expenses and retain cash that may be substantial. We will need to increase revenue in order to generate sustainable operating profit and continue to make improvements on our expense controls. Given our history of operating losses, we cannot assure you that we will be able to achieve or maintain operating profitability on an annual or quarterly basis, or at all.

~~Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt as~~available for future distributions to our ~~ability to continue as a going concern.~~

Although our consolidated financial statements have been prepared assuming we will continue as a going concern, our independent registered public accounting firm, in its report accompanying our consolidated financial statements as of and for the year ended December 31, 2014, expressed substantial doubt as to our ability to continue as a going concern as of December 31, 2014. The inclusion of a going concern explanatory paragraph may make it more difficult for us to execute our current operating plan, maintain and or secure additional financing or enter into strategic relationships on terms acceptable to us,stockholders, if ~~at all, and may materially and adversely affect the terms of~~ any ~~current or future financing that we may obtain.~~

~~The Company may need to raise additional equity or capital in the future and such capital may not be available when needed or at all.~~

~~The Company's liquidity and capital resources remain limited. There~~distributions are made. We can beprovide no assurance that any such actions will be taken or, if taken, will have the ~~Company's liquidity~~intended effect.

We cannot predict the timing of any distributions to stockholders.

Our current intention is that the Dissolution would begin within one year following stockholder approval of the Dissolution, which approval was obtained on October 15, 2015; however, the decision of whether or ~~capital resource position~~not to proceed with the Dissolution and when to proceed will be made by the Board of Directors in its sole discretion. No further stockholder approval would ~~allow it~~be required to ~~continue to pursue~~effect the Dissolution, provided that under the Plan of Dissolution the Certificate of Dissolution must be filed by the one-year anniversary of stockholder approval of the Dissolution. However, if the Board of Directors determines that the Dissolution is not in our best interest and the best interest of our stockholders, the Board of Directors may, in its ~~current business strategy. As a result,~~sole discretion, abandon the ~~Company~~Plan of Dissolution or may ~~need to raise additional capital in~~amend or modify the future to provide it with sufficient capital resources and liquidity to meet its commitments and business needs. The Company’s ability to raise additional equity or capital, if needed, will depend on, among other things, conditions in the equity or capital markets at that time, which are outsidePlan of ~~its control, and its financial performance. Any occurrence that may limit the Company's access~~Dissolution to the ~~equity or capital markets may adversely affect~~extent permitted by Delaware law without the Company’s capital costs and its ability to raise capital and, in turn, its liquidity. An inability to raise additional equity or capital on acceptable terms when needed could have a material adverse effect on the Company’s business, financial condition and resultsnecessity of ~~operations. Additionally, future equity transactions could be dilutive to the Company's shareholders.~~further stockholder approval.

~~Our failure or inability to meet certain terms of our Credit Facility could have a material adverse effect on our business, financial condition and results of operations.~~

~~On August 29, 2014, we entered into~~Under Delaware law, before a ~~$20.0 million credit facility (the “Credit Facility). Borrowings under the Credit Facility are secured by a first priority lien on certain of the Company’s and~~dissolved corporation may make any distributions to its ~~subsidiaries’ assets. The Credit Facility contains certain customary representations and warranties, and certain customary covenants on the Company’s ability~~stockholders, it must pay or make reasonable provision to among other things, incur additional indebtedness, create liens or other encumbrances, sell or otherwise dispose of assets, and merge or consolidate with other entities or enter into a change of control transaction. We may not be able to satisfypay all of ~~these conditions~~its claims and obligations, including all contingent, conditional or ~~may default on some~~un-matured claims known to the corporation. We cannot predict the settlement amounts, fines or penalties, if any, that we might incur as a result of ~~these covenants for various reasons, including~~our ongoing litigation and regulatory matters, ~~which are beyond our control. Additionally, the Credit Facility contains various events of default. If~~and therefore we are unable to ~~borrow under the Credit Facility,~~make a reasonable provision to pay any such claims. Furthermore, we may be subject to potential liabilities relating to indemnification obligations to Ecolab or to current and former officers and directors. It might take several years to resolve these matters, and as a result we are unable to ~~meet~~predict the timing for distributions, if any are made, to our ~~business obligations, which could have a material adverse effect on~~stockholders.

We cannot estimate the amount of distributions, if any, to be made to our ~~business, financial condition and results of operations.~~stockholders.

We believe the value of our assets that will ultimately be available for distribution to our stockholders, if any distribution is made, will be significantly and materially less, in the aggregate, than the consideration received in the Sale Transaction. We cannot estimate amounts to be distributed to our stockholders if the Board of Directors proceeds with the Dissolution.

Proceeds from the Sale Transaction will be used to pay off the Company’s outstanding debts and liabilities including the retained liabilities, outstanding service provider and vendor bills, and professional fees relating to the costs of being a public company.

The balance of the proceeds will be retained to pay ongoing corporate and administrative costs of a public company and expenses associated with winding down the Company, liabilities and potential liabilities relating to or arising out of our outstanding litigation and regulatory matters, fines or penalties, and potential liabilities relating to our indemnification obligations, if any, to Ecolab or to current and former officers and directors.

The Board of Directors will determine, in its sole discretion, the timing of the distribution of the remaining amounts, if any, to our stockholders in the Dissolution. We can provide no assurance as to if or when any such distribution will be made, and we cannot provide an estimate as to the amount to be paid to stockholders in any such distribution, if one is made. However, we expect the amount of any such distribution, if one is made, to be significantly and materially less, in the aggregate, than the consideration received in the Sale Transaction.

The Internal Revenue Service may not treat distributions to our stockholders, if any distributions are made, as distributions in complete liquidation as such term is described in Section 346(a) of the Internal Revenue Code, or may not treat a liquidating trust, if one is used, as a "liquidating trust" for U.S. federal income tax purposes.

The term “complete liquidation” is not defined in the Internal Revenue Code. The approval of the Sale Transaction and the Dissolution by the Company's stockholders does not ensure that any liquidating distributions we make will be treated as distributions in “complete liquidation” by the Internal Revenue Service. The Company intends to accomplish the Dissolution of the Company in a manner that will qualify as a “complete liquidation” within the meaning of Section 346(a) of the Code, but there can be no assurance that its efforts to do so will be successful. If distributions do not so qualify, they will be treated as dividends to our shareholders to the extent of our earnings and profits.

The Company will also endeavor to ensure that any liquidating trust, if formed to be the transferee of certain of the assets of the Company, will be treated for tax purposes as a liquidating trust for Federal income tax purposes. However, there can be no assurance that any liquidating trust, if created, will be treated as a liquidating trust for federal income tax purposes. If the liquidating trust is not treated as a trust but instead is treated as a continuation of the existing corporation for U.S. federal income tax purposes, the liquidating distributions would likely not be treated as distributions in complete liquidation for tax purposes and would likely be treated as taxable dividends to the extent of the Company’s earnings and profits.

Our stockholders may be liable to our creditors for part or all of the amount received from us in our liquidating distributions if reserves are inadequate.

If the Dissolution becomes effective, we may establish a contingency reserve designed to satisfy any additional claims and obligations that may arise. Any contingency reserve may not be adequate to cover all of our claims and obligations. Under the General Corporation Law of the State of Delaware, if we fail to create an adequate contingency reserve for payment of our claims and obligations during the three-year period after we file the Certificate of Dissolution with the Delaware Secretary of State, each stockholder could be held liable for payment to our creditors of the lesser of (i) such stockholder's pro rata share of amounts owed to creditors in excess of the contingency reserve and (ii) the amounts previously received by such stockholder in dissolution from us and from any liquidating trust or trusts. Accordingly, in such event, a stockholder could be required to return part or all of the distributions previously made to such stockholder, and a stockholder could receive nothing from us under the Plan of Dissolution. Moreover, if a stockholder has paid taxes on amounts previously received, a repayment of all or a portion of such amount could result in a situation in which a stockholder may incur a net tax cost if the repayment of the amount previously distributed does not cause a commensurate reduction in taxes payable in an amount equal to the amount of the taxes paid on amounts previously distributed.

We have identified material weaknesses in our internal control over financial reporting and we may be unable to develop, implement and maintain appropriate controls in future periods. If the material weaknesses are not remediated, then they could result in material misstatements to the financial statements.

We have identified material weaknesses in our internal control over financial reporting and, as a result of such weaknesses, our management, with the participation of our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, ~~2014~~2015 and December 31, ~~2013. These material~~2014. Material weaknesses were originally identified in connection with our assessment of the effectiveness of internal control over financial reporting as of December 31, ~~2013,~~2011, and were determined not to have been remediated as of December 31, ~~2014.~~2014 and 2015. Until remediated, these material weaknesses could result in material misstatements to our interim or annual consolidated financial statements and disclosures that may not be prevented or detected on a timely basis. In addition, we may be unable to meet our reporting obligations or comply with SEC rules and regulations, which could result in ~~delisting actions by The Nasdaq Stock Market ("Nasdaq") and~~ investigation and sanctions by regulatory authorities. Any of these results could adversely affect our ~~business~~financial condition and the trading price of our common stock.

~~Failure to retain our current customers and renew existing customer contracts could adversely affect our business.~~

Our success depends in part on our ability to retain current customers and renew existing customer service agreements. Our ability to retain current customers depends on a variety of factors, including the quality, price, and responsiveness of the services we offer, as well as our ability to market these services effectively and differentiate our offerings from those of our competitors. We cannot assure you that we will be able to renew existing customer contracts at the same or higher rates or that our current customers will not turn to competitors, cease operations, elect to bring the services we provide in-house, or terminate existing service agreements. The failure to renew existing service agreements or the loss of a significant number of existing service agreements could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~Changes in economic conditions that impact the industries in which our end-users primarily operate in could adversely affect our business.~~

During the last few years, conditions throughout the U.S. and worldwide have been weak and those conditions may not improve in the foreseeable future. As a result, our customers or vendors may have financial challenges, unrelated to us that could impact their ability to continue doing business with us. Economic downturns, and in particular downturns in the foodservice, hospitality, travel, and food processing industries, can adversely impact our end-users, who are sensitive to changes in travel and dining activities. The recent decline in economic activity is adversely affecting these markets. During such downturns, these end-users typically reduce their volume of purchases of cleaning and sanitizing products, which may have an adverse impact on our business. We cannot assure you that current or future economic conditions, and the impact of those conditions on our customer base, will not have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~The financial condition and operating ability of third parties may adversely affect our business.~~

We purchase the majority of our dispensing equipment and dish machines from a limited number of suppliers. Should any of these third party suppliers experience production delays, we may need to identify additional suppliers, which may not be possible on a timely basis or on favorable terms, if at all. A delay in the supply of our chemicals or equipment could adversely affect relationships with our customer base and could cause potential customers to delay their decision to purchase services or cause them not to purchase our services at all.

We market and sell our products and services through independent third-party distributor partners. In recent years, we have expanded our distributor program, which provides us with additional opportunities for organic growth. Our distributor program is targeted toward regional and local foodservice distributors that are seeking not only to increase the revenue and margin they can drive by increasing the number of products they deliver to each customer. In effect, by us partnering to be the chemical sales and service arm for the distributor, we help to generate demand for our rental equipment and our consumable products. The loss of one or more of our distributors, or the decision by one or more of them to reduce the number of our products they offer or to carry the product lines of our competitors, could have an adverse effect on our business, financial condition and results of operations. The termination of a significant distributor, whether at our or the distributor's initiative, or a disruption in the operations of one or more of our distributors, may adversely affect our business.

In the event that any of the third parties with whom we have significant relationships files a petition in or is assigned into bankruptcy or becomes insolvent, or makes an assignment for the benefit of creditors or makes any arrangements or otherwise becomes subject to any proceedings under bankruptcy or insolvency laws with a trustee, or a receiver is appointed in respect of a substantial portion of its property, or such third party liquidates or winds up its daily operations for any reason whatsoever, then our business, financial position, results of operations, and cash flows may be materially and adversely affected.

We have recognized significant impairment charges in 2014 and prior years, and may recognize additional impairment charges in the future which could adversely affect our results of operations and financial condition.

We assess our intangible assets and long-lived assets for impairment when required by generally accepted accounting principles in the United States of America (“GAAP”). These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their fair values. Our assessment of intangible assets and long-lived assets could indicate that an impairment of the carrying value of such assets may have occurred that could result in a significant, non-cash write-down of such assets, which could have a material adverse effect on our results of operations.

~~The availability of our raw materials and the volatility of their costs may adversely affect our operations.~~

We use a number of key raw materials in our business. An inability to obtain such key raw materials could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Also the prices of many of these raw materials are cyclical. If we are unable to minimize the effects of increased raw material costs through sourcing or pricing actions, future increases in costs of raw materials could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We are and may in the future be subject to legal proceedings; the ~~outcome~~outcomes of which are uncertain, and resolutions adverse to us could negatively affect our ~~earnings,~~ financial condition and cash flows.

We are and may in the future be subject to legal proceedings. Litigation is subject to many uncertainties, and we cannot predict the outcome of individual matters with assurance. It is reasonably possible that the final resolution of these matters could require additional expenditures, in excess of established reserves, over an extended period of time and in a range of amounts that could have a material effect on our ~~earnings,~~ financial condition and cash flows.

~~The pricing, terms, and length of customer service agreements may constrain our ability to recover costs and to make a profit on our contracts.~~

The amount of risk we bear and our profit potential will vary depending on the type of service agreements under which products and services are provided. We may be unable to fully recover costs on service agreements that limit our ability to increase prices, particularly on multi-year service agreements. In addition, we may provide services under multi-year service agreements that guarantee maximum costs for the customer based on specific criteria, for example, cost per diner, cost per occupied room, or cost per passenger day, putting us at risk if we do not effectively manage customer consumption. Our ability to manage our business under the constraints of these service agreements may have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~If we are required to change the pricing models for our products or services to compete successfully, our margins and operating results may be adversely affected.~~

The markets in which we operate in are highly competitive. We compete with national, regional, and local providers, some of whom have greater financial and marketing resources than us, and may be perceived to have better brand name recognition, price, product quality, and customer service. Some of our competitors may bundle products and services that compete with our products and services for promotional purposes as a long-term pricing strategy or may provide guarantees of prices and product implementations. Also, competitors may develop new or enhanced products and services more successfully and sell existing or new products and services better than we do. In addition, new competitors may emerge. These practices could, over time, limit the prices that we can charge for our products and services. If we cannot offset price reductions or other pricing strategies with a corresponding increase in sales or decrease in spending, then the reduced revenue resulting from lower prices would adversely affect our margins, operating costs, and profitability.

~~The consolidation of customers may adversely affect our business, consolidated financial condition or results of operations.~~

Customers in the foodservice, hospitality, retail and healthcare industries have been consolidating in recent years, and we believe this trend may continue. Such consolidation could have an adverse impact on the pricing of our products and services and our ability to retain customers, which could in turn adversely affect our business, consolidated financial condition or results of operations.

~~We may fail to maintain our listing on The Nasdaq Stock Market.~~

Our common stock is listed for trading on The Nasdaq Stock Market (“Nasdaq”) under the trading symbol “SWSH.” For our common stock to continue to be listed on Nasdaq, we must meet Nasdaq’s continued listing standards. A failure to meet these standards could result in our common stock being delisted, which could adversely affect the market liquidity of our common stock, impair the value of your investment, and harm our business. We can provide no assurance that we will continue to satisfy Nasdaq’s continued listing standards and maintain our listing on Nasdaq.

The loss of one or more key members of our senior management, or our inability to attract and retain qualified personnel could adversely impact our business, financial condition and results of operations.

Our success depends, in part, on the continued efforts and abilities of our senior management team. The loss of one or more key members of our senior management team could disrupt our operations and divert the time and attention of the remaining members of the senior management team, which could have a material adverse effect on our business, financial condition and results of operations. Our success also depends on our ability to attract, retain and motivate our personnel. Competition for personnel can be intense, and we cannot assure you that we will be able to attract or retain highly qualified personnel needed to support our business. Our inability to attract and retain the necessary personnel may adversely affect our business, financial condition and results of operations. It may be necessary for us to increase the level of compensation paid to existing or new employees to a degree that our operating expenses could be materially increased, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~Increases in fuel and energy costs and fuel shortages could adversely affect our results of operations and financial condition.~~

The price of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and other oil and gas producers, war and unrest in oil producing countries, regional production patterns, limits on refining capacities, natural disasters and environmental concerns. In recent years, fuel prices have fluctuated widely. An increase in fuel prices raises the costs of operating vehicles and equipment. We cannot predict the extent to which we may experience future increases in fuel costs or whether we will be able to pass these increased costs through to our customers. A fuel shortage, higher transportation costs or the curtailment of scheduled service could adversely impact our profitability. If we experience delays in the delivery of products to our customers, or if the services or products are not provided to the customers at all, relationships with our customers could be adversely impacted, which could have a material adverse effect on our business and prospects. As a result, future increases in fuel costs or fuel shortages could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~Our products contain hazardous materials and chemicals, which could result in claims against us.~~

We use and sell a variety of products that contain hazardous materials and chemicals. Like all products of this nature, misuse of the hazardous material based products can lead to injuries and damages but in all cases if these products are used at the prescribed usage levels with the proper PPEs (Personal Protection Equipment) and procedures the chances of injuries and accidents are extremely rare. Nevertheless, because of the nature of these substances or related residues, we may be liable for certain costs, including, among others, costs for health-related claims, or removal or remediation of such substances. We may be involved in claims and litigation filed on behalf of persons alleging injury as a result of exposure to such substances or by governmental or regulatory bodies related to our handling and disposing of these substances. Because of the unpredictable nature of personal injury and property damage litigation and governmental enforcement, it is not possible to predict the ultimate outcome of any such claims or lawsuits that may arise. Any such claims and lawsuits, individually or in the aggregate, that are resolved against us, could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We are subject to environmental, health and safety regulations, and may be adversely affected by new and changing laws and regulations, that generate ongoing environmental costs and could subject us to liability.

We are subject to laws and regulations relating to the protection of the environment and natural resources, and workplace health and safety. These include, among other things, reporting on chemical inventories and risk management plans, and the management of hazardous substances. Violations of existing laws and enactment of future legislation and regulations could result in substantial penalties, temporary or permanent facility closures, and legal consequences. Moreover, the nature of our existing and historical operations exposes us to the risk of liability to third parties. The potential costs relating to environmental, solid waste, and product registration laws and regulations are uncertain due to factors such as the unknown magnitude and type of possible contamination and clean-up costs, the complexity and evolving nature of laws and regulations, and the timing and expense of compliance. Changes to current laws, regulations or policies could impose new restrictions, costs, or prohibitions on our current practices which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

~~If our products are improperly manufactured, packaged, or labeled or become adulterated or expire, those items may need to be recalled or withdrawn from sale.~~

We may need to recall, voluntarily or otherwise, the products we sell if products are improperly manufactured, packaged, or labeled or if they become adulterated or expire. Widespread product recalls could result in significant losses due to the costs of a recall and lost sales due to the unavailability of product for a period of time. A significant product recall could also result in adverse publicity, damage to our reputation, and loss of customer confidence in our products, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

~~Changes in the types or variety of our service offerings could affect our financial performance.~~

Our financial performance is affected by changes in the types or variety of products and services offered to our customers. For example, as we continue to evolve our business to include a greater combination of products with our services, the amount of money required for the purchase of additional equipment and training for associates may increase. Additionally, the gross margin on product sales is often less than gross margin on service revenue. These changes in variety or adjustment to product and service offerings could have a material adverse effect on our financial performance.

~~Prior acquisitions involve a number of risks and could have an adverse effect on our results of operations.~~

The success of any acquisition depends on management’s ability following the transaction to consolidate operations and integrate departments, systems and procedures, and thereby create business efficiencies, economies of scale, and related cost savings. As a result, prior acquisitions involve various risks, such as uncertainties in assessing the value, strengths, weaknesses, liabilities, including undisclosed liabilities, and potential profitability of acquired companies. There is a risk of potential losses of key employees and customers of an acquired business and of an inability to achieve identified operating and financial synergies anticipated to result from an acquisition. Any one or more of these factors could cause us not to realize the benefits anticipated to result from the acquisitions or have a negative impact on the fair value of the acquired companies. Accordingly, intangible assets recorded as a result of acquisitions could become impaired. Additionally, previously undisclosed liabilities could be identified and have a material adverse impact on our results of operations and cash flows.

~~We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.~~

Our ability to compete effectively depends in part on our rights to service marks, trademarks, trade names, formulas and other intellectual property rights we own or license, particularly our registered brand names, including “Swisher” and “Sani-Service.” We may not seek to register every one of our marks either in the U.S. or in every country in which it is used. As a result, we may not be able to adequately protect those unregistered marks. Furthermore, because of the differences in foreign trademark, patent and other intellectual property or proprietary rights laws, we may not receive the same protection in other countries as we would in the U.S. and Canada. Failure to protect such proprietary information and brand names could impact our ability to compete effectively and could adversely affect our business, financial condition, results of operations, and cash flows.

Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our products or services infringe on their intellectual property rights. Any litigation or claims brought by or against us could result in substantial costs and diversion of our resources. A successful claim of trademark, patent or other intellectual property infringement against us, or any other successful challenge to the use of our intellectual property, could subject us to damages or prevent us from providing certain services under our recognized brand names, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Interruptions in our information and telecommunication systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could adversely affect our business.

We rely extensively on computer systems to process transactions, maintain information and manage our business. Disruptions in the availability of our computer systems could impact our ability to service our customers and adversely affect our sales and results of operations. We are dependent on internal and third party information technology networks and systems, including the Internet and wireless communications, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for fulfilling and invoicing customer orders, applying cash receipts, determining reorder points and placing purchase orders with suppliers, making cash disbursements, and conducting digital marketing activities, data processing, and electronic communications among business locations. We also depend on telecommunication systems for communications between company personnel and our customers and suppliers. Our computer systems are subject to damage or interruption due to system conversions, power outages, computer or telecommunication failures, computer viruses, security breaches, catastrophic events such as fires, tornadoes and hurricanes and usage errors by our employees. Also, our computer systems could be subject to physical or electronic break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to customers, or in the misappropriation of our proprietary information. Interruptions in information and telecommunication systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions by us or others, could delay or disrupt our ability to do business and service our customers, require us to incur significant investments to fix or replace them, harm our reputation, subject us to regulatory sanctions and other claims, lead to a loss of customers and revenues and otherwise adversely affect our business.

Insurance policies may not cover all ~~operating~~ongoing risks and a casualty loss beyond the limits of our coverage could adversely impact our business.

~~Our business is subject to all of the operating hazards and risks normally incidental to the operations of a company in the cleaning and maintenance solutions industry.~~ We maintain insurance policies in such amounts and with such coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise ~~from claims for personal injury or death, property damage, or environmental liabilities arising in the ordinary course of business~~ and our current levels of insurance may not be able to be maintained or available at economical prices. If a significant liability claim is brought against us that is not covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our ~~business,~~ financial condition ~~results of operations,~~ and cash flows.

Our stock price has been and may in the future be volatile which could cause purchasers of our common stock to incur substantial losses.

The trading price of our common stock has been and may in the future be subject to substantial price volatility. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors listed below and other factors described in this “Risk Factors” section:

●·	low trading volume, which could cause even a small number of purchases or sales of our stock to have an impact on the trading price of our common stock;

●·	price and volume fluctuations in the overall stock market from time to time;

●·	significant volatility in the market price and trading volume of comparable companies;

●·	short sales, hedging and other derivative transactions involving our common stock; and

●·	sales of shares in the open market or the perception that such ~~shares~~sales could occur.

Certain stockholders may exert significant influence over any corporate action requiring stockholder approval.

As of March ~~25, 2015,~~4, 2016, Messrs. Huizenga and Berrard own approximately ~~28%~~13.7% and 14.1% of our common ~~stock.~~stock, respectively. As a result, these stockholders may be in a position to exert significant influence over any corporate action requiring stockholder approval, including the election of directors, determination of significant corporate actions, amendments to ~~Swisher’s~~Swisher Hygiene Inc.’s certificate of incorporation and by-laws, and the approval of any business transaction, such as mergers or takeover attempts, in a manner that could conflict with the interests of other stockholders. Although there are no agreements or understandings between the former Swisher International stockholders as to voting, if they voted in concert, they could exert significant influence over Swisher Hygiene.

Provisions of Delaware law and our organizational documents may delay or prevent an acquisition of our Company, even if the acquisition would be beneficial to our stockholders.

Provisions of Delaware law and our certificate of incorporation and bylaws may discourage, delay or prevent a change of control that our stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions may also prevent or delay attempts by stockholders to replace or remove management or members of our board of directors. These provisions include:

● ·	the absence of cumulative voting in the election of directors, which means that the holders of a majority of our common stock may elect all of the directors standing for election;

●·	the inability of our stockholders to call special meetings;

●·	the requirement that our stockholders provide advance notice when nominating director candidates or proposing business to be considered by the stockholders at an annual meeting of stockholders;

●·	the ability of the our board of directors to make, alter or repeal our bylaws;

●·	the requirement that the authorized number of directors be changed only by resolution of the board of directors; and

●·	the inability of stockholders to act by written consent.

ITEM 1B.

UNRESOLVED STAFF COMMENTS.

None

ITEM 2.

PROPERTIES.

~~We operate~~Before completing the Sale Transaction, we leased our corporate headquarters facility in Charlotte, North Carolina, pursuant to a lease which was assumed by Ecolab in connection with the Sale Transaction. During 2015 and through the Sale Transaction, we operated five chemical manufacturing plants in leased facilities in Oregon, Arizona, Illinois, Florida and New ~~York. We lease our current corporate headquarters facility in Charlotte, North Carolina, pursuant to a lease expiring in February 2017. As of December 31, 2014,~~York, and we also ~~lease~~leased numerous other facilities located in the United States and Canada where we ~~operate~~operated our business. ~~We believe that~~All leases were either terminated or transferred to Ecolab with the exception of two leases which expire in January and June 2016. Following the Sale Transaction, we changed our ~~facilities are sufficient for~~mailing address to Suite 1600, 350 East Las Olas Boulevard, Fort Lauderdale, Florida 33301, the offices of our ~~current needs and are in good condition in all material respects.~~outside legal counsel.

ITEM 3.

LEGAL PROCEEDINGS.

We may be involved in litigation from time to time in the ordinary course of business. ~~We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, financial condition or results of operations. However, the~~The results of these matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceedings or disputes will not have a material adverse effect on our ~~business,~~ financial ~~condition~~condition.

The Company routinely indemnifies its directors and ~~results~~officers and insures the indemnification risk with various insurance liability policies, primarily directors’ and officers’ coverages. Historically, other than the premiums and the retention associated with the director’s and officers’ coverages, the cost to the company of ~~operations.~~the indemnifications has been immaterial and based on management’s current knowledge and the Company’s current insurance program, other than the deductible not met at year end of approximately $0.8 million, it is expected that the future cost will also be immaterial; however, we cannot assure that to be the case given the uncertainties inherent in legal proceeding and litigation.

Securities Litigation

~~Between March 30,~~

On May 21, 2012, a stockholder derivative action was brought against the Company's former CEO and ~~May 24, 2012, six~~former CFO and the Company's then directors for alleged breaches of fiduciary duty by a purported Company stockholder ~~lawsuits were filed~~ in ~~federal courts in North Carolina and~~the United States District Court for the Southern District of New ~~York asserting claims relating~~York. In this derivative action, captioned Arsenault v. Berrard, et al., 1:12-cv-4028, the plaintiff seeks to recover for the Company damages arising out of the Company's March 28, 2012 announcement regarding the ~~Company's Board’s~~Board of Director's conclusion that the Company's previously issued interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended, should no longer be relied upon and that an internal review by the Company's Audit Committee primarily relating to possible adjustments to the Company's financial statements was ongoing.

On ~~March 30,~~August 13, 2012, the Arsenault derivative action, along with a ~~purported Company stockholder commenced a~~related putative securities class action ~~on behalf of purchasers of the Company's common stock~~pending in ~~the U.S. District Court for~~ the Southern District of New York, ~~against~~was transferred to the Company, the former President and Chief Executive Officer ("former CEO"), and the former Vice President and Chief Financial Officer ("former CFO"). The plaintiff asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") based on alleged false and misleading disclosures in the Company's public filings. In April and May 2012, four more putative securities class actions were filed by purported Company stockholders in the U.S.United States District Court for the Western District of North Carolina against the same set of defendants. The plaintiffs in these cases asserted claims alleging violations of Sections 10(b) and 20(a) of the Exchange Act based on alleged false and misleading disclosures in the Company's public filings. In each of thewhere other related putative securities class actions were pending. All actions were consolidated under the ~~plaintiffs sought damages for losses suffered by the putative class of investors who purchased the Company’s common stock.~~

On May 21, 2012, a stockholder derivative action was brought against the Company's former CEO and former CFO and the Company's then directors for alleged breaches of fiduciary duty by another purported Company stockholder in the Southern District of New York. In this derivative action, captioned Arsenault v. Berrard, et al., 1:12-cv-4028, the plaintiff seeks to recover for the Company damages arising out of the then possible restatement of the Company's financial statements.

On May 30, 2012, the Company, its former CEO and former CFO filed a motion with the United States Judicial Panel on Multidistrict Litigation ("MDL Panel") to centralize all of the cases in the Western District of North Carolina by requesting that the actions filed in the Southern District of New York be transferred to the Western District of North Carolina. In light of the motion to centralize the cases in the Western District of North Carolina, the Company, its former CEO and former CFO requested from both courts a stay of all proceedings pending the MDL Panel's ruling. On June 4, 2012, the Southern District of New York adjourned all pending dates in the cases in light of the motion to transfer filed before the MDL Panel. On June 13, 2012, the Western District of North Carolina issued a stay of proceedings pending a ruling by the MDL Panel.

caption On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina as part of MDL No. 2384, captioned In re Swisher Hygiene, Inc. Securities and Derivative ~~Litigation. In response, on~~Litigation, MDL No. 2384. On August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there. On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendants' time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the Arsenault derivative action, pending the outcome of the securities class ~~actions.~~actions, which as previously disclosed were subsequently settled in August 2014. On February 9, 2016, the Arsenault derivative action was voluntarily dismissed without compensation to any party.

On April 24, 2013, lead plaintiffs filed their first amended consolidated class action complaint (the "Class Action Complaint") asserting similar claims as those previously alleged as well as additional allegations stemming from the Company's restated financial statements. The Class Action Complaint also named the Company's former Senior Vice President and Treasurer as an additional defendant who was later dismissed from the case. On June 24, 2013, defendants moved to dismiss the Class Action Complaint. Briefing on the motions to dismiss was completed on August 9, 2013.

Although the Company believed it had meritorious defenses to the asserted claims in the securities class actions in the United States, the defendants and plaintiffs agreed to the terms of a settlement and on February 5, 2014 executed a settlement agreement that, following approval by the Western District of North Carolina, would resolve all claims in the securities class actions pending there (the "Settlement"). The Settlement provided that the defendants would make a set cash payment totaling $5,500,000, all from insurance proceeds, to settle all of the securities class actions, and full and complete releases would be provided to defendants. On March 11, 2014, the Western District of North Carolina issued a preliminary order approving the Settlement, and scheduled a hearing for August 6, 2014. That same day, the Western District of North Carolina also issued an order terminating defendants’ pending motions to dismiss the Class Action Complaint as moot in light of the Settlement. On August 6, 2014, following a hearing, the Western District of North Carolina approved the Settlement, and issued an Order and Final Judgment that, among other things, dismissed the securities class actions pending in the United States with prejudice and provided for full and complete releases to defendants. The Arsenault derivative action is still pending.

On June 11, 2013, an individual action was filed in the ~~U.S.~~United States District Court for the Southern District of Florida captioned Miller, et al. v. Swisher Hygiene, Inc., et al., No. 0:13-CV-61292-JAL, against the Company, its former CEO and former CFO, and a former Company director, bringing state and federal claims founded on the allegations that in deciding to sell their company to the Company, plaintiffs relied on defendants' statements about such things as the Company's accounting and internal controls, which, in light of the ~~Company’s~~Company's restatement of its financial statements, were false. On July 17, 2013, the Company notified the United States Judicial Panel on Multidistrict Litigation ("MDL ~~Panel~~Panel") of this action, and requested that it be transferred and centralized in the Western District of North Carolina with the other actions pending there. On July 23, 2013, the MDL Panel issued a Conditional Transfer Order (the "Miller CTO"), conditionally transferring the case to the Western District of North Carolina. On July 29, 2013, plaintiffs notified the MDL Panel that they would seek to vacate the Miller CTO. In light of the proceedings in the MDL Panel, defendants requested that the Southern District of Florida stay all proceedings pending the MDL Panel's ruling. On August 6, 2013, the Southern District of Florida issued a stay of all proceedings pending a ruling by the MDL Panel. On October 2, 2013, following a briefing on the issue of whether the Miller CTO should be vacated, the MDL Panel issued an order transferring the action to the Western District of North Carolina. The Company and the individual defendants filed motions to dismiss the complaint on March 20, 2014. Briefing on the motions to dismiss was completed on May 12, 2014. On June 2, 2014, plaintiffs filed a motion with the Western District of North Carolina seeking a suggestion for remand from that ~~Court~~court to the MDL Panel. Briefing on that motion was completed on June 26, 2014. Oral argument on the motions to dismiss and motion for suggestion for remand were heard on July 22, 2014. On August 5, 2014, the Western District of North Carolina denied plaintiffs' motion for suggestion for remand. On October 22, 2014, the Company filed a notice of supplemental authority in support of its motion to dismiss the ~~complaint in this action.~~complaint. On November 4, 2014, plaintiffs filed a response to the notice of supplemental authority. On July 8, 2015, the Western District of North Carolina ruled on the motions to dismiss. The Western District of North Carolina dismissed plaintiffs' federal securities claims and certain of their state law claims. All claims against the former CFO were dismissed. After issuing its ruling, the Western District of North Carolina recommended by letter to the MDL Panel that the action be transferred back to the Southern District of Florida. On July 16, 2015, the Western District of North Carolina issued an order staying all proceedings in the action pending a determination by the MDL Panel on its recommendation. Thereafter, the MDL Panel issued a Conditional Remand Order, remanding the action to the Southern District of Florida, which was finalized and filed on July 28, 2015. On September 4, 2015, as requested by the Southern District of Florida, the parties submitted a Joint Status Report. On September 9, 2015, the Southern District of Florida issued an Order to Show Cause as to why the remaining state law claims should not be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3). On September 18, 2015, the parties filed their respective responses to the Order to Show Cause. On September 21, 2015, the Southern District of Florida issued an order dismissing the remaining state law claims in the action without prejudice on subject matter jurisdiction grounds pursuant to 28 U.S.C. § 1367(c)(3). On November 6, 2015, the parties reached a settlement of the matter. The terms of the settlement are confidential. The Company's financial obligation under the settlement will be covered by insurance and accordingly, the terms of the settlement did not have a material effect on the Company's financial position.

On September 8, 2015, a lawsuit seeking to be certified as a class action (Paul Berger v. Swisher Hygiene Inc., et al., Case No. 2015 CH 13325 (Ill. Cir. Ct. Cook Co.)) was filed in the Circuit Court of Cook County, Illinois County Department, Chancery Division by Paul Berger, on behalf of himself and all others similarly situated, against Swisher Hygiene Inc., the members of Swisher Hygiene Inc.’s board of directors, individually, and Ecolab in connection with the Sale Transaction. The plaintiff has alleged that (i) faced with an ongoing investigation by the Securities and Exchange Commission and the USAO, the individual defendants embarked upon a self-interested scheme to sell off Swisher International, Inc.’s assets and to liquidate Swisher Hygiene Inc., (ii) the individual defendants, through an alleged insufficient process, caused Swisher Hygiene Inc. to agree to sell substantially all of its assets for insufficient consideration, (iii) each member of Swisher Hygiene Inc’s. Board of Directors is interested in the Sale Transaction and the plan of dissolution, and (iv) the proxy statement was materially misleading and/or incomplete. The causes of action set forth in the complaint are (i) a claim for breaches of the fiduciary duties of good faith, loyalty, fair dealing and due care, (ii) a claim for failure to disclose, and (iii) a claim against Ecolab for aiding and abetting breaches of fiduciary duty. The plaintiff sought to enjoin the consummation of the Sale Transaction unless and until defendants provide all material facts in the proxy statement, and the plaintiff also seeks compensatory and/or rescissory damages as allowed by law for the plaintiff. This summary is qualified by reference to the full text of the complaint as filed with the Court.

1513

On ~~July 11, 2013, a purported stockholder~~October 6, 2015, Defendants filed a motion to dismiss the Illinois action given that a substantially similar action, Raul, was pending in North Carolina. On December 15, 2015, the parties agreed to hold defendants’ motion to dismiss in abeyance until the court in the Raul action ruled on the pending motions to dismiss in that case, described below. A status hearing is scheduled for February 26, 2016. The Company believes the claims alleged by the plaintiff are without merit and it intends to vigorously defend against them.

On September 11, 2015, a derivative and putative class action ~~on behalf of the Company~~(Malka Raul v. Swisher Hygiene Inc. et al., Case No. 15-CVS-16703 (Superior Court, Mecklenburg County, North Carolina)) was filed in the General Court of Justice, Superior Court Division, Mecklenburg County, North Carolina by Malka Raul. The action was brought derivatively on behalf of Swisher Hygiene Inc., and individually and on behalf of all others similarly situated, against Swisher Hygiene Inc., the members of Swisher Hygiene, Inc’s board of directors, individually, and Ecolab in connection with the Sale Transaction. The plaintiff has alleged that (i) the sale of Swisher International, Inc. to Ecolab contemplated by the purchase agreement is unfair and inequitable to the Swisher Hygiene Inc’s stockholders and constitutes a breach of the fiduciary duties of the directors in the sale of Swisher International, Inc. (ii) defendants have exacerbated their breaches of fiduciary duty by agreeing to lock up the Sale Transaction with deal protection devices that preclude other bidders from making a successful competing offer for Swisher International, Inc. and preclude stockholders from voting against the Sale Transaction, (iii) the Sale Transaction will divest the Swisher Hygiene Inc’s stockholders of their ownership interest in Swisher International, Inc. for inadequate consideration; (iv) each of the defendants violated and continues to violate applicable law by directly breaching and/or aiding and abetting the defendants’ breaches of fiduciary duties of loyalty, due care, independence, good faith and fair dealings, (v) the Sale Transaction is the product of a flawed process that was designed to sell Swisher International, Inc. to Ecolab on terms detrimental to plaintiff and the other Swisher Hygiene Inc’s stockholders, (vi) the proxy statement fails to provide Swisher Hygiene Inc’s stockholders with material information and/or provides them with materially misleading information and (vii) the proxy statement fails to provide Swisher Hygiene Inc.’s stockholders with all material information concerning the financial analysis of Cassel Salpeter & Co., LLC. The causes of action set forth in the complaint are (i) a claim for breach of fiduciary duty against the individual defendants, (ii) a claim for aiding and abetting breaches of fiduciary duty against Ecolab, (iii) a derivative claim for breach of fiduciary duties against the individual defendants, and (iv) a derivative claim for unjust enrichment against the individual defendants. The plaintiff primarily sought to (i) enjoin defendants from consummating the Sale Transaction unless and until the individual defendants adopt and implement a fair procedure or process to sell Swisher International, Inc., (ii) direct the individual defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of Swisher Hygiene Inc. and its stockholders and (iii) rescind, to the extent already implemented, the purchase agreement or any of the terms thereof. The plaintiff also seeks costs and disbursements, including reasonable attorneys’ and experts fees, and such other equitable and/or injunctive relief as the Court may deem just and proper. This summary is qualified by reference to the full text of the complaint as filed with the Court.

On November 5, 2015, defendants in the Raul case filed motions to dismiss, and on November 23, 2015, the plaintiff filed a motion to dismiss as moot and a motion for an award of attorney’s fees. Oral arguments of the plaintiff’s and defendants’ motions occurred on January 12, 2016. In supplemental briefing plaintiff advised the Court that it intended to withdraw its motion to dismiss and amend its complaint to include “newly discovered information.” On January 28, 2016, the Court granted Ecolab’s motion to dismiss and plaintiff’s permission to file an amended complaint, preserved defendants’ motions to dismiss for future consideration and deferred consideration of plaintiff’s motion for award of attorneys’ fees.

On February 11, 2016, the plaintiff in the Raul case filed her amended complaint bringing the action derivatively on behalf of Swisher Hygiene Inc., individually and on behalf of all others similarly, against the members of Swisher Hygiene Inc.’s board of directors and Swisher Hygiene Inc. The plaintiff alleged a claim for declaratory relief against the individual defendants, a claim for breach of fiduciary duty against the individual defendants, and derivative claims for breach of fiduciary duties, unjust enrichment, abuse of control, and waste relating to the Sale Transaction and the Plan of Dissolution. On February 24, 2016, following a review of the amended complaint, defense counsel advised plaintiff’s counsel of certain factual and legal errors contained in the amended complaint, and further advised of defendants’ intention to seek reimbursement for expenses, including attorneys’ fees, if the amended complaint was not withdrawn. On February 29, 2016, defendant filed a notice of voluntary dismissal and, on March 3, 2016, the amended complaint was dismissed with prejudice as to the plaintiff, with each side bearing its own costs and expenses.

On October 28, 2015, a civil suit was filed against Swisher Hygiene Inc. and related entities in the Commonwealth of Puerto Rico, Gerardo Jimenez Pacheco v. Service Puerto Rico, LLC, et al. Civil No. D AC2015-2256 (Commonwealth of Puerto Rico). Plaintiff alleges that he sold assets of his privately held company to Service Puerto Rico in February 2011 in exchange for cash and a $375,000 note that was convertible into Swisher Hygiene Inc., shares of common stock. Plaintiff alleges breach of contract, defect in consent, joint and several liability, and abuse of process, all of which appear to be based on plaintiff’s reliance on Swisher Hygiene Inc.’s 2011 financial statements that were subsequently withdrawn and restated. Plaintiff requested a total of $475,000 in damages for all causes of action, plus attorney’s fees and pre-judgment interests. On February 1, 2016, Defendants filed a motion to dismiss and believe that plaintiff’s suit is without merit, is bound by the settlement on August 6, 2014 of the class action litigation captioned In re Swisher Hygiene, Inc. Securities and Derivative Litigation, MDL No. 2384, and if not bound by that settlement, is barred by the applicable statute of limitations. Defendants intend to vigorously defend against Plaintiff’s claims.

Other Matters

The Honeycrest Holdings, Ltd. v. Integrated Brands, Inc. matter relates to a longstanding dispute between Honeycrest Holdings, Ltd. (“Honeycrest”) and Integrated Brands, Inc. (“Integrated”) f/k/a Steve’s Homemade Ice Cream, Inc. involving a license granted by Integrated to Honeycrest in 1990, which licensed the manufacture and sale of ice cream products by Honeycrest in the United Kingdom. In 1998 Honeycrest filed an action against Integrated (Honeycrest Holdings, Ltd. v. Integrated Brands, Inc., New York Supreme Court, Queens County (Index No. 5204/1998)) alleging a breach of the licensing agreement; Integrated responded by denying the material allegations and alleging Honeycrest had breached the license agreement. Subsequently, Integrated merged with a subsidiary of Coolbrands International Inc (“Coolbrands”) and in 2001, Honeycrest filed a similar action against Coolbrands and Integrated (Honeycrest Holdings, Ltd. v. Coolbrands International, Inc., et al., New York Supreme Court, Queens County (Index No. 29666/01)). The actions against Integrated and Coolbrands have been combined (although not consolidated) for joint trial. In 2010, Coolbrands (formerly a Canadian corporation) was domesticated in the State of ~~North Carolina, Mecklenburg County, captioned Borthwick v. Berrard, et. al.~~Delaware as Swisher Hygiene Inc. and thereafter acquired Swisher International Inc. In the Sale Transaction, Swisher Hygiene Inc. sold all of the stock of Swisher International Inc. to Ecolab Inc., ~~No. 13-CVS-12397.~~but retained indirect ownership of Integrated. The ~~action asserted claims~~litigation involving Honeycrest and Integrated and/or Coolbrands spans 17 years, has been episodically dormant with periods of extended discovery, motion practice, mediation, attempted settlements and other activities. In January 2016, Honeycrest filed a motion to amend the Coolbrands complaint to add Swisher Hygiene Inc. as a defendant in that case. Swisher Hygiene Inc.'s opposition papers were served on February 29, 2016. Swisher Hygiene Inc. believes any possible claim by Honeycrest against it is without merit and intends to vigorously defend itself against any such claims. The foregoing summary is qualified in its entirety by the pleadings that have been filed in the foregoing cases.

On October 7, 2015, the Company asentered into a nominal defendant, its former CEO and former CFO, and certain former and current Company directors for breaches of fiduciary duties, gross mismanagement, abuse of control, waste of corporate assets, and aiding and abetting thereof in connectionDeferred Prosecution Agreement (the “DPA”) with the Company's restatement of its financial statements. Among other things, the action sought damages on behalf of the Company and an order directing the Company to implement corporate governance reforms. On August 7, 2013, the Company filed a notice to remove the action from the General Court of Justice, Superior Court Division in the State of North Carolina, Mecklenburg County to the Western District of North Carolina. On August 30, 2013, the Company moved to consolidate this action with the actions previously consolidated beforeUnited States Attorney’s Office for the Western District of North Carolina (“USAO”) relating to the USAO’s investigation of the Company’s accounting practices. Under the terms of the DPA, the USAO filed, but deferred prosecution of, a criminal information charging Swisher Hygiene Inc. with conspiracy to commit securities fraud and other charges relating to ~~stay~~ the ~~action. On September 25, 2013, the Western District of North Carolina granted~~Company’s accounting and financial reporting practices reflected in the Company's ~~motion to consolidate~~originally filed Quarterly Reports on Form 10-Q for the periods ended March 31, 2011, June 30, 2011, and stay the action. On October 23, 2014, following its approval of the settlement of the securities class actions, the Western District of North Carolina set a briefing schedule whereby the Company, as nominal defendant, filed a motion to dismiss the derivative action on November 4, 2014.September 30, 2011. Pursuant to the ~~schedule,~~DPA, the ~~remaining defendants did not need~~Company agreed to ~~file any motions~~pay a $2 million fine to ~~dismiss until after~~ the ~~Court ruled on~~USAO payable in four annual installments of $500,000 each if the ~~Company's motion. On December 10, 2014,~~Company is financially able to do so. Pursuant to the ~~parties filed~~terms of the DPA, the fine became immediately due and payable in full upon a ~~Stipulation~~change in control of the Company. As a result, the fine was paid in full upon the closing of the Sale Transaction, and ~~Proposed Order for the~~we are awaiting dismissal of the ~~complaint filed in this action with prejudice. On December 11, 2014,~~Bill of Information pursuant to the ~~Western District of North Carolina issued an order dismissing the Borthwick action with prejudice.~~

~~On December 17, 2013, a purported stockholder commenced a putative securities class action on behalf of purchasers~~terms of the Company's common stock on the Toronto Stock Exchange or any other Canadian trading platforms in the Ontario Superior Court of Justice, captioned Edwards v. Swisher Hygiene, Inc., et al., CV 13-20282 CP, against the Company, the former CEO and former CFO. The action alleges claims under Canadian law for alleged misrepresentations of the Company's financial position relating to its business acquisitions. On February 13, 2014, a Fresh Statement of Claim and Fresh Notice of Action were filed, adding an additional named plaintiff. On March 28, 2014, another purported stockholder commenced a putative securities class action on behalf of purchasers of the Company's common stock on the Toronto Stock Exchange or any other Canadian trading platforms in the Ontario Superior Court of Justice, captioned Phillips v. Swisher Hygiene, Inc., et al., CV 14-00501096-0000, against the Company, the former CEO, the former CFO and the Company's former Senior Vice President and Treasurer. The action alleges claims under Canadian law stemming from the Company's restatement.

Although the Company believed it had meritorious defenses to the asserted claims in the two securities class actions pending in Canada, the defendants agreed to terms of settlement and executed a settlement agreement resolving all claims in both securities class actions pending there, which was approved by the Ontario Superior Court of Justice by Order dated February 13, 2015 (the "Canadian Settlement"). The Canadian Settlement provides that defendants will make a set cash payment totaling $0.7 million, including legal fees, all from insurance proceeds, to settle all of the Canadian securities class actions, with full and complete releases provided to the defendants. Notice has been given of the Canadian Settlement.

~~Other Matters~~DPA.

~~The~~In 2012, the Company ~~has been~~was contacted by the staff of the Atlanta Regional Office of the SEC ~~and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office")~~ after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to make certain individuals available and to provide certain information about these matters to the ~~SEC and the U.S. Attorney's Office.~~SEC. The Company is fully cooperating with the ~~SEC and the U.S. Attorney's Office.~~SEC. Any action by the SEC ~~the U.S. Attorney's Office~~ or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

1615

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Registrant’s Common Equity

Our common stock is listed for trading on ~~NASDAQ~~the OTCQB under the trading symbol “SWSH.” Our common stock ~~commenced trading~~was traded on ~~NASDAQ on~~The Nasdaq Stock Market ("NASDAQ") from February 2, ~~2011. Our~~2011 to January 14, 2016. Also, our common stock was previously listed on the Toronto Stock Exchange (“TSX”) until April 30, 2014 when we voluntarily delisted our common stock. On June 3, 2014, a one-for-ten reverse split of the Company's issued and outstanding common stock, $0.001 par value per share, became effective ("Reverse Stock Split"). Trading of the common stock on a post-Reverse Stock Split adjusted basis began at the open of business on the morning of June 3, 2014. All historic share and per share information, including earnings per share, in this ~~2014~~2015 Form 10-K have been retroactively adjusted to reflect the Reverse Stock Split. The following table sets out the reported low and high sale prices on NASDAQ for the periods indicated as reported by the exchange:

NASDAQ
Low/High Prices
Fiscal Quarter 2014 2013
First $ 4.50 – 6.70 $ 11.40 – 18.80
Second $ 2.98 – 5.10 $ 7.50 – 14.60
Third $ 2.77 – 4.73 $ 5.80 – 11.40
Fourth $ 1.58 – 4.20 $ 3.80 – 7.60

~~Stock Performance Chart~~

	NASDAQ
	Low/High Prices
Fiscal Quarter	2015		2014
First	$	1.55 – 2.61	$	4.50 – 6.70
Second	$	1.03 – 2.06	$	2.98 – 5.10
Third	$	0.50 – 1.80	$	2.77 – 4.73
Fourth	$	0.83 – 1.25	$	1.58 – 4.20

The chart and table below compare the cumulative total stockholder return on our common stock from January 10, 2011, the date we became a U.S. reporting company, through December 31, 2014 with the performance of: (i) the Standard and Poor's ("S&P") SmallCap 600 Index and (ii) a self-constructed peer group consisting of other public companies in similar lines of business as of December 31, 2014. The peer group consists of Cintas Corp, Ecolab, Inc., G&K Services Inc., Unifirst Corp., and ZEP Inc.

The comparisons reflected in the graph and tables are not intended to forecast the future performance of our common stock and may not be indicative of future performance. The graph and table assume that $100 was invested on January 10, 2011 in each of our common stock, the S&P SmallCap 600 Index, the peer group and that dividends were reinvested.

~~INDEXED RETURNS~~

~~Quarter Ending~~

Base
Period
Company / Index 01/10/11 2/02/11 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12 9/30/12 12/31/12
Swisher Hygiene, Inc. 100 114.55 109.13 99.98 71.92 66.42 43.69 44.66 24.68 31.08
S&P SmallCap 600 Index 100 101.46 107.41 107.24 85.97 100.73 112.81 108.77 114.64 117.18
Peer Group 100 101.47 104.15 114.43 98.18 117.72 127.58 138.07 135.10 147.00

Company / Index 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14 6/30/14 9/30/14 12/31/14
Swisher Hygiene, Inc. 22.55 15.27 10.77 9.13 7.99 7.64 5.40 3.32
S&P SmallCap 600 Index 131.02 136.15 150.76 165.59 167.46 170.92 159.42 175.12
Peer Group 164.65 173.99 201.25 216.60 222.93 230.45 239.98 234.09

The return from January 10, 2011 to February 1, 2011 reflects trades on the TSX in Canadian dollars, converted to U.S. Dollars. The return from February 2, 2011 to December 31, 2014 reflects trades on NASDAQ, which became our primary trading market on February 2, 2011, in U.S. dollars.

As of March ~~25, 2015,~~4, 2016, there were ~~17,617,379~~17,675,220 shares of our common stock issued and outstanding. As of March ~~25, 2015,~~4, 2016, we had ~~883~~893 registered stockholders of record.

We have not paid any cash dividends on our common stock and do not plan to pay any cash dividends in the foreseeable future. Our Board of Directors will determine our future dividend policy on the basis of many factors including results of operations, capital requirements, general business conditions, and restrictions in our Credit Facility. Our Credit Facility restricts the payment of dividends on our Common Stock.

~~ITEM 6.~~

ITEM 6. SELECTED FINANCIAL DATA.

The following selected consolidated financial data should be read in conjunction with our audited Consolidated Financial Statements and Notes to Consolidated Financial Statements beginning on page F-1.

For the Year Ended December 31,

2014 (2)

2013 (2)

2012 (1)

2011 (1)
2010
Selected Income Statement Data:

Revenue $ 193,757 $ 213,688 $ 230,521 $ 160,617 $ 63,652

Loss from continuing operations $ (45,234 ) $ (152,472 ) $ (58,929 ) $ (34,574 ) $ (15,113 )

Net loss from continuing operations $ (46,808 ) $ (150,532 ) $ (80,775 ) $ (24,723 ) $ (17,570 )

Loss per share, continuing operations:

Basic and diluted $ (2.64 ) $ (8.55 ) $ (4.62 ) $ (1.55 ) $ (2.62 )

Selected Balance Sheet Data:

Total Assets $ 113,198 $ 161,717 $ 327,685 $ 478,404 $ 106,234

Swisher Hygiene Inc. Stockholders' equity $ 81,290 $ 127,186 $ 277,121 $ 343,834 $ 45,917

Long-term debt and obligations $ 1,185 $ 2,003 $ 5,284 $ 47,267 $ 44,408

~~_____________________~~

~~(1)~~ During 2011, we completed acquisitions of nine franchises and 54 acquisitions of independent businesses, including 4 solid waste collection service businesses (Waste segment). In 2012 we disposed of the Waste segment. 2012 and 2011 selected financial data has been restated to reflect discontinued operations treatment of this segment. Refer to Note 2, “Discontinued Operations and Assets Held for Sale” and Note 3, “Acquisitions” in the Notes to the Consolidated Financial Statements for additional information regarding these transactions.

Not applicable.

~~(2)~~ During 2014 and 2013, the Company recorded a non-cash goodwill impairment charge of $5.8 million and $93.2 million, respectively. Refer to Note 5, “Goodwill and Other Intangible Assets,” for additional information related to this impairment charge. Additionally, during 2014 and 2013, the Company recorded $3.0 million and $6.4 million, respectively, in impairment related to its assets held for sale and the adjustment of these assets balances to the lower of net book value or estimated fair value.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

You should read the following discussion and analysis in conjunction with ~~the “Selected Financial Data” included in Item 6 and~~ our audited Consolidated Financial Statements and the related notes thereto included in Item 8 “Financial Statements and Supplementary Data.” In addition to historical consolidated financial information, this discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Actual results could differ from these expectations as a result of factors including those described under Item 1A, “Risk Factors,” “Forward-Looking Statements” and elsewhere in this annual report.

~~Business~~ Overview ~~and Outlook~~

On August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab Inc ("Ecolab"). We ~~currently operate~~refer to the transaction pursuant to the purchase agreement between the Company and Ecolab dated August 12, 2015 as the "Sale Transaction." At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash adjustment. The $2.0 million holdback was received from Ecolab in January 2016. See Note 1 to the Notes to the Consolidated Financial Statements for additional information on the Sale Transaction.

As a result of the Sale Transaction a loss of $2.6 million was recorded after the $22.6 million impairment charge was recognized in the quarter ended September 30, 2015, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. See Note 2, "Discontinued Operations and Assets Held for Sale," and Note 3, "Goodwill and Other Intangible Assets" for a further description of the $2.6 million loss on sale and the $22.6 million impairment charge. Swisher Hygiene Inc. will no longer have any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years.

Prior to the Sale Transaction, we operated in one business segment, Hygiene, which ~~encompasses~~encompassed providing essential hygiene and sanitizing solutions to customers in a wide range of end-markets including foodservice, hospitality, retail and the healthcare industries. Certain of our products ~~are~~were registered with the Environmental Protection Agency and ~~follow~~followed the Center for Disease Control guidelines for disinfection of surface areas such as children’s playgrounds, hospitals, and assisted living environments. We ~~sell~~sold consumable products such as detergents, cleaning chemicals, soap, paper, water filters and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products as well as additional services such as the cleaning of restrooms and other facilities. We ~~continue to see~~saw the positive impact of cost efficiencies, integration, capital resource management and planning, plant consolidations and route optimization efforts; however, we ~~believe~~believed we still ~~need~~needed to increase revenue in order to maximize our profitability. We ~~are~~were committed to our philosophy of Service, People and Profitability and to Selling Through Service. To that end, we ~~have~~ commenced a realignment of our field service and sales teams to better serve our customers since we ~~believe~~believed this ~~will~~would ultimately drive increased revenues through improved customer retention and the ability to leverage our ~~current~~ customer base. ~~See “Prior Period Reclassification” below for~~As a ~~description~~result of ~~our realignment.~~

the Sale Transaction, we have no operating assets remaining and no revenue producing business or operations.

Assets Held For Sale

In accordance with ASC 360, Property, Plant and Equipment, the Company’s estimates of fair value require significant judgment and were regularly reviewed and subject to change based on market conditions, changes in the customer base of the operations or routes, and our continuing evaluation as to the facility's acceptable sale price.

The disposal groups mentioned below are included in discontinued operations in the Company’s consolidated financial statements.

During 2013, the Company commenced an active program to sell certain non-core assets and routes related to its linen and dust operations. ~~Additionally, in~~In 2014, the Company ceased operations at a linen processing ~~plant~~plant. During March 2015, the Board of Directors of the Company approved a resolution to sell the Company’s remaining linen operation and in ~~2013 a chemical manufacturing plant was closed in connection with~~July 2015, the ~~Company’s plant consolidation efforts.~~Board of Directors approved the sale of the Canadian operations. In accordance with ASC 360, Property, Plant and Equipment, these assets were classified as assets held for sale in the Consolidated Balance Sheet and the asset balances were adjusted to the lower of historical carrying amounts or fair values.

During 2014, the Company updated its estimates of the fair value of certain linen routes and operations to reflect various events that occurred during the year. The cumulative impairment loss for the twelve months ended December 31, 2014 was $3.0 million and is included in other expense of discontinued operations in the in the consolidated statements of operations and comprehensive loss, of which $1.9 million was attributable to a reduction in the estimate of net sales proceeds for a linen processing operation. The factors driving the $1.9 million reduction were the cancellation notifications received during April and May 2014 from three major customers resulting in a significant loss of forecasted revenue; and the operation’s 2014 year-to-date loss which was in excess of the Company’s estimates. The asset fair value of this linen processing operation was written down to zero in the second quarter of 2014 and was closed during the fourth quarter of 2014.

The Company ~~recorded impairment charges for~~completed the ~~twelve months ended December 31, 2013~~sale of ~~$6.4~~the remaining linen operation on May 12, 2015 receiving $4.0 million in cash and notes receivable plus purchased accounts receivables, resulting in a gain of $0.9 million. ~~Included~~The gain is included in ~~this charge is $3.1 million that was recorded during the fourth quarter~~other income of 2013 as follows: $2.0 million related to the Board of Director’s approval, on November 8, 2013, of additional assets to be disposed of and the resultant adjustment of these assets from net carrying value to fair; $1.1 million impairment adjustments to existing assets held for sale to reflect reductionsdiscontinued operations in the ~~estimated fair value as a result~~consolidated statement of ~~events that occurred during~~operations and comprehensive loss. On August 4, 2015, the ~~fourth quarter which indicated that~~Company completed the ~~estimated net selling prices will be less than anticipated at the end~~sale of the ~~third quarter.~~Canadian operations for $2.6 million in cash and $0.1 million in respect of outstanding accounts payable, net of outstanding accounts receivable. The sale of the Canadian operations resulted in a gain on the sale of $1.4 million, which is included in other income of discontinued operations in the consolidated statement of operations and comprehensive loss.

The Company completed several sales transactions during the twelve months ended December 31, 2014, which resulted in the net receipt of $1.6 million in cash and the remainder in receivables. A loss on these sales of $0.9 million was incurred and included a write-off of $0.6 million of the receivable balances. The receivable balances were primarily for contingent sales proceeds that were based on post-closing revenues of previously sold routes which were lower than estimated. The total loss of ~~$0.8~~$0.9 million for the twelve months ended December 31, 2014, is included in ~~“Other~~other expense ~~net”~~of discontinued operations in the condensed consolidated statements of operations and comprehensive loss.

~~The Company completed several sales transactions during the last half of 2013 totaling $6.3 million in net sales proceeds including $0.6 million in receivable balances that~~There were contingent primarily upon 2014 revenues generated by certain of the sold assets during defined post-close periods. The resulting $0.2 million gain is included in “Other expense, net” in the consolidated statement of operations.

~~Prior Period Reclassification~~

~~In the first quarter~~as of 2014, the Company began implementing a realignment of its field service and sales organization and as a result the primary function of certain job titles has shifted from primarily a sales, to a service focus. The additional service activities involve more frequent field visits to perform preventative maintenance, repairs, evaluation of product and service solutions and required inventory levels. This realignment of the field service and sales organization was implemented in stages during 2014. Payroll expense related to these job titles was historically classified within “Selling, general and administrative expenses” in the Condensed Consolidated Statement of Operations and Comprehensive Loss, based on the primary job focuses of sales and administration. Based on the changes in the job functions, the related payroll expense is classified within “Route expense”, which the Company defines as the employee costs incurred to provide service and deliver products to customers. To facilitate comparability between the periods presented in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the twelve months ended December 31, ~~2013 certain selling, general~~2014 and administrative expenses have been reclassified to route expense to conform to the current period’s presentation which resulted in an $11.9 million increase in route expense and a $11.9 million decrease in selling, general and administrative expense. The reclassification for the twelve months ended December 31, 2012 resulted in a $12.5 million increase in route expense and a $12.5 million decrease in selling, general and administrative expense. There was no impact to loss from continuing operations, net loss or loss per share as a result of the 2013 and 2012 reclassifications.2015.

Critical Accounting Policies and Estimates

The discussion of the financial condition and the results of operations are based on the Consolidated Financial Statements, which have been prepared in conformity with United States generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based on the information available. These estimates and assumptions affect the reported amount of assets and liabilities, revenue and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, the most important and pervasive accounting policies used and areas most sensitive to material changes from external factors. See Note 1, “Operations and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements for additional discussion of the application of these and other accounting policies.

~~Assets Held for Sale~~

~~We record assets held for sale, in accordance with~~ ~~Accounting Standards Codification ("ASC") 360 "Property, Plant, and Equipment,"~~ at the lower of carrying value or fair value less cost to sell. Fair value is based on the estimated net proceeds from the sale of the assets which are derived based on a number of factors including standard industry multiples of revenues or operating metrics and the status of ongoing sales negotiations and asset purchase agreements, where available. Our estimates of fair value are regularly reviewed and subject to changes based on market conditions, changes in the customer base of the operations or routes and our continuing evaluation as to the assets acceptable sale price. As described in Note 9, “Fair Value Measurements,” in the Notes to the Consolidated Financial Statements, assets held for sale are measured using Level 3 inputs.

Purchase Accounting for Business Combinations

The Company ~~accounts~~accounted for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference iswas recorded as goodwill. Adjustments may behave been made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition surface during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration iswas recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value ~~are~~were recorded through earnings each reporting period. Transactions that occur in conjunction with or subsequent to the closing date of the acquisition ~~are~~were evaluated and accounted for based on the facts and substance of the transactions.

Goodwill

Goodwill iswas not amortized but rather tested for impairment at least annually. The Company ~~tests~~tested goodwill for impairment annually during the fourth quarter of each year. Goodwill iswas also tested for impairment between annual tests if an event ~~occurs~~occurred or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill iswas done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available, and segment management regularly reviews the operating results of that component. The Company ~~has~~ concluded ~~that~~ it ~~has~~had one reporting ~~unit.~~unit prior to the Sale Transaction.

Determining fair value includes the use of significant estimates and assumptions. Management ~~utilizes~~utilized an income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis ~~requires~~required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows are based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis ~~reflects~~reflect a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates can be affected by factors such as customer growth, pricing, and economic conditions that can be difficult to predict. During ~~the second quarter of~~ 2014, ~~and the fourth quarter of 2013,~~ in conjunction with its impairment test, the Company recorded a goodwill impairment charge of $5.8 million, ~~and $93.2 million,~~ respectively, as further discussed in Note 5,3, “Goodwill and Other Intangible Assets," in the notes to the Consolidated Financial Statements.

Other Intangible Assets

Identifiable intangible assets include customer relationships, non-compete agreements, trade names and trademarks, and formulas. The fair value of these intangible assets at the time of acquisition iswas estimated based upon various valuation techniques including replacement cost and discounted future cash flow projections. Customer relationships ~~are~~were amortized on a straight-line basis over the expected average life of the acquired accounts, which is typically five to ten years based upon a number of factors, including historical longevity of customers and contracts acquired and historical retention rates. The non-compete agreements ~~are~~were amortized on a straight-line basis over the term of the agreements, typically not exceeding five years. Formulas are amortized on a straight-line basis over their estimated useful life of twenty years. The Company ~~reviews~~reviewed the recoverability of these assets if events or circumstances indicate that the assets may be impaired and periodically reevaluates the estimated remaining lives of these assets.

Trademarks ~~are~~were considered to be indefinite lived intangible assets unless specific evidence exists that a shorter life is more appropriate. Indefinite lived intangible assets ~~are~~were tested, at a minimum, on an annual basis using an income approach or sooner whenever events or changes in circumstances indicate that an asset may be impaired.

During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its intangible assets in accordance with ASC 350, Intangible-Goodwill and Other, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s intangible assets had occurred resulting in an impairment charge of $10.0 million, which is reported as part of discontinued operations in the consolidated statement of operations and comprehensive loss as discussed in Note 3, "Goodwill and Other Intangible Assets" in the notes to the Consolidated Financial Statements.

Long-Lived Assets

Fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flows expected to be generated by the asset. If such assets or asset groups are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets or asset groups exceeds the related fair values. The Company also performs a periodic assessment of the useful lives assigned to the long-lived assets, as previously discussed. During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s fixed assets had occurred resulting in an impairment charge of $12.6 million, which is reported as part of discontinued operations in the consolidated statement of operations and comprehensive loss as discussed in Note 5, "Property and Equipment" in the notes to the Consolidated Financial Statements.

Revenue Recognition

~~Revenue~~Prior to the Sale Transaction, revenue from product sales and service iswas recognized when the product iswas delivered to the customer or when services ~~are~~were performed, including product and service sales made under multiple deliverable agreements, which outline the pricing of products and the preferred frequency of delivery. Deliverables under these pricing arrangements ~~are~~were considered to be separate units of accounting, as defined by ASC 605-25, Revenue Recognition – Multiple-Element Arrangement, and due to the nature of the Company’s business, the timing of the delivery of products and performance of service iswas concurrent and ongoing and there are no contingent deliverables. Franchise and other revenue ~~include~~included product sales, royalties and other fees charged to franchisees in accordance with the terms of their franchise agreements. Royalties and fees ~~are~~were recognized when earned and product sales ~~are~~were recognized as the product iswas delivered.

The Company’s sales policies ~~provide~~provided for limited rights of return and, during the fiscal years ~~2014, 2013,~~2015 and ~~2012,~~2014, product returns were insignificant. The Company ~~records~~recorded estimated reductions to revenue for sales returns and for customer programs and incentive offerings, including pricing arrangements, rebates, promotions and other volume-based incentives at the time the sale is recorded.

Valuation Allowance for Accounts Receivable

~~We estimate~~Prior to the Sale Transaction, we estimated the allowance for doubtful accounts for accounts receivable by considering a number of factors, including overall credit quality of customers, the age of outstanding customer balances, historical write-off experience and specific customer account analysis that ~~projects~~projected the ultimate collectability of the outstanding balances. Actual results could ~~differ~~have differed from these assumptions and the Company periodically ~~evaluates~~evaluated these factors affecting the allowance estimate. Our allowance for doubtful accounts was ~~$1.0 million~~zero and ~~$2.0~~$1.0 million as of December 31, 2015 and 2014, ~~and 2013,~~ respectively.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax ~~bases~~basis and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that deferred tax assets will not be realized.

The Company's policy is to evaluate uncertain tax positions under ASC 740-10, Income Taxes. As of December 31, ~~2014, 2013~~2015 and ~~2012,~~2014, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company includes interest and penalties accrued in the consolidated financial statements as a component of interest expense. No significant amounts were required to be recorded for the ~~three~~two year period ended December 31, ~~2014.~~2015.

Stock Based Compensation

We measure and recognize all stock based compensation at fair value at the date of grant and recognize compensation expense over the service period for awards expected to vest. Determining the fair value of stock based awards at the grant date requires judgment, including estimating the share volatility, the expected term the award will be outstanding, and the amount of the awards that are expected to be forfeited. We utilize the Black-Scholes option pricing model to determine the fair value. See Note ~~13,~~10, “Equity Matters” in the Notes to Consolidated Financial Statements for further information on these assumptions.

Newly Issued Accounting Pronouncements

In April, ~~10,~~ 2014, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an ~~Entity.~~Entity. The amendments in this ~~accounting standard raise~~ASU raises the threshold for a disposal to qualify as a discontinued operation and ~~require new~~requires expanded disclosures ~~of both~~about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, expenses and ~~certain other~~cash flows of discontinued operations. Under the new guidance, the disposal of a component or group of components of a business will be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Early adoption is permitted, but only for disposals that dohave not ~~meet the definition of a discontinued operation.~~been reported in financial statements previously issued. This accounting standard update is effective for annual periods beginning on or after December 15, 2014 and related interim periods, with early adoption allowed. This standard has been adopted by the Company and the impact is incorporated in the Company’s consolidated financial statements and disclosures.

In August, 2015, the FASB issued ASU No. 2015-14 which updated previously issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU is intended to clarify the principles for recognizing revenue by providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices; and providing more useful information to users of financial statements through improved revenue disclosure requirements. The updated ASU changed the effective date of the previously issued ASU, and made it effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this standard and ~~plans~~has elected to not adopt ~~this~~the standard ~~on the stated effective date in fiscal year 2015.~~early.

On May 28, 2014, the FASB issued ASU Update No. 2014-09, Revenue from Contracts with Customers. This accounting standard creates common revenue recognition guidance for U.S. GAAP and IFRS. The guidance also requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. This accounting standard update is effective for annual reporting periods beginning after December 15, 2016, and related interim periods. Early adoption is not permitted. The Company is currently evaluating the impact of this standard.

In August 2014, the FASB issued ASU Update No. 2014-15, ~~Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic 718),~~ Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU ~~Update No. 2014-15~~ provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. The new requirements are effective for the annual periods ending after December 15, 2016, and for interim periods and annual periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of this standard and has elected to not adopt the standard early.

2320

In April 2015 and August 2015, the FASB issued ASU 2015-03 (ASC Subtopic 835-30), Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs and ASU 2015-15 (ASC Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, respectively. The ASUs require that debt issuance costs related to a recognized debt liability, with the exception of those related to line-of-credit arrangements, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In September 2015, the FASB issued ASU 2015-16 (ASC Topic 805), Business Combinations Simplifying the Accounting for Measurement-Period Adjustments. The amendments in this update require that an acquirer recognize measurement period adjustments in the period in which the adjustments are determined. The income effects of such measurement period adjustments are to be recorded in the same period’s financial statements but calculated as if the accounting had been completed as of the acquisition date. The impact of measurement period adjustments to earnings that relate to prior period financial statements are to be presented separately on the income statement or disclosed by line item. The amendments in this update are for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted for public business entities for reporting periods for which financial statements have not yet been issued. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In November 2015, the FASB issued ASU 2015-17 (ASC Topic 740), Income Taxes Balance Sheet Classification of Deferred Taxes. The amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted by all entities as of the beginning of an interim or annual reporting period. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements and disclosures.

In January 2016, the FASB issued ASU 2016-01 (ASC Subtopic 825-10), Financial Instruments- Overall Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this ASU require entities to measure all investments in equity securities at fair value with changes recognized through net income. This requirement does not apply to investments that qualify for the equity method of accounting, to those that result in consolidation of the investee, or for which the entity meets a practicability exception to fair value measurement. Additionally, the amendments eliminate certain disclosure requirements related to financial instruments measured at amortized cost and add disclosures related to the measurement categories of financial assets and financial liabilities. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted for only certain portions of the ASU. The Company is in the process of assessing the impact, if any, on its consolidated financial statements.

RESULTS OF CONTINUING OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015 COMPARED TO DECEMBER 31, 2014

Selling, General and Administrative Expenses

Selling, general and administrative expenses for continuing operations consist primarily of the costs incurred for:

·	Compensation related primarily to the Chief Financial Officer and the Chief Executive Officer.

·	Professional fees related to tax preparation, audit and review related fees and financial statement printing and related filing expenses.

·	Legal and investigation related expenses.

·	Corporate governance expenses, investor relations, director and officer insurance fees and other corporate related professional fees.

The details of selling, general and administrative expenses for the years ended December 31, 2015 and 2014 reported as continuing operations are as follows:

	2015		2014
Selling, General & Administrative Expenses
Compensation	$	1,235	$	636
Professional fees (other than legal)		4,192		3,664
Legal fees	$	2,189	$	582
Other		1,644		1,482
Total selling, general & administrative expenses	$	9,260	$	6,364

Selling, general and administrative expenses increased $2.9 million to $9.3 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. The primary component of this change was an increase in professional fees of $0.5 million and legal fees of $1.6 million in connection with the settlement with the United States of America referenced below in “Other Expense, Net,” settlements of other lawsuits and corporate matters, and a $0.6 million increase in compensation.

Other Expense, Net

The increase in other expense of $1.9 million from continuing operations is mainly due to a $2.0 million fine paid to the United States of America pursuant to the terms of a Deferred Prosecution Agreement as described in Part I – Item 3 Legal Proceedings.

RESULTS OF DISCONTINUED OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015 COMPARED TO DECEMBER 31, 2014

The following table provides our results of operations for each of the years ended December 31, ~~2014, 2013,~~2015 and ~~2012,~~2014, including key financial information relating to our discontinued business and operations. This financial information should be read in conjunction with our audited Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Item 8.

Year ended December 31,
2014 2013 2012
Revenue
Products $ 173,505 $ 189,480 $ 202,968
Services 18,877 22,895 26,186
Franchise and other 1,375 1,313 1,367
Total revenue 193,757 213,688 230,521

Costs and expenses
Cost of sales (exclusive of route expenses and related depreciation and amortization) 89,101 95,585 101,914
Route expenses 50,595 54,227 54,988
Selling, general, and administrative 69,269 94,620 110,975
Acquisition and merger expenses - - 582
Depreciation and amortization 21,216 22,113 20,991
Impairment related to assets held for sale 2,989 6,422 -
Impairment related to goodwill 5,821 93,194 -
Total costs and expenses 238,991 366,160 289,450
Loss from continuing operations (45,234 ) (152,472 ) (58,929 )

Other expense, net (1,663 ) (654 ) (3,093 )
Net loss from continuing operations before income taxes (46,897 ) (153,126 ) (62,022 )
Income tax benefit (expense) 89 2,594 (18,753 )
Net loss from continuing operations (46,808 ) (150,532 ) (80,775 )

Discontinued operations, net of tax (Note 2)
Net loss from operations through disposal - (2,516 ) (6,245 )
Gain on disposal - - 13,844
Net (loss) income from discontinued operations - (2,516 ) 7,599

Net loss $ (46,808 ) $ (153,048 ) $ (73,176 )

~~Comparison of the years ended December 31, 2014 to December 31, 2013~~

	Year Ended December 31,
	2015			2014
Revenue	$	142,713		$	193,757

Cost of sales		66,684			89,101
Route expenses		37,599			50,595
Selling, general and administrative		46,538			62,905
Depreciation and amortization		13,494			21,216
Impairments		22,807			8,810
Loss on Sale Transaction		2,615			-
Other (income) expenses, net		(717	)		1,529
Loss from discontinued operations		(46,307	)		(40,399	)
Income tax benefit		43			89
Net loss from discontinued operations	$	(46,264	)	$	(40,310	)

Revenue

Revenue from products iswas primarily comprised of the sales and delivery of consumable products such as detergents and cleaning chemicals, the rental, sales and servicing of dish machines and other equipment used to dispense those products, the sale of paper items, rental fees, linen processing and other ancillary product sales. Revenues from services ~~are~~was primarily comprised of manual cleaning and delivery service fees. Franchise and other consists of fees charged to franchisees.

~~Total revenue and the revenue derived from each revenue type for the years ended December 31, 2014 and 2013 are as follows:~~

2014 % 2013 %
Revenue (In thousands)
Products $ 173,505 89.5 % $ 189,480 88.7 %
Services 18,877 9.8 % 22,895 10.7 %
Franchise and other 1,375 0.7 % 1,313 0.6 %
Total revenue $ 193,757 100.0 % $ 213,688 100.0 %

Consolidated revenue of discontinued operations decreased ~~$19.9~~$51.0 million or ~~9.3%~~26.3% to ~~$193.8~~$142.7 million for the year ended December 31, ~~2014 as~~2015 compared to ~~2013. Excluding revenue generated from linen assets sold or closed for the years ended December 31, 2014 and 2013, consolidated revenue decreased 4.4%.~~2014. Product revenue decreased ~~$16.0~~$45.1 million, ~~primarily due~~which included a decrease of $25.9 million from ceasing operations upon the sale to ~~an $8.6~~Ecolab effective November 2, 2015, $6.2 million decrease related to linen ~~routes~~assets sold, and ~~businesses sold. Product revenue also decreased~~$1.8 million decrease due to the sale of Canadian operations during August 2015. Additionally, the remaining $11.2 million decrease is primarily due to a ~~$2.7 million decrease~~reduction in purchasing from large wholesale and distribution customers, the attrition in customers resulting from the ~~loss~~termination of ~~customers at existing~~the Manufacturing and ~~closed linen operations, partially offset by the addition of $1.7 million~~Supply Agreement (the “Cavalier Agreement”) which was terminated in ~~revenue previously classified~~September 2014, as ~~service revenue. The remaining product revenue decrease is due to lower product purchases by existing customers~~well as additional attrition, volume reductions and ~~customer attrition.~~strategic separations from customers. Service revenue declined ~~$4.0~~$5.3 million partially due to the ~~reclass with product revenue~~sale of ~~$1.7 million and~~Canadian operations of $1.4 million. In addition, the Company experienced a loss of hygiene ~~customers.~~customers due to attrition and customers sold in connection with linen businesses. Franchise and other revenue ~~remained consistent period over period.~~declined $0.6 million primarily due to the timing of purchases with one of our international licensee.

Cost of Sales

Cost of sales ~~consists~~related to discontinued operations consisted primarily of the cost of chemical, paper, air freshener and other consumable products sold to, or used in the servicing of our customers. These costs are exclusive of route expense and related depreciation and amortization.

Cost of sales ~~for the year ended December 31, 2014 and 2013 are as follows:~~

2014 % (1) 2013 % (1)
Cost of Sales (In thousands)
Products $ 88,287 50.9 % $ 93,280 49.2 %
Services 361 1.9 % 1,594 7.0 %
Franchise and other 453 32.9 % 711 54.2 %
Total cost of sales $ 89,101 46.0 % $ 95,585 44.7 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of the respective revenue line.~~

~~Cost of sales~~related to discontinued operations decreased ~~$6.5~~$22.4 million or ~~6.8%,~~25.2% to ~~$89.1~~$66.7 million for the year ended December 31, ~~2014~~2015, compared ~~with 2013 primarily due~~ to 2014. The decrease included a ~~decline~~reduction of $13.5 million from the ceasing of operations upon the sale to Ecolab effective November 2, 2015, $0.9 million from the sale of Canadian operations, and $0.5 million from the sale of linen operations. The remaining decrease is a result of general declines in sales volume. ~~During 2014, management undertook an inventory of dish machines located at customer locations, which resulted in an adjustment totaling $0.8 million in product cost of sales.~~ Reported in the 2014 cost of sales is a $1.8 million realignment of freight costs that were classified in selling, general and administrative expenses in 2013. The Company has elected not to reclassify this amount in its prior period Condensed Consolidated Statement of Operations and Comprehensive Loss for comparability purposes since it is considered immaterial. As a percentage of sales, consolidated cost of sales increased slightly from ~~44.7%~~46.0% to ~~46.0%~~46.7%. ~~Excluding the $0.8 million adjustment for dish machines, 2014 total~~The increase in cost of sales as a percentage of ~~sales would have been 45.6% and 2013 total costs~~revenue from the prior-year primarily reflects the impact of ~~sales as a percentage of revenue would have also been 45.6% including~~exiting the ~~$1.8 million realignment.~~linen business, partially offset by cost efficiencies.

Route Expenses

Route expenses related to discontinued operations consist ~~primarily~~ of ~~the~~ costs incurred ~~by the Company~~ for the delivery of products and providing services to customers. ~~The details of route expenses for the year ended December 31, 2014 and 2013 are as follows:~~

2014 % (1) 2013 % (1)
Route Expenses (In thousands)
Compensation $ 39,147 20.3 % $ 41,220 19.4 %
Vehicle and other expenses 11,448 6.0 % 13,007 6.1 %
Total route expenses $ 50,595 26.3 % $ 54,227 25.5 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of total non-franchise revenue.~~

Route expenses of discontinued operations decreased ~~$3.6~~$13.0 million or ~~6.7%,~~25.7% to ~~$50.6~~$37.6 million for the year ended December 31, ~~2014~~2015 compared to ~~2013.~~2014. The ~~primary components~~decrease included a reduction of ~~this change were decreases~~$8.1 million from ceasing operations upon the sale to Ecolab effective November 2, 2015. The remaining decrease of $4.9 million represents a decrease in compensation, primarily through route optimization efforts of ~~$2.1~~$3.7 million and ~~decreases~~a decrease in vehicle and other ~~expenses~~ of ~~$1.6~~$1.2 million. Route expenses as a percentage of total revenue ~~was~~were 26.3% and ~~25.5%~~26.1% for the ~~years~~year ended December 31, 2015 and 2014, ~~and 2013,~~ respectively. The increase as a percentage of revenue was primarily due to the decline in revenue from the prior year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses related to discontinued operations consist primarily of the costs incurred for:

●·	Local office and field management support costs that are related to field operations. These costs include compensation, occupancy expense and other general and administrative expenses.

●·	Selling expenses which include compensation and commissions for local sales representatives and corporate account representatives.

·	Marketing expenses.

●·	~~Corporate office expenses which include executive management, information~~Information technology, ~~marketing,~~ human ~~resources,~~resource, accounting, purchasing and other support costs.

~~The details of selling, general and administrative expenses for the years ended December 31, 2014 and 2013 are as follows:~~

2014 % (1) 2013 % (1)
Selling, General & Administrative Expenses (In thousands)
Compensation $ 38,984 20.1 % $ 48,823 22.8 %
Occupancy 7,658 4.0 % 9,935 4.6 %
Other 22,627 11.7 % 35,862 16.8 %
Total selling, general & administrative expenses $ 69,269 35.8 % $ 94,620 44.3 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of total revenue.~~

Selling, general and administrative expenses of discontinued operations decreased ~~$25.4~~$16.4 million ~~or 26.8%~~ to ~~$69.3~~$46.5 million for the year ended December 31, ~~2014 as~~2015 compared to ~~2013.~~2014. The components of this change were decreases in compensation of ~~$9.8~~$12.6 million, occupancy of ~~$2.3~~$2.5 million, and other expenses of ~~$13.2~~$1.3 million. ~~Compensation~~Of these decreases in compensation, occupancy and other expenses, ~~decreased $5.0~~$5.6 million, $1.2 million and $2.7 million, respectively, were related to ceasing operations as a result of the sale to Ecolab on November 2, 2015. The remaining decrease in compensation expense was primarily due to ~~on-going cost efficiencies,~~headcount reductions, the sale of Canadian operations and the linen businesses, a reduction in stock based compensation ~~of $1.2 million~~ and ~~a $3.6 million reduction resulting from linen businesses which were sold or closed.~~other optimization efforts. Occupancy also decreased ~~$1.2 million~~ due to the ~~sale~~closure of a linen ~~businesses~~plant and due to ongoing efforts to reduce facility infrastructure ~~needs. Other~~costs. The $2.7 million decrease in other expenses ~~decreased primarily due~~related to ~~a decrease~~ceasing operations was offset by increases of $1.4 million in professional fees of $9.1 million, which includes investigation and review related fees of $4.8 million in the year ended December 31, 2013, a decrease in office equipment of $0.7 million, a decrease in travel expenses of $0.4 million, a decrease relateddue to ~~realigning freight~~transaction costs in ~~cost of sales of $1.8 million, a reduction in bad debt expenses of $0.7 million, plus additional expense reduction initiatives.~~

~~Impairment related to Assets Held for~~connection with the Sale

During 2013, the Company made a decision to sell certain assets including linen operations, routes and customers that were not considered to be core to the Company’s overall hygiene and sanitizing business. The decrease of $3.4 million in impairment expense to $3.0 million in 2014 from $6.4 million in 2013 relates to adjustments that were required to write-down these asset balances to the lower of net carrying value or fair value. Transaction.

Depreciation and Amortization

Depreciation and amortization reported as components of discontinued operations consists of depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization decreased $7.7 million to $13.5 million or 36.4% for the year ended December 31, ~~2014 decreased $0.9~~2015, $4.0 million ~~or 4.1%, to $21.2 million as compared to 2013.~~

~~Impairment related to Goodwill~~

In conjunction with its goodwill impairment test, the Company incurred a non-cash goodwill impairment charge of $5.8 million during 2014 compared to $93.2 million during 2013, See Note 5, “Goodwill and Other Intangible Assets” for further discussion of the ~~impairment.~~

decrease results from the sale to Ecolab on November 2, 2015. The remaining decrease is primarily the result of fixed assets becoming fully depreciated and a decrease in capital expenditures.

Other ~~Expense,~~Income (Expense), Net

~~Other~~The change of $2.2 million from a $1.5 million other expense ~~net for the years ended~~at December 31, 2014 ~~and 2013 is as follows:~~

2014 2013
(In thousands)
Interest income $ 9 $ 41
Interest expense (387 ) (485 )
Foreign currency (167 ) (5 )
Other expense (1,118 ) (205 )
Total other (expense) income, net $ (1,663 ) $ (654 )

~~The change in~~to a $0.7 million other ~~expense~~income at December 31, 2015 related to discontinued operations is due primarily to a ~~$0.8~~$3.2 million ~~loss~~increase in the gain on ~~the sale of certain~~ assets held for sale ~~during the year ended December 31, 2014~~ and a ~~$0.2~~$0.4 million gain ~~during~~in 2015 for a legal settlement, offset by $0.5 million increase in foreign currency loss and $0.9 loss on extinguishment of the ~~year ended December 31, 2013.~~Revolving Credit Facility in 2015.

Income tax benefit ~~(expense)~~

~~For~~The Company’s tax provision has an unusual relationship to pretax loss mainly because of the ~~year ended December 31, 2013, there was~~existence of a full deferred tax asset valuation allowance. This circumstance generally results in a zero tax provision since the income tax expense or benefit that would otherwise be recognized is offset by the change to the valuation allowance. However, due to the impairment of tradenames for book purposes during the third quarter of 2015, a deferred tax ~~liability associated with excess book over tax goodwill as it relates~~asset now exists related to ~~the Company’s Canadian subsidiary. As goodwill is considered to be an indefinite lived intangible, this associated~~tradenames. The change from a net deferred tax liability ~~is not allowed~~ to ~~be netted with other~~a net deferred tax ~~assets~~asset resulted in ~~determining the need for~~ a ~~valuation allowance.~~tax benefit in 2015. Due to the impairment of goodwill for book purposes during 2014, a deferred tax asset ~~now exists~~existed related to goodwill for the Canadian subsidiary. The change from a net deferred tax liability position to a net deferred tax asset position resulted in a tax benefit ~~of approximately $0.1 million.~~

~~Comparison of the years ended December 31, 2013 to December 31, 2012~~

~~Impact of Acquisitions and Discontinued Operations~~

~~During the year ended December 31, 2012, we acquired four independent businesses and the non-controlling interest~~ in one of our subsidiaries and sold the Waste segment. As discussed in Note 2, “Discontinued Operations and Assets Held for Sale,” in the Notes to the Consolidated Financial Statements, the Company has applied discontinued operations accounting treatment and disclosures for the sale of our Waste segment. The term "Acquisitions" refers to the four independent businesses and the remaining non-controlling interest of one of our subsidiaries acquired during the year ended December 31, 2012, including the subsequent growth in existing customer revenue existing at the time of acquisition as well as revenue from new customer relationships created by the acquired business.

~~Revenue~~

~~Total revenue and the revenue derived from each revenue type for the years ended December 31, 2013 and 2012 are as follows:~~

2013 % 2012 %
Revenue (In thousands)
Products $ 189,480 88.7 % $ 202,968 88.0 %
Services 22,895 10.7 % 26,186 11.4 %
Franchise and other 1,313 0.6 % 1,367 0.6 %
Total revenue $ 213,688 100.0 % $ 230,521 100.0 %

Consolidated revenue decreased $16.8 million to $213.7 million for the year ended December 31, 2013 as compared to 2012. The components of the revenue decrease were a $13.5 million decrease in products revenue, and a $3.3 million decrease in services revenue. These amounts represented revenue decreases of 7.3% for total revenue, 6.6% for products and 12.6% for services. Franchise and other revenue remained consistent period over period.

~~Within products, the $13.5 million in revenue decline from 2012 to 2013 was comprised primarily of a decline in chemical products of $12.6 million or 6.2%.~~2014.

2724

Throughout the revenue product lines, decreases in revenue were primarily attributable to 1) the loss of customers, including those resulting from the integration of some of our smaller acquisitions, 2) the loss of three significant accounts, totaling $6.0 million of revenue, including a chemical wholesale customer, 3) the loss of a large distributor customer representing $1.2 million of revenue and 4) the sale in the fourth quarter of 2012 of non-core businesses that resulted in a revenue decrease of approximately $2.2 million.

~~Cost of Sales~~

~~Cost of sales for the year ended December 31, 2013 and 2012 are as follows:~~

2013 % (1) 2012 % (1)
Cost of Sales (In thousands)
Products $ 93,280 49.2 % $ 100,089 49.3 %
Services 1,594 7.0 % 1,496 5.7 %
Franchise and other 711 54.2 % 329 24.1 %
Total cost of sales $ 95,585 44.7 % $ 101,914 44.2 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of the respective revenue line.~~

Consolidated cost of sales decreased $6.3 million, or 6.2%, to $95.6 million for the year ended December 31, 2013 compared with 2012. As a percentage of sales, consolidated cost of sales increased from 44.2% to 44.7%. Due to the increase in product revenue to 88.7% from 88.0% of total sales, and due to product cost of sales having a cost of sales percentage of 4.5% higher than the overall percentage, consolidated cost of sales increased 0.3% or $0.6 million. In addition, the percentage increase in cost of sales is a result of $0.7 million of one-time costs associated with the consolidation of two of the Company’s chemical manufacturing plants into a new Southwest regional manufacturing facility which occurred during the third quarter of 2013. These costs included 1) $0.4 million incurred to reposition inventory as well as de-install and re-install equipment and provide for severance payments, and 2) payment of a one-time lease termination fee of $0.5 million, of which $0.3 million is reflected in products costs of sales and the remaining $0.2 million is reflected in Selling, General and Administrative Occupancy expenses. Cost of sales also includes underutilized fixed costs as a result of the drop in volume as well as the Company’s efforts to reduce inventory on hand which affected production levels. The dollar decrease primarily reflects the decline in volume, while the change in the cost of sales as a percent of revenue is attributable to the revenue mix change including increased chemical sales as a percentage of total revenue and the decrease in hygiene sales.

~~Route Expenses~~

Route expenses consist primarily of the costs incurred by the Company for the delivery of products and providing services to customers. The details of route expenses for the year ended December 31, 2013 and 2012 are as follows:

2013 % (1) 2012 % (1)
Route Expenses (In thousands)
Compensation $ 41,220 19.4 % $ 42,988 18.8 %
Vehicle and other expenses 13,007 6.1 % 12,000 5.2 %
Total route expenses $ 54,227 25.5 % $ 54,988 24.0 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of total non-franchise revenue.~~

Consolidated route expenses decreased $0.8 million, or 1.4%, to $54.2 million and 25.5% of related product and service revenue for the year ended December 31, 2013, as compared to 2012. The components of this change were a decrease in compensation of $1.8 million and an increase in vehicle and other expenses of $1.0 million. The decrease in compensation expenses is due primarily to route consolidation efficiencies offset by an increase in workers’ compensation insurance. The increase in vehicle and other expenses of $1.0 million is due to increases in company leased vehicle expenses, vehicle insurance, fuel expenses and repairs, and maintenance.

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative expenses consist primarily of the costs incurred for:~~

●	~~Local office and field management support costs that are related to field operations. These costs include compensation, occupancy expense and other general and administrative expenses.~~

●	~~Selling expenses, which include compensation and commissions for local sales representatives and corporate account representatives.~~

●	~~Corporate office expenses which include executive management, information technology, marketing, human resources, accounting, purchasing and other support costs.~~

●	~~Investigation and professional fees related to the Audit Committee review, restatement process, and other non-recurring fees related to completing our 2011 and 2012 audits.~~

~~The details of selling, general and administrative expenses for the years ended December 31, 2013 and 2012 are as follows:~~

2013 %(1) 2012 %(1)
Selling, General & Administrative Expenses (In thousands)
Compensation $ 48,823 22.8 % $ 50,182 21.8 %
Occupancy 9,935 4.6 % 10,068 4.4 %
Other 35,862 16.8 % 50,725 22.0 %
Total selling, general & administrative expenses $ 94,620 44.3 % $ 110,975 48.2 %

~~_____________________~~

~~(1)~~

~~Represents cost as a percentage of total revenue.~~

Consolidated selling, general, and administrative expenses decreased $16.4 million or 14.7% to $94.6 million for the year ended December 31, 2013 as compared to 2012. The components of this change were decreases in compensation of $1.4 million, occupancy of $0.1 million and other expenses of $14.9 million.

~~The compensation expense decreased primarily due to ongoing cost efficiencies and reduction in stock based compensation.~~

The Company incurred a one-time expense of $0.5 million related to the relocation of our Southwest chemical plant, of which $0.3 million is reflected in product costs of sales and the remaining $0.2 million is reflected in occupancy expenses. This was partially offset by as a result of consolidating plants and eliminating facility expenses.

Other selling, general and administrative expenses decreased $14.9 million, or 29.3%, to $35.9 million as compared to 2012. The decrease is primarily comprised of the decrease in professional fees of $7.6 million, the decrease of $1.5 million for the provision for doubtful accounts, plus additional expense reductions. The decrease in professional fees primarily relates to a decrease in fees related to investigation, review and other non-routine professional fees.

~~Impairment related to Assets Held for Sale~~

During 2013, the Company made a decision to sell certain assets including linen operations, routes and customers that were not considered to be core to the Company’s overall hygiene and sanitizing business. The increase of $6.4 million in impairment expense relates to adjustments that were required to recognize these asset balances at the lower of net carrying value or fair value.

~~Depreciation and Amortization~~

~~Depreciation and amortization for the year ended December 31, 2013 increased $1.1 million, or 5.3%, to $22.1 million as compared to 2012 primarily due to depreciation on capital expenditures.~~

~~Impairment related to Goodwill~~

In conjunction with its annual goodwill impairment test, the Company incurred a non-cash goodwill impairment charge of $93.2 million during 2013, See Note 5, “Goodwill and Other Intangible Assets” for further discussion of the impairment.

~~Other Expense, Net~~

~~Other expense, net for the years ended December 31, 2013 and 2012 is as follows:~~

2013 2012
Other Expense, Net (In thousands)
Interest income $ 41 $ 75
Interest expense (485 ) (3,406 )
Realized and unrealized gain (loss) on fair value of convertible notes - 66
Earn-out - 170
Loss from impairment - (507 )
Foreign currency (5 ) (15 )
Other (expense) income (205 ) 524
Total other (expense) income, net $ (654 ) $ (3,093 )

The reduction in interest expense reflects the lower borrowings outstanding in 2013 compared to 2012. Other expense, net includes the gain on the sale of certain assets held for sale during 2013 and a gain on the involuntary conversion of assets of approximately $0.6 million during 2012.

~~Income tax benefit (expense)~~

For the year ended December 31, 2012, there was a deferred tax liability associated with excess book over tax goodwill. As goodwill is considered to be an indefinite lived intangible, this associated deferred tax liability is not allowed to be netted with other deferred tax assets in determining the need for a valuation allowance. This resulted in an overall net deferred tax liability after applying the valuation allowance. Due to the impairment of goodwill for book purposes as of December 31, 2013, a deferred tax asset now exists related to goodwill. The change from a net deferred tax liability position to a net deferred tax asset position resulted in a tax benefit of approximately $2.6 million.

~~Net (Loss) Income from Discontinued Operations~~

Net (loss) income from discontinued operations for the year ended December 31, 2013 decreased $10.1 million to a loss of $2.5 million as compared to $7.6 million income during 2012. The decrease is primarily due to the recognition of a gain on the disposal of the operations in 2012 of $13.8 million. Loss from discontinued operations during fiscal year 2013 is due to the following: $0.5 million increase to retained worker’s compensation liabilities and $2.0 million, in legal fees and a settlement payment, related to a contractual dispute involving one of the businesses sold that the Company accepted responsibility to resolve as a term of the sales agreement.

CASH FLOWS SUMMARY

Cash flows from continuing operations for the years ended December 31, ~~2014, 2013,~~2015 and ~~2012~~2014 were:

	2015			2014
	(In thousands)
Net cash used in operating activities of continuing operations	$	(10,306	)	$	(4,689	)
Net cash used in by investing activities of continuing operations		(345	)		-
Net cash used in financing activities of continuing operations		(2,867	)		(4,235	)
Net decrease in cash and cash equivalents from continuing operations	$	(13,518	)	$	(8,924	)

2014 2013 2012
(In thousands)
Net cash used in operating activities $ (6,322 ) $ (29,873 ) $ (39,244 )
Net cash (used in) provided by investing activities (1,544 ) 2,016 86,382
Net cash used in financing activities (4,235 ) (7,450 ) (49,417 )
Net decrease in cash and cash equivalents from continuing operations $ (12,101 ) $ (35,307 ) $ (2,279 )
Net cash used in operating activities increased by $5.6 million primarily due to a $0.8 million change in operating assets and liabilities and an increase in net loss of $4.8 million. Cash used by financing activities was $2.9 million compared with $4.2 million used during 2014. The decrease of $1.4 million was primarily due to a decrease in principal payments on debt of $2.4 million, partially offset by a decrease in net proceeds from the line of credit of $1.0 million.

Cash flows from discontinued operations for the years ended December 31, ~~2014, 2013,~~2015 and ~~2012~~2014 were:

2014 2013 2012
(In thousands)
Net cash used in operating activities of discontinued operations $ (2,131 ) $ (4,647 ) $ (3,519 )
Net cash used in investing activities of discontinued operations - - (2,861 )
Net cash used in financing activities of discontinued operations - - (430 )
Net decrease in cash and cash equivalents from discontinued operations $ (2,131 ) $ (4,647 ) $ (6,810 )

Cash flows used in operating activities from discontinued operations in 2014 consisted of payments made related to legal fees and a settlement payment related to a contractual dispute that the Company accepted responsibility to resolve as a part of the sale of the Waste segment.

Cash flows used in operating activities from discontinued operations in 2013 consisted of payments made related to legal and professional fees, worker’s compensation insurance and accrued expenses the Company accepted responsibility to pay as a part of the sale of the Waste segment.

Cash flows used in operating activities from discontinued operations in 2012 is primarily due to the change in discontinued operations working capital of $4.8 million. Cash flows used in investing activities of discontinued operations in 2012 consisted of $2.9 million in purchases of property and equipment. Cash flows used in financing activities of discontinued operations in 2012 consisted of principal payments on debt of $0.4 million.

~~Operating Activities~~

Net cash used in operating activities from continuing operations decreased $23.6 million or 78.8% to $6.3 million for the year ended December 31, 2014 compared with 2013. The decrease in net cash used is primarily due to a change in working capital of $9.8 million, a $2.9 million decrease in route expenses and a $26.1 million decrease in selling, general administrative expenses, offset by a $13.4 million decrease in gross margin. Working capital was impacted by the $0.8 million adjustment for dish machines sold.

	2015			2014
	(In thousands)
Net cash used in operating activities of discontinued operations	$	(6,635	)	$	(3,764	)
Net cash provided by (used in) investing activities of discontinued operations		38,177			(1,544	)
Net cash used in financing activities of discontinued operations		(29	)		-
Net increase (decrease) in cash and cash equivalents from discontinued operations	$	31,513		$	(5,308	)

Net cash used in operating activities ~~from continuing~~of discontinued operations ~~decreased $9.4~~increased by $2.9 million ~~or 23.9% to $29.9 million for the year ended December 31, 2013 compared with 2012. The decrease in the net cash used is~~ primarily due to ~~a $1.3~~an increase in net loss of $6.0 million ~~change~~offset by changes in working capital ~~and a decrease in selling general and administrative costs, primarily professional fees related to investigation, review, and other non-routine professional fees.~~

~~Investing Activities~~

components of $4.6 million. Net cash ~~used in~~provided by investing activities changed by $3.6 million to a $1.5 million use of cash in 2014 compared to a $2.0 million source of cash in 2013. This change primarily consists of a decrease of $12.6 million in cash proceeds from the sale of discontinued ~~operations and a $4.8~~activities increased $39.7 million, ~~decrease in~~primarily due to $36.0 million net cash received ~~from~~for the ~~sale of~~Sale Transaction, $5.6 million proceeds received for assets held for sale, ~~offset by~~ a ~~$8.1~~decrease of $4.0 million ~~decrease~~ in purchases of property and equipment, ~~and a $5.7 million increase from restricted cash.~~

Net cash provided by investing activities decreased $84.4 million to $2.0 million or 97.7% for the year ended December 31, 2013, compared with net cash used in investing activities of $86.4 million for 2012. This decrease primarily consists of additional cash and receivables related to assets held for sale of $6.3 million, a $2.9 million decrease in cash used in discontinued operations, a decrease in purchases of equipment of $2.0 million, a $4.2 million decrease in cash paid for acquisitions, a change in restricted cash of $5.1 million, offset by a decrease in restricted cash ~~received from the sale~~ of ~~property of $2.7 million and a $99.3 million decrease in cash received on the sale of Choice Environmental Services, Inc. ("Choice").~~

~~Financing Activities~~

Net cash used in financing activities decreased $3.2 million to $4.2 million or 43.2% for the year ended December 31, 2014, compared with net cash used in financing activities of $7.5 million during 2013. This decrease is primarily due to a decrease in principal payments on debt and capital leases of $1.9 million and an increase in proceeds from notes payable of $1.1$5.4 million.

Net cash used in financing activities decreased $42.0 million to $7.5 million or 84.9% for the year ended December 31, 2013, compared with net cash provided by financing activities of $49.4 million during 2012. This decrease is primarily due to a decrease in principal payments on debt and capital leases of $15.5 million, a decrease of $25.0 million in payments of lines of credit and a decrease of $2.0 million for payment of a shareholder advance.

3125

LIQUIDITY AND CAPITAL RESOURCES

~~Going Concern~~

Our consolidated financial statements were prepared on a going concern basis in accordance with U.S. GAAP. The going concern basis of presentation assumes that we will continue in operation for the next twelve months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to continue as a going concern. The Company has suffered recurring losses from operations and has not generated positive cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. In order for us to continue operations beyond the next twelve months and be able to discharge our liabilities and commitments in the normal course of business, we must do some or all of the following: (i) improve operating results through improved customer retention, profitable organic revenue growth, and continued improvements in cost efficiencies; (ii) sell additional non-core or non-essential assets; (iii) raise additional equity; or (iv) obtain additional financing through debt. There can be no assurance that we will be able to improve operating results or obtain additional funds by selling additional non-core or non-essential assets, raising additional equity or obtaining additional financing when needed or that such funds, if available, will be obtainable on terms satisfactory to us.

If we are not able to improve operating results or obtain additional funds by selling additional non-core or non-essential assets, raising additional equity or obtaining additional financing, material adverse events may occur including, but not limited to: 1) a reduction in the nature and scope of our operations, 2) our inability to fully implement our current business plan and 3) defaults under the Credit Facility. There can be no assurances that we will be able to successfully improve our liquidity position. Our consolidated financial statements do not reflect any adjustments that might result from the adverse outcome relating to this uncertainty.

Cash Requirements

As a result of the activities discussed above, our cash and cash equivalents ~~decreased~~increased by ~~$14.2~~$18.0 million to $25.2 million at December 31, 2015 compared to $7.2 million at December 31, ~~2014 compared~~2014. Due to ~~$21.5~~the Sale Transaction completed on November 2, 2015, the Company does not have any operating assets remaining and no revenue producing business or operations. As such, it is important that we take immediate steps to resolve remaining liabilities and reduce future costs and expenses in order to preserve cash. The failure of Swisher Hygiene Inc. to take such steps promptly could result in a reduction in the amount of cash remaining for distribution to stockholders should the Board of Directors decide to implement the approved Plan of Dissolution.

At closing, Ecolab paid the closing purchase price of $40.5 million, atless a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to the closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 purchased cash balance, net of $0.2 million debt assumed. The closing purchase price proceeds received by the Company were used to pay (i) a $2.0 million fine to the United States of America pursuant to the terms of a previously announced Deferred Prosecution Agreement entered into between the Company and the United States Attorney’s Office for the Western District of North Carolina; (ii) indebtedness of the Company of approximately $5.7 million; (iii) a deposit securing letters of credit of approximately $1.6 million; and (iv) other accrued and post-closing obligations that survived the transaction. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, ~~2013. Our~~2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash ~~requirements for~~adjustment. The $2.0 million holdback was received from Ecolab in January 2016.

The Company will continue to use the ~~next twelve months consist primarily of: (i) capital expenditures~~remaining balance of proceeds from the Sale Transaction to pay retained liabilities, ongoing corporate and administrative costs and expenses associated with ~~dispensing equipment, dish machines~~winding down the Company, any costs to evaluate alternatives to dissolution and ~~other items in service~~potentially executing on any such alternative, liabilities and potential liabilities relating to or arising out of pension plan obligations to employees of its predecessor, outstanding litigation matters of the Company, including but not limited to pending stockholder litigation related to the Sale Transaction, and potential liabilities relating to the Company's indemnification obligations, if any, to Ecolab pursuant to the Agreement, or to current and former officers and directors pursuant to the Company's bylaws and articles of incorporation (collectively, the "On-going Obligations"). As a result of the On-going Obligations, if the Board of Directors determines to proceed with the Plan of Dissolution and Complete Liquidation, which plan was approved by the Company's stockholders at ~~customer locations, equipment, vehicles, software; (ii) working capital; and (iii) payment~~its Annual Meeting on October 15, 2015, the Company believes the value of ~~principal and interest on borrowings under our convertible promissory notes, acquisition notes payable and capital lease obligations and other financing. We expect~~its remaining assets that ~~through capital resource management and the use of additional customer equipment programs, our annual capital expenditures in 2015~~will ultimately be available for distribution to stockholders, if any distribution is made, will be significantly and materially less, in the aggregate, than ~~2014 capital expenditures~~the proceeds received in the Sale Transaction. The Company can neither estimate nor provide any assurance regarding amounts to be distributed to stockholders if the Board of ~~$7.8 million.~~Directors proceeds with the dissolution.

We expect that our cash on hand plus the ~~cash flow provided by operating activities along with availability under the Credit Facility, and the cash flow~~$2.0 million holdback received from ~~investing activities, including the sale of assets held for sale,~~Ecolab in January 2016, will be sufficient to ~~execute~~meet our ~~business plan~~cash requirements for the next twelve months, however we believe it is contingent upon improved customer retention, profitable organic revenue growth and continued improvement in cost efficiencies in 2015 (see Note 20, "Subsequent Event" in the Notes to the consolidated financial statements for information on assets held for sale). Failure to execute our plan successfully or unforecasted shortfalls in available cash may require us to alter our plan, sell other non-core or non-essential assets, or raise additional equity which could be dilutive to existing shareholders or obtain additional financing through debt. There can be no assurance that such equity and debt may be available and would be likely subject to prevailing market conditions and the company's performance.months.

~~Long term contractual obligations at December 31, 2014 are as follows:~~

Total Less Than 1 Year 1-2 Years 3-4 Years 5 or More Years
( In thousands )
Long-term debt and obligations $ 2,887 $ 1,809 $ 695 $ 383 $ -
Operating and capital leases (1)
21,424 5,877 8,329 4,895 2,323
Employment contracts 1,375 875 500 - -
Interest payments 156 83 62 11 -
Total long-term contractual cash obligations $ 25,842 $ 8,644 $ 9,586 $ 5,289 $ 2,323

~~(1)~~

~~Operating and capital leases consist primarily of facility and vehicle leases.~~

Credit Facility

On August 29, 2014, we entered into a $20.0 million revolving credit facility, through the execution of a Loan and Security Agreement, by and among the Company, as Guarantor, and certain subsidiaries of the Company and collectively, as Borrower, and Siena Lending Group LLC, as Lender (the “Credit Facility”). The Credit Facility ~~matures~~was paid in full and terminated on ~~August 29, 2017.~~November 2, 2015.

Interest on borrowings under the Credit Facility ~~will accrue~~accrued at the Base Rate plus 2.00% and ~~will be~~was payable monthly. The Base Rate iswas defined as the greater of (1) the Prime Rate, (2) the Federal Funds Rate plus 0.50%, or (3) 3.25%.

Borrowings and availability under the Credit Facility ~~are~~were subject to a borrowing base and limitations, and compliance with other terms specified in the agreement. Borrowings under the Credit Facility ~~are~~were secured by a first priority lien on certain of the Company’s assets. ~~The calculated borrowing base as of December 31, 2014 was $13.3 million, of which $4.4 million was outstanding under letters of credit and $8.9 million was unused.~~

The Credit Facility ~~contains~~contained certain customary representations and warranties, and certain customary covenants on the Company’s ability to, among other things, incur additional indebtedness, create liens or other encumbrances, sell or otherwise dispose of assets, and merge or consolidate with other entities or enter into a change of control transaction. The Credit Facility ~~contains~~contained various events of default. ~~The Company was not in default with covenants under the Credit Facility as of December 31, 2014.~~

Inflation and Changing Prices

Changes in wages, benefits and energy costs ~~have~~had the potential to materially impact our financial results. We ~~believe that~~believed we ~~are~~were able to increase prices to counteract the majority of the inflationary effects of increasing costs and to generate sufficient cash flows to maintain our production capability. During the years ended December 31, ~~2014, 2013~~2015 and ~~2012,~~2014, we do not believe that inflation has had a material impact on our financial position, results of operations, or cash flows. ~~However, we cannot predict what effect inflation may have on our operations in the future.~~

Off-Balance Sheet Arrangements

Other than operating leases, there ~~are~~were no significant off-balance sheet financing arrangements or relationships with unconsolidated entities or financial partnerships, which are often referred to as “special purpose entities.” Therefore, there iswas no exposure to any financing, liquidity, market or credit risk that could arise, had we engaged in such relationships.

In connection with a distribution agreement entered into in December 2010, we provided a guarantee that the distributor’s operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor’s annual operating cash flow ~~does fall~~fell below the agreed-to annual minimums, we ~~will~~would reimburse the distributor for any such short fall up to $1.5 million. No value was assigned to the fair value of the guarantee at December 31, 2014 ~~2013 and 2012~~ based on a probability assessment of the projected cash flows. ~~Management currently does not believe that it is probable that any amounts will be paid under this~~This distribution agreement ~~and thus there is no amount accrued for~~was assumed by Ecolab as part of the ~~guarantee in the Consolidated Financial Statements.~~

~~Fuel~~

Fuel costs represent a significant operating expense. To date, we have not entered into any contracts or employed any strategies to mitigate our exposure to fuel costs. Historically, we have made limited use of fuel surcharges or delivery fees to help offset rises in fuel costs. Such charges have not been in the past, and we believe will not be going forward, applicable to all customers. Consequently, an increase in fuel costs results in a decrease in our operating margin percentage. At current consumption level, a $0.50 change in the price of fuel changes our fuel costs by $0.7 million on an annual basis.

Sale Transaction.

FORWARD-LOOKING STATEMENTS

Our ~~business,~~ financial condition, ~~results of operations,~~ cash flows and prospects, and the prevailing market price and performance of our common stock, may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this ~~2014~~2015 Form 10-K, as well as other written or oral statements made from time to time by us or by our authorized executive officers on our behalf, constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we set forth this statement and these risk factors in order to comply with such safe harbor provisions. You should note that our forward-looking statements speak only as of the date of this ~~2014~~2015 Form 10-K or when made and we undertake no duty or obligation to update or revise our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we believe that the expectations, plans, intentions and projections reflected in our forward-looking statements are reasonable, such statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that our stockholders and prospective investors should consider include the following:

●	~~We have a history of significant operating losses and as such our future revenue and operating profitability are uncertain.~~

●·	Our ~~independent registered public accounting firms's report contains an explanatory paragraph that expresses substantial doubt as to our ability to continue as a going concern.~~

●	~~The Company may need to raise additional equity or capital in the future and such capital may~~stockholders will not be ~~available when needed~~able to buy or ~~at all.~~sell shares of our common stock after we close our stock transfer books on the Final Record Date (as defined below).

●

~~Our failure or inability~~Following the Sale Transaction, we have no remaining operating assets and we need to ~~meet certain terms of~~significantly reduce our ~~Credit Facility could have a material adverse effect on our business, financial condition~~corporate and ~~results of operations.~~administrative expenses.

·	We will continue to incur the expenses of complying with public company reporting requirements.

·	The Board of Directors may, in its sole discretion, abandon the Plan of Dissolution or may amend or modify the Plan of Dissolution to the extent permitted by Delaware law without the necessity of further stockholder approval.

●

·	We cannot predict the timing of any distributions to stockholders.

·	We cannot estimate the amount of distributions, if any, to be made to our stockholders.

The Internal Revenue Service may not treat distributions to our stockholders, if any distributions are made, as distributions in complete liquidation as such term is described in Section 346(a) of the Internal Revenue Code or may not treat a liquidating trust, if one is used, as a "liquidating trust" for U.S. federal income tax purposes.

·	Our stockholders may be liable to our creditors for part or all of the amount received from us in our liquidating distributions if reserves are inadequate.

●	~~Failure to retain our current customers and renew existing customer contracts could adversely affect our business.~~

●	~~Changes in economic conditions that impact the industries in which our end-users primarily operate in could adversely affect our business.~~

●	~~The financial condition and operating ability of third parties may adversely affect our business.~~

●	We have recognized significant impairment charges in 2014 and prior years,and may recognize additional impairment charges in the future which could adversely affect our results of operations and financial conditions.

●	~~The availability of our raw materials and the volatility of their costs may adversely affect our operations.~~

● ·	We are and may in the future be subject to legal proceedings, the outcome of which are uncertain, and resolutions adverse to us could negatively affect our earnings, financial condition and cash flows.

●	~~The pricing, terms, and length of customer service agreements may constrain our ability to recover costs and to make a profit on our contracts.~~

●	~~If we are required to change the pricing models for our products or services to compete successfully, our margins and operating results may be adversely affected.~~

●	~~The consolidation of customers may adversely affect our business, consolidated financial condition or results of operations.~~

●	~~We may fail to maintain our listing on The Nasdaq Stock Market.~~

●	The loss of one or more key members of our senior management, or our inability to attract and retain qualified personnel could adversely impact our business, financial condition and results of operations.

●	~~Increases in fuel and energy costs and fuel shortages could adversely affect our results of operations and financial condition.~~

●	~~Our products contain hazardous materials and chemicals, which could result in claims against us.~~

●	We are subject to environmental, health and safety regulations, and may be adversely affected by new and changing laws and regulations, that generate ongoing environmental costs and could subject us to liability.

●	~~If our products are improperly manufactured, packaged, or labeled or become adulterated or expire, those items may need to be recalled or withdrawn from sale.~~

●	~~Changes in the types or variety of our service offerings could affect our financial performance.~~

●	~~Prior acquisitions involve a number of risks and could have an adverse effect on our results of operations.~~

●	~~We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business.~~

●	Interruptions in our information and telecommunication systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could adversely affect our business.

● ·	Insurance policies may not cover all ~~operating~~ongoing risks and a casualty loss beyond the limits of our coverage could adversely impact our ~~business.~~cash position.

● ·	Our stock price has been and may in the future be volatile, which could cause purchasers of our common stock to incur substantial losses.

● ·	Certain stockholders may exert significant influence over any corporate action requiring stockholder approval.

● ·	Provisions of Delaware law and our organizational documents may delay or prevent an acquisition of our Company, even if the acquisition would be beneficial to our stockholders.

~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risks, including changes in interest rates and fuel prices. Borrowings under the Credit Facility are indexed to a variable interest rate. As of December 31, 2014, there have been no drawings on the Credit Facility. As of December 31, 2014, we have $4.4 million of letters of credit outstanding at a fixed fee under our Credit Facility. We do not use financial instruments for speculative trading purposes and we do not hold derivative financial instruments that could expose us to significant market and commodity risk. We do not currently have any contract with vendors where we have exposure to the underlying commodity prices. In such event, we would consider implementing price increases and pursue cost reduction initiatives; however, we may not be able to pass on these increases in whole or in part to our customers or realize costs savings needed to offset these increases. This discussion does not consider the effects that may have an adverse change on the overall economy, and it also does not consider actions we may take to mitigate our exposure to these changes. We cannot guarantee that the action we take to mitigate these exposures will be successful.

Fuel costs represent a significant operating expense. To date, we have not entered into any contracts or employed any strategies to mitigate our exposure to fuel costs. Historically, we have made limited use of fuel surcharges or delivery fees to help offset rises in fuel costs. Such potential charges have not been in the past, and we believe will not be going forward, applicable to all customers. Consequently, an increase in fuel costs normally results in a decrease in our operating margin percentage. At our current consumption level, a $0.50 change in the price of fuel changes our fuel costs by approximately $0.7 million on an annual basis.Not applicable.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Swisher Hygiene's Consolidated Financial Statements and the Notes thereto, together with the reports of Grant Thornton, LLP dated March 15, 2016 and BDO USA LLP dated March 31, 2015 regarding the Company's financial statements and internal control over financial reporting ~~each dated March 31, 2015,~~ are filed as part of this report, beginning on page F-1.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.

CONTROLS AND ~~PROCEDURES~~.

PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d) – 15(e) under the Exchange Act), that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and, include controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures as of December 31, ~~2014.~~2015. Based upon that evaluation, our management, including our CEO and CFO, concluded that certain deficiencies in our internal control over financial reporting identified in the 2014 Form 10-K continue to exist as noted below, and as such our disclosure controls and procedures were not effective as of December 31, ~~2014 because of the deficiencies in our internal control over financial reporting discussed in Management's Report on Internal Control over Financial Reporting, presented below.~~2015.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management, ~~under the supervision of and with the participation~~which consists of the Company’s Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s internal control over financial reporting based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based ~~on deficiencies identified during this~~upon that evaluation, ~~and set forth below,~~ management concluded that ~~we did not maintain effective~~the deficiencies in our internal control over financial reporting identified in the 2011 Form 10-K were under ongoing remediation and therefore continue to exist, and as such our disclosure controls and procedures were not effective as of December 31, ~~2014~~2015 for the following reasons:

● ·

We did not maintain an effective control environment as we lacked sufficient oversight of activities related to our internal control over financial reporting. In addition, we did not have a sufficient structure in place to identify and evaluate gaps in the knowledge and technical experience of the accounting personnel responsible for the implementation and execution of our control environment.

● ·	We did not maintain effective controls over certain control activities. Specifically, the following individual material weaknesses were identified in connection with our control activities:

● ·	We did not implement effective controls to properly account for the sale, disposal and movement of dish machines at customer locations and our own ~~facilities, which resulted in substantial post-closing journal entries that our review process failed to identify.~~facilities.

● ·

We did not implement effective controls to accurately and completely evaluate and calculate our allowance for doubtful accounts. ~~Additionally, our review process was not sufficient to detect material errors in the methodology and calculation of the allowance resulting in material post-closing adjustments.~~

● ·	We did not implement effective controls to properly identify, analyze, and account for non-routine transactions reflected in the financial statements.

● ·

We did not develop and implement an overall financial reporting review process that encompassed all significant financial statement accounts or contained an appropriate level of precision. ~~This review process did not identify the issues surrounding the accounting and recording for our dish machines, allowance for doubtful accounts, and non-routine transactions.~~

● ·	We did not design, implement and maintain effective controls over the corporate review of significant journal entries processed at our field-level locations, which represent a significant portion of our business, to ensure that these entries were appropriate in nature and correct.

● ·	We did not maintain effective controls over user security and program change management for the information technology systems and accounting software at the field-level locations.

● ·	We did not maintain effective controls to ensure the timely preparation of financial records sufficient to allow management adequate time to prevent or detect and correct material misstatements and to fulfill its other control activity responsibilities.

● ·

We did not maintain effective information and communication controls to generate relevant and quality information for use in the financial reporting close process. ~~These control failures contributed to the transactions involving our dish machines and to information generated relating to the allowance for doubtful accounts.~~

●

We did not maintain effective information and communication controls with external parties due to delays in our financial statement close process as evidenced by the untimely filing of our Annual Report on Form 10-K for the year ended December 31, 2014, and our failure to identify and timely disclose existing control deficiencies in previous filings.

● ·	We did not maintain effective monitoring controls sufficient to ascertain whether key components of internal control were present and ~~functioning, as evidenced by our incorrect initial assessment of the effectiveness of our internal controls over financial reporting.~~functioning.

● ·	We did not maintain effective monitoring controls to communicate the deficiencies in our internal control over financial reporting to our board of directors in sufficient time to allow them to take corrective action.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Based on its evaluation of internal control over financial reporting management ~~has~~ determined that the control deficiencies identified above should be considered material weaknesses in our internal control over financial reporting.

As set forth below, management has taken or will take steps to remediate the control deficiencies identified above. Notwithstanding the control deficiencies described above, we have performed additional analyses and other procedures to enable management to conclude that our consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition and results of operations as of and for the year ended December 31, ~~2014.~~2015.

~~BDO USA, LLP,~~Management's Remediation Plan

As reported in the ~~Company's independent registered public accounting firm, audited the Company’s consolidated financial statements included in this~~ Annual Report on Form 10-K for the year ended December 31, ~~2014. Also, BDO USA, LLP has issued their attestation report on management’s internal control over financial reporting. A copy of BDO's reports are included~~2014, we have engaged in ~~this 2014 Form 10-K at pages F-2 and F-3.~~

~~Management's Remediation Plan~~

Inremedial actions in response to the deficiencies discussed ~~above, we~~above. We plan to continue the efforts ~~already underway~~below to improve internal control over financial ~~reporting:~~reporting, where still applicable. During the third quarter of 2015, management focused on the Sale Transaction and as a result suspended remediation efforts relating to operations since, following the Sale Transaction, the Company has no operating assets remaining and no revenue producing businesses or operations.

●

~~Management~~The Company will continue to ~~enhance its training programs for our accounting personnel both at the corporate and field-level,~~focus on emphasizing financial reporting responsibilities and accountability for implementing and maintaining effective internal control over financial reporting.

●	Dish machines will be serialized in the fixed asset system to track the movement of the dish machines and periodic field observations will be performed to ensure the existence and accuracy of these fixed assets.

●	~~Management~~The Company will continue to ~~track collection trends across the business and evaluate the accuracy of the assumptions used in the estimates for the allowance for doubtful accounts on an annual basis, at a minimum.~~

●	~~Management will~~ put in place controls to properly identify, analyze and account for non-routine transactions and will use the appropriate level of oversight to ensure the transactions are reflected accurately and timely in the financial statements.

●	~~Management continues to implement controls over user access and change management related to the field-level information technology systems.~~

●	~~Management~~The Company will perform a comprehensive review to re-evaluate our activities related to internal control over financial reporting, including monitoring controls related to the operating effectiveness, timeliness and communication of certain control activities.

While ~~management and our audit committee will~~the Company closely ~~monitor~~monitored the implementation of these remediation plans for the remaining limited business after the Sale Transaction, there is no assurance that the aforementioned plans will be sufficient to fully remediate the deficiencies identified above and that additional remediation steps ~~will not~~may be necessary.

Changes in Internal Control over Financial Reporting

~~Material weaknesses previously identified and remediated~~Other than the changes noted above there have been no changes in our internal control over financial reporting during the ~~year~~quarter ended December 31, ~~2014~~

~~Management identified material weaknesses which were reported in~~2015 that have materially affected, or are reasonably likely to materially affect, our ~~annual report on Form 10-K for the year ended December 31, 2013. Management has made changes to certain~~ internal ~~controls~~control over financial reporting, which remediated some of the previously disclosed material weaknesses, as follows (a recitation of the noted material weakness is set forth followed by steps taken to remediate the material weakness):reporting.

The effectiveness of controls over proper purchase and maintenance of inventory and fixed assets. Additionally, proper application of customer payments and review and approval of vendor invoices and related payments.

During 2014 significant enhancements have been made to the accounts payable and inventory control processes. These changes include enhancements to existing accounting and operational processes, development and roll out of new policies, and improvements to the level of retained documentation. Specifically:

●	Accounts Payable: An approval matrix has been established and communicated throughout the Company. Staff was trained on the vendor invoice approval process and policy requirements. No operating deficiencies were found in this area in 2014.

●	~~Inventory: We have established an inventory policy and have improved training to better define and emphasize accountability for control process requirements.~~

The effectiveness of certain information technology controls regarding system generated reports at the field level and key spreadsheets utilized across the Company. This is comprised of controls over data input, calculations, user access, and management review.

Management has remediated deficiencies relating to data input, access to, and changes to key spreadsheets through the implementation of an End User Computing Tools policy. Management migrated computers running ERP systems outside of corporate to be inside the firewall and under the domain to strengthen security.

The effectiveness of the documentation, review, and approval of significant account reconciliations and key underlying reports. Furthermore, the Company has not defined parameters for its review of key reconciliations and financial analysis.

Management has established, communicated, and implemented policies around preparing and properly supporting account reconciliations as well as setting parameters for the review and approval of significant account reconciliations.

~~The effectiveness of the preparation, documentation, review, and approval of journal entries, and a lack of formal written accounting policies.~~

~~Management has established, communicated, and formally documented, distributed and implemented critical corporate accounting policies in line with company objectives.~~

ITEM 9B.

OTHER INFORMATION

On March 26, 2015, the Company entered into a letter agreement, dated as of March 25, 2015 ("Letter Agreement"), with its lender, Siena Lending Group LLC, in respect of the occurrence of a Springing DACA Event, as such term is defined in the Loan and Security Agreement, dated as of August 29, 2014, among the Company, certain of the Company's subsidiaries, and Siena Lending Group LLC. The Letter Agreement temporarily waives, until April 10, 2015, certain cash management requirements and certain enhanced reporting requirements that would otherwise go into effect upon the occurrence of a Springing DACA Event. The foregoing description is qualified in its entirety by reference to the Letter Agreement which is attached hereto as Exhibit 10.39, and incorporated herein by reference.None.

3830

PART III

~~ITEM 10.~~

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors

The following persons currently serve as members of the Board of Directors. Directors have been elected to serve until the next annual meeting of stockholders, their earlier resignation or their successors are duly elected and qualified. Information relating to Mr. Pierce is set forth above under Part I – Item I – Executive Officers of the Registrant.

Nominee	Age		Current Position with Swisher Hygiene	Director Since

Joseph Burke		58	Director		2014
Richard L. Handley		68	Chairman of the Board		2012
William M. Pierce		64	Director, President and Chief Executive Officer		2013
William D. Pruitt		75	Director		2011
David Prussky		58	Director		2010	(1)

___________

(1)

On November 2, 2010, Swisher International, Inc. completed a merger with Swisher Hygiene (formerly CoolBrands International, Inc. (“CoolBrands”)) (the “Merger”). Mr. Prussky served an initial term as a director of CoolBrands from 1994 to 1998 and rejoined the CoolBrands board of directors in February 2010

Joseph Burke

Mr. Burke has served as a director of Swisher Hygiene since May 2014. Mr. Burke has served as a Management Consultant - Finance and Operations for Hudson Capital Group since March 2013. Mr. Burke served as a Management Consultant - Finance and Operations for Boston Finance Group, LLC from February 2011 to May 2012. Mr. Burke served as Chief Executive Officer of Lakeland Construction Finance, LLC from 2005 to 2007 and as Executive Vice President in 2008. Beginning in 1995, Mr. Burke spent ten years with Gateway, Inc. (NYSE: GTW), a worldwide technology pioneer, serving in a number of executive capacities including Chief Executive Officer - Gateway Country (Retail Division), Senior Vice President - Global Business Development, Chief Financial Officer and most recently as Senior Vice President - Business Development. Mr. Burke has been a director of Flagship Community Bank since its founding in 2005 and is the Chairman of the Asset and Liability and Technology Committees. Mr. Burke was a director of Sunair Services Corporation (AMEX: SNR) from 2006 to 2008 and was a member of the Audit Committee. Mr. Burke earned a BA from the University of Florida.

Mr. Burke is an experienced officer and director of public and private companies with the skills necessary to serve as a director. Mr. Burke also has extensive experience in financial matters as a currently licensed certified public accountant, in good standing, and as a former Audit Supervisor of an international accounting firm.

Richard L. Handley

Mr. Handley has served as the Chairman of Swisher Hygiene since June 5, 2013 and as a director of Swisher Hygiene since December 2012. Mr. Handley served as a director of Swisher International, Inc., the Company's predecessor, from 2005 to 2010. Mr. Handley has served as the Senior Vice President, Secretary and General Counsel of Huizenga Holdings, Inc. since May 1997. From May 1997 to December 2004, Mr. Handley also served as Senior Vice President, Secretary, and General Counsel of Boca Resorts, Inc. From October 1995 to May 1997, Mr. Handley served as Senior Vice President and General Counsel of AutoNation Inc. and its predecessor, Republic Industries Inc. Mr. Handley served as a director of Services Acquisition Corp. International from June 2006 to November 2006. Mr. Handley also serves on the board of certain privately held companies and certain not for profit entities. Mr. Handley earned a BA from the University of California, Berkeley, a JD from the University of Utah College of Law, and an LLM from Georgetown University.

Mr. Handley is an experienced officer and director of public and private companies with the skills necessary to serve as a director. As an executive officer and director, Mr. Handley has developed knowledge and experience of financial, operational, and managerial matters. He has helped guide numerous public and private companies from early stage development to significant operating entities.

William D. Pruitt

Mr. Pruitt has served as a director of Swisher Hygiene since January 2011. Mr. Pruitt has served as general manager of Pruitt Enterprises, LP. and president of Pruitt Ventures, Inc. since 2000. Mr. Pruitt served as an independent board member of the MAKO Surgical Corp., a developer of robots for knee and hip surgery, from 2008 to 2013, when it was sold to Stryker Corp., and served as a member of the MAKO Audit Committee. Mr. Pruitt has been an independent board member of NV5 Holdings, Inc., a professional services company, and is a member of the NV5 Audit Committee, since April 2013. Mr. Pruitt served as an independent board member of The ~~information required by Item 10~~PBSJ Corporation, an international professional services firm, from 2005 to 2010. Mr. Pruitt served as chairman of the Audit Committee of KOS Pharmaceuticals, Inc., a fully integrated specialty pharmaceutical company, from 2004 until its sale in 2006. He was also chairman of the Audit Committee for Adjoined Consulting, Inc., a full-service management consulting firm, from 2000 until it was merged into Kanbay International, a global consulting firm, in 2006. From 1980 to 1999, Mr. Pruitt served as the managing partner for the Florida, Caribbean and Venezuela operations of the independent auditing firm of Arthur Andersen LLP. Mr. Pruitt holds a Bachelor of Business Administration from the University of Miami and is ~~incorporated by reference~~a Certified Public Accountant, in good standing.

Mr. Pruitt is an experienced director of public companies with the skills necessary to serve as a director. Mr. Pruitt also has extensive experience in financial matters as a certified public accountant and as a former managing partner of an accounting firm.

M. David Prussky

Mr. Prussky was a director and chair of the Audit Committee of CoolBrands. He was an original director of the predecessor to CoolBrands, Yogen Fruz World-Wide Inc. Mr. Prussky served as an investment banker for Patica Securities Limited from August 2002 to January 2012. Mr. Prussky has served as director of numerous public and private companies over the past 18 years, including Carfinco Income Fund, Canada's largest public specialty auto finance business, and Lonestar West Inc., a hydro-vac service business based in Sylvan Lake, Alberta. Mr. Prussky is also a director and chairman of the Audit Committee of Atrium Mortgage Investment Corporation and Chairman of Griffin Skype Corporation.

Mr. Prussky is an experienced director of public companies with the skills necessary to serve as director. He has helped build numerous public and private entities from the early stages to significant operating entities.

Executive Officers

Information relating to our ~~Proxy Statement for our 2015 Annual Meeting of Stockholders, except for certain information concerning the~~executive officers is set forth above under Part I – Item I – Executive Officers of the ~~Company~~Registrant.

Corporate Governance Principles and Code of Ethics

The Board of Directors is committed to sound corporate governance principles and practices. The Board of Directors’ core principles of corporate governance are set forth in ~~Part I — Item I hereof~~the Swisher Hygiene Corporate Governance Principles (the “Principles”). In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, the Board of Directors adopted a Code of Business Conduct and Ethics (“Code of Ethics”) which is applicable to all directors, officers, and employees. We intend to post amendments to or waivers from our Code of Ethics (to the extent applicable to our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, or persons performing similar functions) on our website at www.swshinvestors.com. A copy of the Code of Ethics and the Principles are available on our corporate website at www.swshinvestors.com. You also may obtain a printed copy of the Code of Ethics and Principles by sending a written request to: Investor Relations, Swisher Hygiene Inc., c/o Akerman LLP, Suite 1600, 350 East Las Olas Boulevard, Fort Lauderdale, Florida 33301.

Audit Committee

The Company has a separately designated standing Audit Committee established in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities by overseeing our accounting and financial processes and the audits of our financial statements. The independent auditor is ultimately accountable to the Audit Committee, as representatives of the stockholders. The Audit Committee has the ultimate authority and direct responsibility for the selection, appointment, compensation, retention and oversight of the work of the company's independent auditor that is engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the company (including the resolution of disagreements between management and the independent auditors regarding financial reporting), and the independent auditor must report directly to the Audit Committee. The Audit Committee also is responsible for the review of proposed transactions between the company and related parties. For a complete description of our Audit Committee's responsibilities, you should refer to the Audit Committee Charter which is available on our corporate website at www.swshinvestors.com.

The Audit Committee consists of three (3) directors, Mr. Pruitt, Chairman, Mr. Burke and Mr. Prussky. The Board of Directors has determined that the Audit Committee members have the requisite independence and other qualifications for audit committee membership under applicable rules under the ~~caption “Executive Officers~~Exchange Act and NASDAQ rules. The Board of Directors also has determined that Mr. Pruitt is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K under the Exchange Act. The Audit Committee held six meetings during 2015.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the ~~Registrant.” Our Proxy Statement for~~Exchange Act requires that our directors, executive officers, and persons who beneficially own 10% or more of our stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2015, ~~Annual Meeting~~our directors, executive officers, and greater than 10% beneficial owners complied with all such applicable filing requirements, except each of ~~Stockholders will be~~Messrs. Pierce, Handley, Burke, Pruitt and Prussky untimely reported one transaction on a Form 5, filed with the ~~Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Form 10-K.~~SEC on February 16, 2016.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain summary information concerning compensation earned by, and paid to, the named executive officers for 2015 and 2014. All historical share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.

Name and Principal Position	Year	Salary		Bonus		Stock Awards		Option Awards (1)		Nonequity Incentive Plan Compensation		Nonqualified Deferred Compensation Earnings		All Other Compensation			Total

William M. Pierce	2015	$	416,805		-	$	-	$	-		-	$	-	$	89,717	(2)	$	506,522
President and Chief Executive Officer (6)	2014		150,000		-		-		44,235		-		-		61,836	(3)		256,071

William T. Nanovsky	2015	$	282,796		-	$	-	$	-		-	$	-	$	97,065	(4)		379,861
Senior Vice President and Chief Financial Officer (7)	2014		270,000		-		-		26,541		-		-		81,594	(5)		378,135

Blake W. Thompson	2015		232,692		-		-		-		-		-		-			232,692
Senior Vice President and Chief Operating Officer (8)	2014		275,000		-		-		29,490		-		-		-			304,490

~~ITEM 11.~~(1)	~~EXECUTIVE COMPENSATION.~~Represents stock options granted under the Stock Incentive Plan. Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. In determining the grant date fair value for 2014 stock options, we used the Black-Scholes option pricing model, and took into account the $4.04 closing price of our common stock on the date previous to the grant, the $4.04 exercise price, the six year assumed period over which the stock options will be outstanding, a 32.7% volatility rate, and a 1.9% - 2.0% risk free rate.
(2)	Includes (i) $40,628 for expenses related to use of a corporate apartment, (ii) $33,041 for expenses related to travel between North Carolina and Florida and (iii) $16,048 of unused time off. This table does not include the cash payment of $6,897 paid to Mr. Pierce on January 15, 2016 in connection with the cancellation of 6,569 restricted stock units on November 5, 2016.
(3)	Includes (i) $36,388 for expenses related to use of a corporate apartment and (ii) $25,448 for expenses related to travel between North Carolina and Florida.
(4)	Includes (i) $30,962 of fees paid to the SCA Group pursuant to the Executive Services Agreement, (ii) $29,550 for expenses related to use of a corporate apartment, (iii) $30,568 for expenses related to travel between North Carolina and Florida, (iv) $1,250 in phone allowance and (v) $6,231 of unused paid time off. For a discussion of the Executive Services Agreement, see the “Related Party Transactions” section.
(5)	Includes (i) $30,000 of fees paid to the SCA Group pursuant to the Executive Services Agreement, (ii) the $2,949 grant date fair value of a warrant to purchase 2,000 shares of common stock at an exercise price of $4.04 granted to the SCA Group (iii) $28,600 for expenses related to use of a corporate apartment, (iv) $18,545 for expenses related to travel between North Carolina and Florida and (v) $1,500 in phone allowance. For a discussion of the Executive Services Agreement, see the “Related Party Transactions” section.
(6)	Mr. Pierce was appointed as President and Chief Executive Officer of the Company on September 10, 2013.
(7)	Mr. Nanovsky has served as Interim Senior Vice President and Chief Financial Officer or Senior Vice President and Chief Financial Officer of the Company since September 24, 2012.
(8)	Mr. Thompson was appointed Senior Vice President and Chief Operating Officer of the Company on August 9, 2013. In connection with the Sale Transaction, Mr. Thompson resigned as Senior Vice President and Chief Operating Officer, effective November 2, 2015.

Outstanding Equity Awards at Fiscal Year-End - 2015

The following table sets forth certain information ~~required~~regarding equity-based awards held by ~~Item 11~~the named executive officers as of December 31, 2015. All historical share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.

	Option Awards (1)								Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Grant Date	Option Exercise Price		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested

William M. Pierce		30,000		-	8/8/2014	$	4.04	8/7/2024		-	$	-
William T. Nanovsky (2)		18,000		-	8/8/2014	$	4.04	8/7/2024		-	$	-
		13,500		-	6/11/2013	$	9.30	6/10/2023		-	$	-
Blake W. Thompson		20,000		-	8/8/2014	$	4.04	8/7/2024		-	$	-
		29,527		-	6/26/2012	$	25.40	6/25/2022		-	$	-
		15,000		-	8/15/2013	$	8.10	8/14/2023		-	$	-

______________

(1)	Represents stock options granted under the Stock Incentive Plan, which originally vested in four annual installments starting on the first anniversary of the grant date. In connection with the Sale Transaction, all outstanding options vested on November 1, 2015 and were subsequently cancelled on February 2, 2016.
(2)	Does not include warrants to purchase 2,000 shares of common stock with an exercise price of $4.04 and 1,500 shares of common stock with an exercise price of $9.30 granted to the SCA Group. In connection with the Sale Transaction, these warrants and options vested on November 1, 2015 and were subsequently cancelled on February 2, 2016.

Employment Agreements

We entered into an employment agreement with Mr. Pierce, and we entered into an Executive Services Agreement with the SCA Group in connection with Mr. Nanovsky's service as Senior Vice President and Chief Financial Officer. Below is ~~incorporated~~a summary of the employment agreement with Mr. Pierce. For a description of the Executive Services Agreement, see the “Related Party Transactions” section.

Employment Agreement - William M. Pierce

On October 16, 2013, the Company entered into an employment agreement with William M. Pierce, effective as of September 16, 2013 (the “Pierce Agreement”), relating to his service as Chief Executive Officer of the Company. The Pierce Agreement has a term of one year and may be renewed annually upon the consent of both Mr. Pierce and the Company. Also, the Pierce Agreement may be terminated at any time by ~~reference~~the Company or Mr. Pierce, provided the terminating party gives the other party written notice of such termination at least 30 days in advance. Pursuant to ~~our Proxy Statement~~the Pierce Agreement, Mr. Pierce is to receive an annual base salary in the amount of $150,000 payable in regular installments in accordance with the Company's general payroll practices. Mr. Pierce is also eligible to earn an annual bonus in an amount determined by the Compensation Committee of the Board, based upon achieving performance metrics and strategic goals established by the Board. In addition, the Company will reimburse Mr. Pierce for ~~our~~any reasonable out-of-pocket business expenses incurred in connection with his performance as Chief Executive Officer. The Company will also reimburse Mr. Pierce for the costs associated with the lease of an apartment in Charlotte, North Carolina and for the cost of weekly, round-trip air travel between Charlotte, North Carolina and Fort Lauderdale, Florida.

On August 8, 2014, the Company entered into an agreement for Renewal and Amendment to the Pierce Agreement with William M. Pierce (the “Pierce Renewal Agreement”). The Pierce Renewal Agreement provided that the term of the Pierce Agreement was renewed and continued to September 16, 2015 ~~Annual Meeting~~unless earlier terminated. In addition to the weekly air travel of ~~Stockholders,~~Mr. Pierce between Charlotte, North Carolina and Fort Lauderdale, Florida, the Company shall reimburse Mr. Pierce for the cost of one trip monthly, round-trip air travel, for Executive's spouse to and from Fort Lauderdale, Florida and Charlotte, North Carolina. On November 3, 2014, the Board of Directors approved a salary increase for Mr. Pierce bringing his annual salary to $400,000 effective January 1, 2015, bringing his salary in line with market rates. All other terms and conditions of the Pierce Agreement remained unchanged.

Since September 15, 2015, Mr. Pierce has continued to serve as President and Chief Executive Officer of the Company on a month to month basis under the same terms as the Pierce Agreement, subject to further review and discussion of the Board of Directors. On February 19, 2016, the Company entered into a Seperation Agreement and Release with Mr. Pierce. Please see below Severance Agreement – William M. Pierce for additional information.

If Mr. Pierce's employment is terminated under the Pierce Agreement by (i) the Company without Cause (as defined in the Pierce Agreement) or (ii) Mr. Pierce for Good Reason (as defined in the Pierce Agreement), then (A) the Pierce Agreement will be deemed to have terminated as of the date Mr. Pierce ceases to be employed by the Company, (B) Mr. Pierce will be entitled to continue to receive his then base salary from the Company for the remainder of the term (which, in the case of base salary, will be paid in arrears in accordance with the Company's general payroll practices, over the applicable period commencing on the date of such termination and subject to withholding and other appropriate deductions), (C) Mr. Pierce shall be entitled to receive any bonus that has been awarded to Mr. Pierce by the Board but has not yet been paid by the Company, subject to withholding and other appropriate deductions, and (D) Mr. Pierce shall be entitled to reimbursement of any unreimbursed expenses. As a condition to receiving such payments, Mr. Pierce will sign and deliver to the Company a release in the form mutually agreed by the parties.

If Mr. Pierce's employment is terminated under the Pierce Agreement by the Company for Cause (as defined in the Pierce Agreement) or by Mr. Pierce without Good Reason (as defined in the Pierce Agreement), then (i) the Pierce Agreement will be deemed to have terminated as of the date Mr. Pierce ceases to be employed by the Company, (ii) Mr. Pierce shall be entitled to receive his base salary through the date of such termination, subject to withholding and other appropriate deductions, and (iii) Mr. Pierce shall be entitled to reimbursement of any unreimbursed expenses.

If Mr. Pierce's employment by the Company is terminated under the Pierce Agreement due to Mr. Pierce's death or Disability (as defined in the Pierce Agreement), then (A) the Pierce Agreement will be deemed to have terminated as of the date Mr. Pierce ceases to be employed by the Company, (B) Mr. Pierce will be entitled to continue to receive his base salary through the remainder of the term, subject to withholding and other appropriate deductions, (C) Mr. Pierce shall be entitled to receive any bonus that has been awarded to Mr. Pierce by the Board but has not yet been paid by the Company, subject to withholding and other appropriate deductions, and (D) Mr. Pierce shall be entitled to reimbursement of any unreimbursed expenses.

Seperation Agreement and Release – William M. Pierce

On February 19, 2016, the Company entered into a Separation Agreement and Release with Mr. Pierce pursuant to which Mr. Pierce will continue to serve as President and Chief Executive Officer of the Company under the same terms as his current employment agreement through the date of his resignation, and Mr. Pierce, or his assignees, will receive severance in the aggregate amount of $234,615, which will be ~~filed~~paid in seven installments on a monthly basis. On February 26, 2016, Mr. Pierce tendered his resignation as Chief Executive Officer and President of the Company, effective March 31, 2016.

Director Compensation

Director compensation for our non-employee directors is as follows:

·	an annual fee of $60,000, paid quarterly on a calendar year basis;

·	an annual committee chairman fee of $10,000, paid quarterly on a calendar year basis to the Chairman of each of our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee;

·	a per Board meeting fee of $1,500, paid quarterly in arrears on a calendar year basis;

·	a per committee meeting fee of $1,500, paid quarterly in arrears on a calendar year basis;

an annual grant of $35,000 in restricted stock units, paid on the first day of the month following our annual meeting of stockholders (the “Annual Grant”); except that during 2015 the Compensation Committee recommended and the Board approved the replacement of the Annual Grant with a one-time cash payment of $20,000; and

·	a one-time grant of $25,000 in restricted stock units, paid to each non-employee director upon their election or appointment to the Board.

Also, non-employee directors are reimbursed for reasonable expenses in connection with their service on the ~~Securities and Exchange Commission no later than 120 days after~~Board of Directors.

The following table sets forth certain information regarding the ~~end of~~compensation paid to our non-employee directors for their service during the fiscal year ~~covered by this Form 10-K.~~ended December 31, 2015:

Name	Fees Earned or Paid in Cash		Stock Awards (2)		Option Awards		Non-Equity Incentive Plan Compensation		Nonqualified Deferred Compensation Earnings		All Other Compensation			Total

Joseph Burke	$	102,500	$	-		-		-		-		-		$	102,500
Richard L. Handley	$	111,500	$	-		-		-		-		100,000	(3)	$	211,500
Harris W. Hudson (1)	$	-	$	-		-		-		-		-		$	-
William D. Pruitt	$	115,500	$	-		-		-		-		-		$	115,500
David Prussky	$	102,500	$	-		-		-		-		-		$	102,500

_________

(1)	Mr. Hudson did not stand for re-election at the 2015 Annual Meeting of Stockholders held on October 15, 2015. During 2015, Mr. Hudson was on an indeterminate medical leave and unable to attend regularly scheduled meetings, and declined to accept board fees.

(2)	In connection with the Sale Transaction, all outstanding restricted stock units were cancelled on November 5, 2015 and the holders received $1.05 per share. On January 15, 2016, the directors received the cash payment set forth below in connection with the restricted share unit cancellations.

Name	Restricted Stock Units		Aggregate Payment
Joseph Burke		16,037		16,839
Richard L. Handley		16,028		16,829
William M. Pierce		6,569		6,897
William D. Pruitt		15,477		16,251
David Prussky		15,455		16,228

(3)	On November 6, 2016, the Board of Directors granted Mr. Handley a bonus of $100,000 in recognition of time committed and accomplishments achieved on behalf of the Company during the year.

~~ITEM 12.~~

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 4, 2016, information regarding the beneficial ownership of our common stock by each director, each named executive officer, all of the directors and executive officers as a group, and each other person or entity known to us to be the beneficial owner of more than five percent of our common stock. Unless noted otherwise, we believe that all persons named in the table below have sole voting and investment power with respect to all securities shown as being owned by them. Unless noted otherwise, the corporate address of each person listed below is c/o Akerman LLP, Suite 1600, 350 East Las Olas Boulevard, Fort Lauderdale, Florida 33301.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class (1)

Directors and Executive Officers:
Joseph Burke		-			-
Richard L. Handley		57,790	(2)		*
William T. Nanovsky		-			-
William M. Pierce		57,790	(2)		*
William D. Pruitt		243			*
David Prussky		24,300	(3)		*
Blake W. Thompson		15,500			*
Directors and Executive Officers as a group (6 persons)		140,123			*
5% or Greater Stockholders
H. Wayne Huizenga		2,420,779	(4)		13.7	%
Steven R. Berrard		2,500,531	(5) (2)		14.1	%
Poplar Point Capital Partners LP		1,358,103	(6)		7.7	%
Richard H. Watson		1,128,226	(7)		6.4	%

____________

(1)	Based on 17,675,220 shares of our common stock outstanding as of March 4, 2016.
(2)	The shares of common stock held by these executive officers and director have been pledged to H. Wayne Huizenga as security for certain obligations owing pursuant to stock pledge and security agreements by each executive officer and director for the benefit of Mr. Huizenga.
(3)	Consists of 21,000 shares of common stock held by Mr. Prussky and 3,300 shares of common stock held by Mr. Prussky's spouse, Erica Prussky.
(4)	Consists of 2,420,779 shares of common stock held by Mr. Huizenga. Mr. Huizenga is the Chairman of the Board of Directors of Huizenga Holdings, Inc. The business address of Huizenga Holdings, Inc. is 450 E. Las Olas Blvd., Suite 1500, Fort Lauderdale, Florida 33301.
(5)	Consists of 2,500,531 shares of common stock held by Mr. Berrard. Mr. Berrard's address is 4521 Sharon Road, Suite 370, Charlotte, North Carolina 28211.
(6)	Based on a Schedule 13G/A filed with the SEC on January 29, 2016. The reporting person’s address is c/o Poplar Point Capital Management LLC, 840 Hinckley Road, Suite 250, Burlingame, California 94010.
(7)	Based on a Schedule 13G filed with the SEC on August 31, 2015. Mr. Watson beneficially owns 1,128,226 shares of common stock, including 614,143 shares held by PWE, LLC and 514,083 shares held by Hart Acquisitions, LLC, each an entity controlled by Mr. Watson. Mr. Watson’s address is 1193 Seven Oaks Road, Waynesboro, Georgia 30830.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of December 31, 2015, with respect to all of our compensation plans under which equity securities are authorized for issuance:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance

Equity compensation plans approved by stockholders		487,213	(1)	$	13.45		352,686
Equity compensation plans not approved by stockholders		-			-		-
Total		487,213		$	13.45		352,686

____________

(1)

Includes 487,213 options to purchase shares of our common stock at a weighted average price of $13.45 per share and zero restricted stock units. In connection with the Sale Transaction, all outstanding restricted stock units were cancelled on November 5, 2015 and the holders received $1.05 per share in cash. Also in connection with the Sale Transaction, all outstanding stock options vested on November 1, 2015 and were subsequently cancelled on February 2, 2016.

The information required by Item 12 is incorporated by reference to our Proxy Statement for our 2015 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Form 10-K.

~~ITEM 13.~~

~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.~~

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Director Independence

The ~~information required by~~Board of Directors has determined that the following non-employee directors are “independent” in accordance with the NASDAQ rules and have no material relationship with the Company, except as a director and a stockholder of the Company: Mr. Burke, Mr. Handley, Mr. Pruitt and Mr. Prussky. In determining the independence of each of the non-employee directors, the Board of Directors considered the relationships described under “Related Party Transactions.”

In each case, the relationships did not violate NASDAQ listing standards or our Principles, and the Board of Directors concluded that such relationships would not impair the independence of our non-employee directors.

Related Party Transactions

As set forth in the written Audit Committee Charter, our Audit Committee must approve all transactions with related persons as described in Item 13404 of Regulation S-K under the Exchange Act. The following is ~~incorporated by reference~~a summary of agreements or transactions with parties related to our ~~Proxy Statement for our 2015 Annual Meeting~~directors, executive officers, or us since January 1, 2014.

The SCA Group, LLC

On June 11, 2013, the Company entered into an Executive Services Agreement with The SCA Group, LLC (the “SCA Group”), effective June 9, 2013, in connection with the services provided by William T. Nanovsky as Senior Vice President and Chief Financial Officer of ~~Stockholders, which~~the Company (the “Executive Services Agreement”). The Executive Services Agreement replaced the Interim Services Agreement, effective September 24, 2012, with the SCA Group. Pursuant to the Executive Services Agreement, the Company will pay the SCA Group a bi-weekly fee of $1,153.85 and Mr. Nanovsky a bi-weekly salary of $10,384.61, such amounts may increase on an annual basis consistent with the Company's policy as it applies to its senior management. Mr. Nanovsky will participate in the Company's bonus program, as it applies to senior management, with a bonus target of 50% of the payments to the SCA Group and Mr. Nanovsky. Any bonus will be ~~filed~~paid 10% to SCA Group and 90% to Mr. Nanovsky. Mr. Nanovsky will remain a partner of SCA Group. We paid the SCA Group an aggregate of $30,962 and $30,000 pursuant to the Executive Services Agreement during 2015 and 2014, respectively.

Pursuant to the Executive Services Agreement, the Company will reimburse Mr. Nanovsky for all reasonable travel and out-of-pocket expenses in connection with his services to the Company. The Company will provide Mr. Nanovsky up to two round trip flights to Florida from North Carolina per month and a daily per diem equal to the then current U.S.A. General Services Administration dinner allowance for Charlotte, North Carolina (currently $29.00). Also, pursuant to the Executive Services Agreement, the Company will provide an apartment to Mr. Nanovsky in Charlotte, North Carolina, and Mr. Nanovsky will participate in the Company's benefit plans as they apply to senior management.

The Executive Services Agreement may be terminated by either party by providing a minimum of 30 days' advance notice. Also, the SCA Group may terminate the Executive Services Agreement immediately upon written notice to the Company if (i) the Company is engaged in or asks the SCA Group or any SCA Group professional to engage in or ignore any illegal or unethical activity, (ii) Mr. Nanovsky ceases to be a SCA Group professional for any reason, (iii) Mr. Nanovsky becomes disabled, or (iv) the Company fails to pay any amounts due to the SCA Group under the Executive Services Agreement when due. In lieu of terminating the Executive Services Agreement under (ii) and (iii) above, upon mutual agreement of the parties, Mr. Nanovsky may be replaced by another SCA Group professional.

In addition, pursuant to the Executive Services Agreement, Mr. Nanovsky will participate in the Company's Amended and Restated 2010 Stock Incentive Plan (the “Stock Incentive Plan”). Any awards granted will be issued 10% as a warrant to the SCA Group and 90% to Mr. Nanovsky under the Stock Incentive Plan.

On June 10, 2013, in connection with the ~~Securities and Exchange Commission no later than 120 days after~~Executive Services Agreement, the ~~end~~Company granted Mr. Nanovsky an option to purchase 13,500 shares of common stock of the ~~fiscal year covered by this Form 10-K.~~Company under the Stock Incentive Plan with an exercise price of $9.30. The option vested annually in four equal installments commencing on the first anniversary of the grant date. The option originally had a term of ten years. In connection with the Sale Transaction, these options vested on November 1, 2015 and were cancelled on February 2, 2016.

Also in connection with the Executive Services Agreement, on June 10, 2013, the Company granted the SCA Group a warrant to purchase 1,500 shares of common stock of the Company with an exercise price of $9.30. The warrant vests annually in four equal installments commencing on June 10, 2014. During 2014, the SCA Group was granted a warrant to purchase 2,000 shares of common stock of the Company with an exercise price of $4.04, which vested in four equal installments commencing on August 7, 2014. The warrants originally had a term of ten years. In connection with the Sale Transaction, these warrants were vested on November 1, 2015 and cancelled on February 2, 2016.

On February 19, 2016, Mr. Nanovsky resigned as Senior Vice President, Chief Financial Officer and Secretary effective March 31, 2016. As a result, the Executive Services Agreement (described below) will be terminated effective March 31, 2016.

~~ITEM 14.~~

~~PRINCIPAL ACCOUNTING FEES AND SERVICES.~~

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

On May 15, 2015, the Company’s Audit Committee approved the dismissal of BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm, effective May 18, 2015. Also, on May 15, 2015, the Company’s Audit Committee approved the engagement of Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. The engagement of Grant Thornton was effective May 19, 2015.

Auditor Fees and Services

The ~~information required by Item 14 is incorporated by reference to our Proxy Statement~~following table sets forth Grant Thornton’ and BDO's fees for ~~our~~the year ended December 31, 2015 ~~Annual Meeting of Stockholders, which will be filed with the Securities~~ and ~~Exchange Commission no later than 120 days after the end of the fiscal year covered by this Form 10-K.~~2014.

	2015		2014

Audit Fees	$	914,000	$	1,288,000
Tax Fees		90,000		125,000
All Other Fees (1)		1,663,000		419,000
Total	$	2,667,000	$	1,832,000

_____________

(1)	These amounts relate to costs incurred by BDO associated with certain government agencies' ongoing inquiries and request for information related to the Company.

3940

Policy for Approval of Audit and Permitted Non-Audit Services

The Audit Committee has adopted a policy and related procedures requiring its pre-approval of all audit and non-audit services to be rendered by its independent registered public accounting firm. These policies and procedures are intended to ensure that the provision of such services do not impair the independent registered public accounting firm's independence. These services may include audit services, audit related services, tax services and other services. The policy provides for the annual establishment of fee limits for various types of audit services, audit related services, tax services and other services, within which the services are deemed to be pre-approved by the Audit Committee. The independent registered public accounting firm is required to provide to the Audit Committee back up information with respect to the performance of such services.

All services provided by Grant Thornton and BDO during the fiscal years ended December 31, 2015 and 2014 were approved by the Audit Committee. The Audit Committee has delegated to its Chair the authority to pre-approve services, up to a specified fee limit, to be rendered by the independent registered public accounting firm and requires that the Chair report to the Audit Committee any pre-approved decisions made by the Chair at the next scheduled meeting of the Audit Committee.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)(1) Financial Statements

The consolidated financial statements begin on page F-1.

(a)(2) Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts

All other schedules not included have been omitted because of the absence of conditions under which they are required or because the required information, where material, is shown in the consolidated financial statements or the notes to the consolidated financial statements.

(a)(3) Exhibits

Exhibit Number		Description

2.1		Agreement and Plan of Merger, dated February 13, 2011. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on February 17, 2011).
2.2		Amendment to Agreement and Plan of Merger, dated as of February 28, 2011, by and among Swisher Hygiene Inc., SWSH Merger Sub, Inc., Choice Environmental Services, Inc., and the other parties set forth therein. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on March 4, 2011).
2.3		Stock Purchase Agreement, dated November 15, 2012, by and between Swisher Hygiene Inc. and Waste Services of Florida, Inc. (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 16, 2012 and schedules and similar attachments of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company undertakes to furnish on a supplemental basis a copy of any omitted schedules and similar attachments to the Securities and Exchange Commission upon request).
2.4		Stock Purchase Agreement, dated August 12, 2015, by and between Swisher Hygiene Inc. and Ecolab Inc. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 13, 2015, and incorporated herein by reference).
3.1		Certificate of Corporate Domestication of CoolBrands International Inc., dated November 1, 2010. (1)
3.2		Amended and Restated Certificate of Incorporation of Swisher Hygiene Inc. (2)
3.3		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Swisher Hygiene Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 2, 2014).
3.4		Bylaws of Swisher Hygiene Inc. (1)
10.1		Promissory Note, dated May 26, 2010, as amended, in the principal amount of $21,445,000 to Royal Palm Mortgage Group, LLC. (1)
10.2		Promissory Note, dated August 9, 2010, in the principal amount of $2,000,000 to Royal Palm Mortgage Group, LLC. (1)
10.3		Promissory Note, dated August 9, 2010, in the principal amount of $1,500,000 to Royal Palm Mortgage Group, LLC. (1)
10.4		Credit Agreement among Swisher Hygiene, Inc., the lenders named therein and Wells Fargo Bank, National Association, dated March 30, 2011 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2011).
10.5		Pledge and Security Agreement by Swisher Hygiene Inc., certain subsidiaries of Swisher Hygiene, Inc. named therein, and Wells Fargo Bank, National Association, dated March 30, 2011 (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2011 and portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment).
10.6		Guaranty Agreement by certain subsidiaries of Swisher Hygiene Inc. and Guaranteed Parties named therein, dated March 30, 2011 (incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2011).

10.7		CoolBrands International Inc. 2002 Stock Option Plan. (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8, filed on February 14, 2011). †
10.8		Omnibus Amendment Agreement, effective as of February 28, 2011, by and between Swisher International, Inc. HB Service, LLC and Wells Fargo Bank, National Association. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 4, 2011).
10.9		Amended and Restated Swisher Hygiene Inc. 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on May 9, 2011).* †
10.10		Swisher Hygiene Inc. Senior Executive Officers Performance Incentive Bonus Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 10, 2011).* †
10.11		Employment and Non-Compete Agreement of Michael Kipp (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 10, 2011).* †
10.12		First Amendment to Credit Agreement and Pledge and Security Agreement, dated August 12, 2011, by and between Swisher Hygiene Inc. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 18, 2011).
10.13		General Electric Capital Corporation Loan Commitment Letter, dated August 12, 2011 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).
10.14		Master Loan and Security Agreement, dated August 12, 2011, by and between General Electric Capital Corporation and Choice Environmental Services, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).

10.15		Amendment to Master Loan and Security Agreement, dated August 12, 2011, by and between General Electric Capital Corporation and Choice Environmental Services, Inc. (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).
10.16		Wells Fargo Equipment Finance, Inc. Loan Commitment Letter dated August 12, 2011 (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).
10.17		Master Loan and Security Agreement dated August 12, 2011, by and between Wells Fargo Equipment Finance, Inc. and Choice Environmental Services, Inc. (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).
10.18		Automotive Rentals, Inc. Vehicle Lease Financing Proposal, dated August 12, 2011 (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2011).
10.19		Second Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated April 12, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2012).
10.20		Third Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated May 15, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2012).
10.21		Fourth Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated May 30, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2012).
10.22		Fifth Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated June 28, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 29, 2012).
10.23		Sixth Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated July 30, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 31, 2012).

10.24		Seventh Amendment to Credit Agreement and Pledge and Security Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated August 31, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 4, 2012 and portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment).
10.25		Eighth Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated September 27, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 27, 2012).
10.26		Ninth Amendment to Credit Agreement by and among Swisher Hygiene, Inc., the Subsidiary Guarantors party thereto, the Required Lenders, and Wells Fargo Bank, National Association, dated October 31, 2012 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2012).
10.27		Employment Letter, dated June 1, 2012, by and between Swisher Hygiene, Inc. and Brian Krass (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2012, filed with the Securities and Exchange Commission on March 15, 2013). †
10.28		Interim Services Agreement, effective September 24, 2012, between Swisher Hygiene Inc. and SCA Group, LLC (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2012, filed with the Securities and Exchange Commission on March 18, 2013). †
10.29		Consulting Agreement and Release between Steven R. Berrard and Swisher International, Inc., effective October 26, 2012 (incorporated by reference to Exhibit 10.56 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on May 1, 2013). †
10.30		Separation Agreement and Release between Hugh Cooper and Swisher International Inc., dated November 15, 2012 (incorporated by reference to Exhibit 10.57 to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on May 1, 2013). †
10.31		Executive Services Agreement, effective June 9, 2013, between Swisher Hygiene Inc. and The SCA Group, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2013, filed with the Securities and Exchange Commission on August 9, 2013). †
10.32		Employment Agreement, dated October 16, 2013, between Swisher Hygiene Inc. and William M. Pierce. †
10.33		Employment Agreement, dated October 16, 2013, between Swisher Hygiene Inc. and Thomas C. Byrne. †
10.34		Separation Agreement and Release between Swisher Hygiene Inc. and Thomas E. Aucamp, dated March 7, 2014 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission on May 12, 2014). †
10.35		Amendment No. 1 to the Employment Agreement between Swisher Hygiene Inc. and Thomas C. Byrne, dated July 14, 2014 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission on November 10, 2014). †
10.36		Amendment to Employment Agreement by and between Swisher Hygiene Inc. and William M. Pierce, dated August 8, 2014 (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission on November 10, 2014). †

10.37		Loan and Security Agreement by and among Swisher Hygiene Inc., as Guarantor, the Borrowers listed thereto and Siena Lending Group LLC, as Lender, dated August 29, 2014 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 3, 2014). (Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment).
10.38		Second Amendment to Employment Agreement by and between Swisher Hygiene Inc. and William M. Pierce, dated January 31, 2015. †
10.39		Letter Agreement, dated as of March 25, 2015, by and among Siena Lending Group LLC and the Borrowers listed thereto.

10.40		Second Amendment to Employment Agreement by and between Swisher Hygiene Inc. and William M. Pierce, dated January 31, 2015 (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on April 1, 2015). †
10.41		Letter Agreement, dated as of March 25, 2015, by and among Siena Lending Group LLC and the Borrowers listed thereto (incorporated by reference to Exhibit 10.39 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on April 1, 2015).
10.42		Waiver letter, dated May 11, 2015 by Siena Lending Group LLC (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the Securities and Exchange Commission on May 11, 2015).
10.43		Deferred Prosecution Agreement, dated October 7, 2015, by and between the United States of America and Swisher Hygiene Inc.
21.1		Subsidiaries of Swisher Hygiene Inc.
~~23.1~~		~~Consent of BDO USA, LLP.~~
31.1		Section 302 Certification of Chief Executive Officer.
31.2		Section 302 Certification of Chief Financial Officer.
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase.
101.LAB		XBRL Taxonomy Extension Label Linkbase.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

________________________

The following documents are incorporated by reference to the indicated exhibit to the following filings by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

(1)	Registration Statement on Form 10, filed with the Securities and Exchange Commission on November 9, 2010.

(2)	Registration Statement on Form S-8, filed with the Security and Exchange Commission on May 9, 2011.

*	Furnished herewith.
†	Management contracts or compensatory plans, contracts, or arrangements.

4245

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	SWISHER HYGIENE INC. (Registrant)

Dated: March ~~31, 2015~~ 15, 2016	By:	/s/ William M. Pierce
		William M. Pierce
		President and Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ William M. Pierce	President, Chief Executive Officer, and Director	March ~~31, 2015~~ 15, 2016
William M. Pierce	(Principal Executive Officer)

/s/ William T. Nanovsky	Senior Vice President, ~~and~~ Chief Financial Officer and Secretary	March ~~31, 2015~~15, 2016
William T. Nanovsky	(Principal Financial Officer and Principal Accounting Officer)

/s/ ~~Linda C. Wilson-Ingram~~ Richard L. Handley	~~Vice President, Corporate Controller and~~ Chairman of the Board	March ~~31, 2015~~15, 2016
~~Linda C. Wilson-Ingram~~	~~Chief Accounting Officer (Principal Accounting Officer)~~


~~/s/~~ Richard L. Handley	~~Chairman of the Board~~	~~March 31, 2015~~
~~Richard L. Handley~~

/s/ Joseph Burke	Director	March ~~31, 2015~~15, 2016
Joseph Burke


/s/ William D. Pruitt	Director	March 15, 2016
William D. Pruitt

/s/ M. David Prussky	Director	March ~~31, 2015~~15, 2016
~~Harris W. Hudson~~ M. David Prussky


~~/s/~~ ~~William D. Pruitt~~	~~Director~~	~~March 31, 2015~~
~~William D. Pruitt~~

~~/s/~~ ~~David Prussky~~	~~Director~~	~~March 31, 2015~~
~~David Prussky~~

4346

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

SWISHER HYGIENE INC. AND SUBSIDIARIES

Consolidated Financial Statements as of December 31, ~~2014~~2015 and ~~2013,~~2014, and for the ~~Three~~Two Years Ended December 31, ~~2014~~2015

~~Reports~~Report of Grant Thornton, LLP, Independent Registered Public Accounting Firm		F-2
Report of BDO USA, LLP, Independent Registered Public Accounting Firm		F-3
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations and Comprehensive Loss		F-5
Consolidated Statements of Equity		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Swisher Hygiene Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Swisher Hygiene Inc. (a Delaware corporation) and Subsidiaries (the “Company”) as of December 31, 2015, and the related consolidated statements of operations and comprehensive loss, equity, and cash flows for the year ended December 31, 2015. Our audit of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Swisher Hygiene Inc. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for the year ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON LLP

Columbia, South Carolina

March 15, 2016

F-2

Report of Independent Registered Public Accounting Firm

Board of Directors

Swisher Hygiene Inc. and Subsidiaries

~~Charlotte, North Carolina~~

We have audited the accompanying consolidated balance sheets of Swisher Hygiene Inc. and Subsidiaries (the "Company") as of December 31, 2014 and ~~2013 and~~ the related consolidated statements of operations and comprehensive loss, equity, and cash flows for ~~each of~~ the ~~three years in the period~~year ended December 31, 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our ~~audits.~~audit.

We conducted our ~~audits~~audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audits provide~~audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Swisher Hygiene Inc. and Subsidiaries as of December 31, 2014, and ~~2013, and~~ the results of its operations and its cash flows for ~~each of~~ the ~~three years in the period~~year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements ~~have been~~for the period ended December 31, 2014 were prepared assuming that the Company will continue as a going concern. As described in Note 1 to the 2014 consolidated financial statements, the Company has suffered recurring losses from operations and has not generated positive cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters ~~are~~were also described in Note 1.1 to the 2014 financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We also audited, in accordance with the Standards of the Public Company Accounting Oversight Board (United States), Swisher Hygiene Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in ~~Internal Control - Integrated Framework~~ ~~(2013)~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 31, 2015 expressed an adverse opinion thereon.~~

/s/ BDO USA, LLP

Charlotte, North Carolina

March 31, 2015,

~~F-2~~

~~Report~~ except for the effects of ~~Independent Registered Public Accounting Firm~~

~~Board of Directors~~discontinued operations and ~~Stockholders~~

~~Swisher Hygiene Inc.~~

~~Charlotte, NC~~

~~We have audited Swisher Hygiene Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in~~ ~~Internal Control – Integrated Framework~~ ~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Swisher Hygiene Inc.’s management is responsible~~assets held for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, "Management's Report on Internal Control Over Financial Reporting". Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses have been identified andsale described in ~~management’s assessment. These material weaknesses were considered in determining~~Note 2 to the ~~nature, timing, and extent of audit tests applied in our audit of the 2014~~ consolidated financial statements ~~and this report does not affect our report dated March 31, 2015 on those financial statements.~~

~~In our opinion, Swisher Hygiene Inc. did not maintain, in all material respects, effective internal control over financial reporting~~ as ~~of December 31, 2014, based on the COSO criteria.~~

~~We do not express an opinion or any other form of assurance on management’s statements referring~~ to ~~any corrective actions taken by the Company after~~which the date ~~of management’s assessment.~~is March 15, 2016

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Swisher Hygiene Inc. and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive loss, equity, and cash flows for each of the three years in the period ended December 31, 2014 and our report dated March 31, 2015 expressed an unqualified opinion thereon.

~~/s/ BDO USA, LLP~~

~~Charlotte, NC~~

~~March 31, 2015~~

F-3

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, ~~2014~~2015 and ~~2013~~2014

(In ~~thousands)~~thousands except share data)

2014
2013

ASSETS
Current assets
Cash and cash equivalents $ 7,233 $ 21,465
Restricted cash 231 3,558
Accounts receivable, net 18,751 21,010
Inventory, net 15,426 14,032
Deferred income taxes 534 935
Assets held for sale - 4,520
Other assets 2,525 5,782
Total current assets 44,700 71,302
Restricted cash - 2,117
Property and equipment, net 37,037 43,842
Goodwill - 5,821
Other intangibles, net 6,654 8,436
Customer relationships and contracts, net 22,792 28,575
Other noncurrent assets 2,015 1,624
Total assets $ 113,198 $ 161,717

LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 13,627 $ 8,794
Accrued payroll and benefits 3,467 3,819
Accrued expense 7,122 8,132
Long-term debt and obligations due within one year 1,884 5,251
Liabilities of discontinued operations - 2,131
Total current liabilities 26,100 28,127
Long-term debt and obligations 1,185 2,003
Deferred income taxes 558 1,053
Other long-term liabilities 4,065 3,348
Total noncurrent liabilities 5,808 6,404

Commitments and contingencies (Notes 2, 3, 6, 7, 10, 13, 15)

Equity (1)

Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued and outstanding at December 31, 2014 and 2013 - -
Common stock, par value $0.001, authorized 600,000,000 shares; 17,612,278 shares and 17,576,741 shares issued and outstanding at December 31, 2014 and 2013 18 18
Additional paid-in capital
389,942 388,252
Accumulated deficit (307,363 ) (260,555 )
Accumulated other comprehensive loss (1,307 ) (529 )
Total equity 81,290 127,186
Total liabilities and equity $ 113,198 $ 161,717

~~(1)~~

~~All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.~~

	2015			2014
ASSETS
Current assets
Cash and cash equivalents	$	25,228		$	-
Restricted cash		318			-
Accounts receivable		2,158			-
Other assets		1,513			911
Current assets of discontinued operations		-			43,790
Total current assets		29,217			44,701
Property and equipment, net		26			-
Other noncurrent assets		162			203
Noncurrent assets of discontinued operations		-			68,295
Total assets	$	29,405		$	113,199

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	587		$	508
Accrued payroll and benefits		235			576
Accrued expense		2,650			1,249
Long-term debt and obligations due within one year		-			1,790
Liabilities of discontinued operations		-			21,979
Total current liabilities		3,472			26,102
Long term debt and obligations		-			1,078
Deferred income taxes		-			-
Other long term liabilities		1,575			3,340
Long-term liabilities of discontinued operations		-			1,389
Total noncurrent liabilities		1,575			5,807

Commitments and contingencies

Equity
Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued and outstanding at December 31, 2015 and 2014		-			-
Common stock, par value $0.001, authorized 600,000,000 shares; 17,675,220 shares and 17,612,278 shares issued and outstanding at December 31, 2015 and 2014		18			18
Additional paid-in capital		390,557			389,942
Accumulated deficit		(364,953	)		(307,363	)
Accumulated other comprehensive loss		(1,264	)		(1,307	)
Total equity		24,358			81,290
Total liabilities and equity	$	29,405		$	113,199

See Accompanying Notes to Consolidated Financial Statements

F-4

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the ~~Three~~Two Years Ended December 31, ~~2014~~2015

(In thousands except share and per share data)

2014 2013 2012
Revenue
Products $ 173,505 $ 189,480 $ 202,968
Services 18,877 22,895 26,186
Franchise and other 1,375 1,313 1,367
Total revenue 193,757 213,688 230,521

Costs and expenses
Cost of sales (exclusive of route expenses and related depreciation and amortization) 89,101 95,585 101,914
Route expenses 50,595 54,227 54,988
Selling, general, and administrative expenses 69,269 94,620 110,975
Acquisition and merger expenses - - 582
Depreciation and amortization 21,216 22,113 20,991
Impairment loss on assets held for sale 2,989 6,422 -
Impairment loss on goodwill 5,821 93,194 -
Total costs and expenses 238,991 366,160 289,450
Loss from continuing operations (45,234 ) (152,472 ) (58,929 )

Other expense, net (1,663 ) (654 ) (3,093 )
Net loss from continuing operations before income taxes (46,897 ) (153,126 ) (62,022 )
Income tax benefit (expense) 89 2,594 (18,753 )
Net loss from continuing operations (46,808 ) (150,532 ) (80,775 )

Discontinued operations, net of tax (Note 2)
Net loss from operations through disposal - (2,516 ) (6,245 )
Gain on disposal - - 13,844
(Loss) income from discontinued operations, net of tax - (2,516 ) 7,599
Net loss (46,808 ) (153,048 ) (73,176 )

Comprehensive loss
Employee benefit plan adjustment, net of tax (747 ) 503 (161 )
Foreign currency translation adjustment (31 ) (33 ) (3 )
Comprehensive loss $ (47,586 ) $ (152,578 ) $ (73,340 )

Loss per share (1)

Basic and diluted (continuing operations) $ (2.64 ) $ (8.55 ) $ (4.62 )
Basic and diluted (discontinued operations) - $ (0.14 ) $ 0.43

Weighted-average common shares used in the computation of loss per share (1)

Basic and diluted 17,723,866 17,599,535 17,500,956

	2015			2014
Revenue	$	-		$	-

Costs and expenses
Selling, general, and administrative expenses		9,260			6,364
Depreciation and amortization		1			-
Total costs and expenses		9,261			6,364
Other expense, net		(2,065	)		(134	)
Loss from continuing operations before income taxes		(11,326	)		(6,498	)
Income tax (expense) benefit		-			-
Loss from continuing operations		(11,326	)		(6,498	)

Discontinued operations
Loss from discontinued operations		(46,307	)		(40,399	)
Income tax benefit		43			89
Loss on discontinued operations		(46,264	)		(40,310	)
Net loss		(57,590	)		(46,808	)

Comprehensive loss
Employee benefit plan adjustment, net of tax		(82	)		(747	)
Foreign currency translation adjustment		125			(31	)
Comprehensive loss	$	(57,547	)	$	(47,586	)

Loss per share (1)
Basic and diluted (Continuing operations)	$	(0.64	)	$	(0.37	)
Basic and diluted (Discontinued operations)	$	(2.61	)	$	(2.27	)
Basic and diluted	$	(3.25	)	$	(2.64	)

Weighted-average common shares used in the computation of loss per share (1)
Basic and diluted		17,741,051			17,723,866

~~(1)~~

~~All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.~~

~~See Notes to Consolidated Financial Statements~~

~~F-5~~

~~SWISHER HYGIENE INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF EQUITY~~

~~FOR THE THREE YEARS ENDED DECEMBER 31, 2014~~

~~(In thousands except share data)~~

~~STOCKHOLDERS' EQUITY~~

Shares

Common
Stock (1)
Amount

Additional Paid-in
Capital (1)

Accumulated
Deficit

Accumulated Other Comprehensive
(Loss)

Swisher Hygiene Inc. Stockholders'
Equity

Non - Controlling
Interest

Total
Equity

Balance at December 31, 2011 17,480,419 $ 17 $ 378,982 $ (34,331 ) $ (835 ) $ 343,833 $ 22 $ 343,855
Issuance of common stock on contingent earn-out 9,091 - 170 - - 170 - 170
Conversion of promissory notes payable 1,004 - 37 - - 37 - 37
Stock based compensation (including discontinued operations of $2,863) - - 6,384 - - 6,384 - 6,384
Issuance of common stock under stock based payment plans 23,637 - - - - - - -
Shares issued for non-controlling interest 1,000 - 37 - - 37 - 37
Employee benefit plan adjustment, net of tax - - - - (161 ) (161 ) - (161 )
Foreign currency translation adjustment - - - - (3 ) (3 ) - (3 )
Net loss - - - (73,176 ) - (73,176 ) - (73,176 )

Balance at December 31, 2012 17,515,151 17 385,610 (107,507 ) (999 ) 277,121 22 277,143
Stock based compensation - - 2,916 - - 2,916 - 2,916
Issuance of common stock under stock based payment plans 88,996 1 - - - 1 - 1
Shares withheld related to income taxes on RSUs (27,406 ) - (274 ) - - (274 ) - (274 )
Liquidation of minority interest - - - - - - (22 ) (22 )
Employee benefit plan adjustment, net of tax - - - - 503 503 - 503
Foreign currency translation adjustment - - - - (33 ) (33 ) - (33 )
Net loss - - - (153,048 ) - (153,048 ) - (153,048 )
Balance at December 31, 2013 17,576,741 18 388,252 (260,555 ) (529 ) 127,186 - 127,186
Stock based compensation - - 1,740 - - 1,740 - 1,740
Shares withheld related to income taxes on RSUs (10,857 ) - (47 ) - - (47 ) - (47 )
Shares issued in connection with RSU delivery 46,394 - (3 ) - - (3 ) - (3 )
Employee benefit plan adjustment, net of tax - - - - (747 ) (747 ) - (747 )
Foreign currency translation adjustment - - - - (31 ) (31 ) - (31 )
Net loss - - - (46,808 ) - (46,808 ) - (46,808 )
Balance at December 31, 2014 17,612,278 18 389,942 (307,363 ) (1,307 ) 81,290 - 81,290

(1)	All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.

See Accompanying Notes to Consolidated Financial Statements

F-5

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE TWO YEARS ENDED DECEMBER 31, 2015

(In thousands except share data)

STOCKHOLDERS' EQUITY

	Common Stock (1)					Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total
	Shares			Amount		Capital (1)			Deficit			(Loss)			Equity
Balance at December 31, 2013		17,576,741		$	18	$	388,252		$	(260,555	)	$	(529	)	$	127,186
Stock based compensation		-			-		1,740			-			-			1,740
Shares withheld related to income taxes on RSUs		(10,857	)		-		(47	)		-			-			(47	)
Shares issued in connection with RSU delivery		46,394			-		(3	)		-			-			(3	)
Employee benefit plan adjustment, net of tax		-			-		-			-			(747	)		(747	)
Foreign currency translation adjustment		-			-		-			-			(31	)		(31	)
Net loss		-			-		-			(46,808	)		-			(46,808	)
Balance at December 31, 2014		17,612,278			18		389,942			(307,363	)		(1,307	)		81,290
Stock based compensation		-			-		704			-			-			704
Accelerated vesting of RSUs		-			-		(73	)		-			-			(73	)
Payout in lieu of issuing RSUs		-			-		(12	)		-			-			(12	)
Shares issued in connection with RSU delivery		62,942			-		(4	)		-			-			(4	)
Employee benefit plan adjustment, net of tax		-			-		-			-			(82	)		(82	)
Foreign currency translation adjustment		-			-		-			-			125			125
Net loss		-			-		-			(57,590	)		-			(57,590	)
Balance at December 31, 2015		17,675,220			18		390,557			(364,953	)		(1,264	)		24,358

(1)

All outstanding share amounts and computations using such amounts have been retroactively adjusted to reflect the June 3, 2014 one-for-ten reverse stock split.

See Accompanying Notes to Consolidated Financial Statements

F-6

SWISHER HYGIENE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~THREE~~TWO YEARS ENDED DECEMBER 31, ~~2014~~2015

(In thousands)

2014 2013 2012
Operating activities
Net loss $ (46,808 ) $ (153,048 ) $ (73,176 )
Adjustments to reconcile net loss to cash used in operating activities:
Net loss (income) from discontinued operations, net of tax - 2,516 (7,599 )
Depreciation and amortization 21,216 22,113 20,991
Provision for doubtful accounts 196 936 2,396
Stock based compensation 1,740 2,916 3,521
Realized and unrealized gain on fair value of convertible notes - - (241 )
Deferred income taxes (94 ) (2,553 ) 18,370
Impairment loss on assets held for sale 2,989 6,422 -
Impairment loss on goodwill 5,821 93,194 -
Loss on disposal of property and equipment 195 33 -
Loss (gain) on sale of assets held for sale 754 (223 ) -
Changes in operating assets and liabilities:
Accounts receivable 2,325 (279 ) 3,739
Inventory (247 ) 1,295 448
Accounts payable, accrued expense and other current liabilities 3,403 (3,084 ) (6,598 )
Other assets and non-current assets 2,187 (111 ) (1,095 )
Net cash used in operating activities of continuing operations (6,322 ) (29,873 ) (39,244 )
Net cash used in operating activities of discontinued operations (2,131 ) (4,647 ) (3,519 )
Cash used in operating activities (8,453 ) (34,520 ) (42,763 )
Investing activities
Cash received for sale of discontinued operations - 12,571 111,841
Purchases of property and equipment (8,645 ) (16,794 ) (18,820 )
Cash received on sale of property and equipment 92 329 3,061
Cash received on sale of assets held for sale 1,565 6,346 -
Acquisitions, net of cash acquired - (151 ) (4,310 )
Restricted cash 5,444 (285 ) (5,390 )
Net cash (used in) provided by investing activities of continuing operations (1,544 ) 2,016 86,382
Net cash used in investing activities of discontinued operations - - (2,861 )
Cash (used in) provided by investing activities (1,544 ) 2,016 83,521
Financing activities
Payments on lines of credit - - (25,000 )
Proceeds from notes payable 1,097 - -
Proceeds from equipment financing - - 209
Principal payments on debt and capital leases (5,282 ) (7,177 ) (22,626 )
Payment of shareholder advances - - (2,000 )
Proceeds from exercise of stock options - 1 -
Taxes paid related to income tax withheld on settlement of equity awards (50 ) (274 ) -
Net cash used in financing activities of continuing operations (4,235 ) (7,450 ) (49,417 )
Net cash provided by financing activities of discontinued operations - - (430 )
Cash used in financing activities (4,235 ) (7,450 ) (49,847 )

Net decrease in cash and cash equivalents (14,232 ) (39,954 ) (9,089 )
Cash and cash equivalents at the beginning of the period 21,465 61,419 70,508
Cash and cash equivalents at the end of the period $ 7,233 $ 21,465 $ 61,419

Supplemental Cash Flow Information
Cash paid for interest (including discontinued operations) $ 150 $ 370 $ 4,253
Cash received for interest (including discontinued operations) $ 9 $ 41 $ 75
Cash paid for income taxes $ 51 $ 316 $ 88
Notes payable issued or assumed on acquisitions (continuing operations) $ - $ - $ 1,121
Note payable related to insurance financing $ 1,097 $ 2,634 $ 2,732
Stock issued to purchase property and to settle liabilities (continuing operations) $ - $ - $ 37
Property received as payment on accounts receivable $ - $ - $ 650

	2015			2014
Operating activities
Net loss	$	(57,590	)	$	(46,808	)
Adjustments to reconcile net loss to cash used in operating activities:
Net loss from discontinued operations, net of tax		46,264			40,310
Depreciation and amortization		1			-
Accounts receivable		2,249			-
Accounts payable, accrued expense and other current liabilities		(669	)		1,803
Other assets and non-current assets		(561	)		6
Net cash used in operating activities of continuing operations		(10,306	)		(4,689	)
Net cash used in operating activities of discontinued operations		(6,635	)		(3,764	)
Cash used in operating activities		(16,941	)		(8,453	)
Investing activities
Purchases of property and equipment		(27	)		-
Restricted cash		(318	)		-
Net cash used in investing activities of continuing operations		(345	)		-
Net cash provided by (used in) investing activities of discontinued operations		38,177			(1,544	)
Cash provided by (used in) investing activities		37,832			(1,544	)
Financing activities
Principal payments on debt		(2,867	)		(5,282	)
Proceeds from debt issuances		-			1,097
Proceeds from line of credit, net of issuance costs		40,485			-
Payments on line of credit		(40,485	)		-
Taxes paid related to income tax withheld on settlement of equity awards		-			(50	)
Net cash used in financing activities of continuing operations		(2,867	)		(4,235	)
Net cash used in financing activities of discontinued operations		(29	)		-
Cash used in financing activities		(2,896	)		(4,235	)

Net increase (decrease) in cash and cash equivalents		17,995			(14,232	)
Cash and cash equivalents at the beginning of the period (1)		7,233			21,465
Cash and cash equivalents at the end of the period (1)	$	25,228		$	7,233

Supplemental Cash Flow Information
Cash paid for interest (including discontinued operations)	$	351		$	150
Cash received for interest (including discontinued operations)	$	-		$	9
Cash paid for income taxes (including discontinued operations)	$	19		$	51
Proceeds on note payable related to insurance financing	$	1,789		$	1,097
Payments on note payable related to insurance financing	$	2,559		$	-

(1)	The December 31, 2014 cash is included in current assets of discontinued operations in the consolidated balance sheet.

See Accompanying Notes to Consolidated Financial Statements

F-7

SWISHER HYGIENE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal Operations

On August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab Inc ("Ecolab"). We refer to the transaction pursuant to the purchase agreement between the Company and Ecolab dated August 12, 2015 as the "Sale Transaction." At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash adjustment. The $2.0 million holdback was received from Ecolab in January 2016.

As a result of the Sale Transaction a loss of $2.6 million was recorded after the $22.6 million impairment charge was recognized in the quarter ended September 30, 2015, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. See Note 2, "Discontinued Operations and Assets Held for Sale," and Note 3, "Goodwill and Other Intangible Assets" for a further description of the $2.6 million loss on sale and the $22.6 million impairment charge. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. Swisher Hygiene Inc. will no longer have any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years.

Prior to the Sale Transaction, our principal executive offices were located at 4725 Piedmont Row Drive, Suite 400, Charlotte, North Carolina, 28210.

Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company” or “we” or “our”) ~~provide~~provided essential hygiene and sanitizing solutions that ~~include~~included cleaning and sanitizing chemicals, restroom hygiene programs and a full range of related products and services. We ~~sell~~sold consumable products such as detergents, cleaning chemicals, soap, paper, water filters and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products as well as additional services such as the cleaning of facilities. We ~~serve~~served customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, and healthcare industries.

During 2011 and most of 2012, we operated in two segments: (i) Hygiene and (ii) Waste. As a result of the sale of the Waste segment in November 2012, we currently operate in one business segment, Hygiene, and the Company has applied discontinued operations accounting treatment and disclosures for this transaction. See Note 2 "Discontinued Operations and Assets Held for Sale" for further information.

Our principal executive offices are located at 4725 Piedmont Row Drive, Suite 400, Charlotte, North Carolina, 28210. As of December 31, 2014, we have company owned operations and one remaining franchise operation located throughout North America and we have entered into nine Master License Agreements covering the United Kingdom, Portugal, the Netherlands, Singapore, the Philippines, Taiwan, Korea, Hong Kong/Macau/China, and Mexico. The financial information about our geographical areas is included in Note 18, “Geographic Information” to the Notes to the Consolidated Financial Statements.

~~Merger~~

On August 17, 2010, Swisher International, Inc. (“Swisher International”) entered into a merger agreement under which all of the outstanding common shares of Swisher International were exchanged for common shares of CoolBrands International Inc. (“CoolBrands”), and Swisher International became a wholly-owned subsidiary of CoolBrands (the “Merger”). Immediately before the Merger, CoolBrands completed its redomestication to Delaware from Ontario, Canada and became Swisher Hygiene Inc. The Merger was completed on November 2, 2010. After the Merger, the shareholders of CoolBrands held shares of Swisher Hygiene Inc. common stock.

~~Going Concern~~

Basis of Presentation and Principles of Consolidation

Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications, including those described further in Note ~~4, “Prior Period Reclassification,~~2, “Discontinued Operations and Assets Held for Sale,” have been made to prior year amounts for consistency with the current period presentation. Financial information, other than share and per share data, is presented in thousands of dollars.

On June 3, 2014, a one-for-ten reverse split of the Company's issued and outstanding common stock, $0.001 par value per share, became effective ("Reverse Stock Split"). Trading of the common stock on a post-Reverse Stock Split adjusted basis began at the open of business on the morning of June 3, 2014. All historic share and per share information, including loss per share, in this Form 10-K have been retroactively adjusted to reflect the Reverse Stock Split.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.

F-8

Segments

~~We operate~~Prior to the Sale Transaction, we operated in one business segment, the manufacturing, distribution and delivery of hygiene and sanitizing services, products and solutions. We ~~define~~defined business segments as components of an organization for which discrete financial information iswas available and operating results ~~are~~were evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM iswas the Company’s President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination ~~include~~included the similar nature of the products and services we ~~sell,~~sold, the functional alignment of our organizational structure, and the reports that ~~are~~were regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. ~~Previously we operated in two segments. See Note 2, “Discontinued Operations and Assets Held for Sale.”~~

Cash Equivalents

The Company considers all cash accounts and all highly liquid short term investments purchased with an original maturity of three months or less at date of purchase to be cash equivalents. As of December 31, ~~2014~~2015 and ~~2013,~~2014, the Company did not have any investments with maturities greater than three months.

Restricted Cash

Restricted cash at December 31, 2015 consists of an account with a maturity of July 3, 2016 to secure a workers’ compensation letter of credit. Restricted cash at December 31, 2014 consists of amounts held in a collateral account to secure purchase card balances and electronic cash ~~transfers.~~transfers and is included in the current assets of discontinued operations in the consolidated balance sheet.

Accounts Receivable

Accounts receivable at December 31, 2015 relate to receivable amounts related to the Sale Transaction. Prior to the Sale Transaction, accounts receivable principally ~~consist~~consisted of amounts due from customers for product sales and services. Accounts receivable ~~are~~were reported net of an allowance for doubtful accounts (“allowance”) and interest iswas generally not charged to customers on delinquent balances. The allowance iswas management’s best estimate of uncollectible amounts and iswas based on a number of factors, including overall credit quality of customers, the age of outstanding customer balances, historical write-off experience and specific customer account analysis that projects the ultimate collectability of the outstanding balances. When accounts receivable amounts ~~are~~were considered uncollectible, the amounts ~~are~~were written-off against the allowance for doubtful accounts. The allowance was ~~$1.0 million~~zero and ~~$2.0~~$1.0 million at December 31, 2015 and 2014, ~~and 2013,~~ respectively. The December 31, 2014 amount is included in the assets of discontinued operations in the consolidated balance sheet.

Inventory

~~Inventory consists~~Prior to the Sale Transaction, inventory consisted of purchased items, materials, direct labor, and other manufacturing related overhead and iswas stated at the lower of cost or market determined using the first in-first out costing method. The Company routinely ~~reviews~~reviewed inventory for excess and slow moving items as well as for damaged or otherwise obsolete items and for items selling at negative margins. When such items ~~are~~were identified, a reserve iswas recorded to adjust their carrying value to their estimated net realizable value. The reserve was ~~$0.8 million~~zero and ~~$0.9~~$0.8 million at December 31, 2015 and 2014, ~~and 2013,~~ respectively.

~~Assets Held for Sale~~

~~We record net assets held for sale in accordance with~~ ~~Accounting Standards Codification ("ASC") 360 "Property, Plant, and Equipment" at the lower of carrying value or fair value. Fair value~~ The December 31, 2014 amount is based on the estimated sales price, less selling costs, of the assets. Estimates of the net sales proceeds are based on a number of factors including standard industry multiples of revenues or operating metrics, and the status of ongoing sales negotiations and asset purchase agreements where available. Our estimates of fair value are regularly reviewed and subject to changes based on market conditions, changesincluded in the ~~customer base~~assets of discontinued operations in the operations or routes and our continuing evaluation as to the facility's acceptable sale price. No depreciation or amortization expense is recorded related to the assets held for sale. As described further below and in Note 9, “Fair Value Measurements,” assets held for sale are measured using Level 3 inputs.consolidated balance sheet.

F-9

Property and Equipment

At December 31, 2015, property and equipment consisted of computer software, which is being depreciated using the straight-line method over 1.5 years. A shorter life is being used for the computer software due to the uncertainty of the useful life of the software. Property and equipment is stated at cost, less accumulated depreciation and amortization. ~~Depreciation~~

Prior to the Sale Transaction, depreciation and amortization iswas provided using the straight-line method over the estimated useful lives of individual assets or classes of assets as follows:

		Years
Items in service		2 – 7
Equipment, laundry facility equipment and furniture		3 - 20
Vehicles		5
Computer equipment		3
Computer software		3 - 7
Building and leasehold improvements		1 - 40

Items in service ~~consist~~consisted of various systems that ~~dispense~~dispensed the Company’s cleaning and sanitizing products, linens, dish machines and dust control products. Included in the capitalized cost of items in service ~~are~~were costs incurred to install certain equipment for customer locations under long-term contracts. These costs ~~include~~included labor, parts and supplies. Costs of significant additions, renewals and betterments, are capitalized and depreciated. Maintenance and repairs are charged to expense when incurred.

The Company ~~capitalizes~~capitalized certain costs incurred during the application development stage associated with the development of new software products for internal use. Research and development costs in the preliminary project stage ~~are~~were expensed. Internal and external training costs and maintenance costs in the post-implementation operation stage ~~are~~were also expensed. Capitalized software costs ~~are~~were amortized over the estimated useful lives of the software commencing upon operational use.

Purchase Accounting for Business Combinations

The Company ~~accounts~~accounted for acquisitions by allocating the fair value of the consideration transferred to the fair value of the assets acquired and liabilities assumed on the date of the acquisition and any remaining difference iswas recorded as goodwill. Adjustments may behave been made to the preliminary purchase price allocation when facts and circumstances that existed on the date of the acquisition ~~surface~~surfaced during the allocation period subsequent to the preliminary purchase price allocation, not to exceed one year from the date of acquisition. Contingent consideration iswas recorded at fair value based on the facts and circumstances on the date of the acquisition and any subsequent changes in the fair value ~~are~~were recorded through earnings each reporting period. Transactions that ~~occur~~occurred in conjunction with or subsequent to the closing date of the acquisition ~~are~~were evaluated and accounted for based on the facts and substance of the transactions.

Goodwill

Goodwill is not amortized but rather tested for impairment at least annually. The Company ~~tests~~tested goodwill for impairment annually during the fourth quarter of each fiscal year. Goodwill iswas also tested for impairment between annual tests if an event ~~occurs~~occurred or circumstances ~~change~~changed that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Impairment testing for goodwill iswas done at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company ~~has~~ concluded prior to the Sale Transaction that it ~~has~~had one reporting unit.

When testing goodwill for impairment, the Company ~~may assess~~assessed qualitative factors to determine whether it iswas more likely than not (that is, a likelihood of more than 50 percent) that the Company’s fair value iswas less than its carrying amount, including goodwill. Alternatively, the Company may ~~bypass~~have bypassed this qualitative assessment and ~~perform~~performed step 1 of the two-step goodwill impairment test. This step ~~requires~~required the determination of the fair value of the reporting unit. If we ~~perform~~performed step 1 and the carrying amount of the reporting unit ~~exceeds~~exceeded its fair value, we would ~~perform~~have performed step 2 to measure such impairment.

Determining fair value ~~includes~~included the use of significant estimates and assumptions. Management ~~utilizes~~utilized an income approach, specifically the discounted cash flow technique as a means for estimating fair value. This discounted cash flow analysis ~~requires~~required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows ~~are~~were based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the business. The discount rates used for the analysis ~~reflect~~reflected a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates ~~can be~~could have been affected by factors such as customer growth, pricing, and economic conditions that ~~can be~~could have been difficult to predict. During the second quarter of 2014, ~~and the fourth quarter of 2013,~~ in conjunction with its impairment test, the Company recorded a goodwill impairment charge of $5.8 million, and ~~$93.2 million, respectively,~~is included in discontinued operations in the consolidated statement of operations and comprehensive loss as further discussed in Note 5,3, “Goodwill and Other Intangible Assets”.

F-10

Other Intangible Assets

Identifiable intangible assets ~~include~~included customer relationships, non-compete agreements, trade names and trademarks, and formulas. The fair value of these intangible assets at the time of acquisition iswas estimated based upon various valuation techniques including replacement cost and discounted future cash flow projections. Customer relationships ~~are~~were amortized on a straight-line basis over the expected average life of the acquired accounts, which iswas typically five to ten years based upon a number of factors, including historical longevity of customers and contracts acquired and historical retention rates. The non-compete agreements ~~are~~were amortized on a straight-line basis over the term of the agreements, typically not exceeding five years. Formulas ~~are~~were amortized on a straight-line basis over their estimated useful life of twenty years. The Company ~~reviews~~reviewed the recoverability of these assets if events or circumstances ~~indicate~~indicated that the assets may behave been impaired and periodically reevaluates the estimated remaining lives of these assets.

Trade names and trademarks ~~are~~were considered to be indefinite lived intangible assets unless specific evidence ~~exists~~existed that a shorter life iswas more appropriate. Indefinite lived intangible assets ~~are~~were tested, at a minimum, on an annual basis, using a discounted cash flow approach, or sooner whenever events or changes in circumstances ~~indicate~~indicated that an asset may be impaired.

During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its intangible assets in accordance with ASC 350, Intangible-Goodwill and Other, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s intangible assets had occurred, resulting in an impairment charge of $10.0 million, which is reported as part of discontinued operations in the consolidated statement of operations and comprehensive loss as discussed in Note 3, "Goodwill and Other Intangible Assets."

Long-Lived Assets

~~Foreign Currency Translation~~

~~All~~ During the third quarter of 2015, as a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets ~~and liabilities~~in accordance with ASC 360-10, Impairment or Disposal of ~~our Canadian~~Long-Lived Assets, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s fixed assets had occurred, resulting in an impairment charge of $12.6 million, which is reported as part of discontinued operations ~~are translated into U.S. dollars using~~in the ~~exchange rates in effect at the balance sheet date and~~consolidated statement of operations ~~items are translated using the average exchange rates throughout the period. The translation adjustment is presented~~ and comprehensive loss as ~~a component of accumulated other comprehensive (loss) income. The loss was primarily due to unfavorable conversion rates.~~discussed in Note 5, "Property and Equipment."

Financial Instruments

The Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents and accounts receivables. The Company maintains cash deposits with major banks, which from time to time may exceed insured limits. The possibility of loss related to the financial condition of major banks is considered minimal. The Company’s accounts receivable balance is composed of numerous customers of varying sizes in diverse industries and geographies. This fact, as well as the practice of establishing reasonable credit limits mitigates credit risk. Based on historical trends and experiences, the allowance for doubtful accounts is adequate to cover potential credit risk losses.

The carrying amounts of cash and cash equivalents ~~accounts receivable~~ and accounts ~~payable~~receivable approximate fair value due to the short maturity of these instruments. The fair value of the Company’s debt iswas estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities and ~~approximates~~approximated the carrying value of these liabilities. Certain convertible promissory notes ~~are~~were recorded at fair value during 2014 ~~and 2013~~ as further described in Note 8,7, "Fair Value Measurements.”

F-11

Revenue Recognition

~~Revenue~~Prior to the Sale Transaction, revenue from product sales and service iswas recognized when the product iswas delivered to the customer or when services ~~are~~were performed, including product and service sales made under multiple deliverable agreements, which outline the pricing of products and the preferred frequency of delivery. Deliverables under these pricing arrangements ~~are~~were considered to be separate units of accounting, as defined by ASC 605-25, Revenue Recognition – Multiple-Element Arrangement, and due to the nature of the Company’s business, the timing of the delivery of products and performance of service iswas concurrent and ongoing and there ~~are~~were no ~~contingent deliverables.~~undelivered elements. Franchise and other revenue include product sales, royalties and other fees charged to franchisees in accordance with the terms of their franchise agreements. Royalties and fees ~~are~~were recognized when earned and product sales ~~are~~were recognized as the product iswas delivered.

The Company’s sales policies provide for limited rights of return and, during the fiscal years ~~2014, 2013,~~2015 and ~~2012,~~2014, product returns were insignificant. The Company ~~records~~recorded estimated reductions to revenue for sales returns and for customer programs and incentive offerings, including pricing arrangements, rebates, promotions and other volume-based incentives at the time the sale iswas recorded.

~~F-11~~

Stock Based Compensation

The Company ~~measures~~measured and ~~recognizes~~recognized all stock based compensation at fair value at the date of grant and ~~recognizes~~recognized compensation expense over the requisite service period for awards expected to vest. Determining the fair value of stock based awards at the grant dates ~~requires~~required judgment, including estimating the share volatility, the expected term the award will be outstanding, and the amount of the awards that are expected to be forfeited. The Company ~~utilizes~~utilized the Black-Scholes option pricing model to determine the fair value for stock options on the date of grant.

Effective February 19, 2016, the Swisher Hygiene Inc. 2010 Stock Incentive Plan was terminated by the Board of Directors. All stock options and restricted stock units were cancelled before the plan was terminated. See Note 10, “Equity Matters” for further information regarding the 2010 Stock Incentive Plan.

Freight Costs

Shipping and handling costs for freight expense on goods shipped ~~are~~were included in cost of sales. Shipping and handling costs for freight expense on goods received ~~are~~were capitalized to inventory where they ~~are~~were relieved to cost of sales when the product iswas sold.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that deferred tax assets will not be realized.

The Company’s policy is to evaluate uncertain tax positions under ASC 740-10, Income Taxes. As of December 31, ~~2014~~2015 and ~~2013,~~2014, and for the ~~three~~two years ended December 31, ~~2014,~~2015, the Company has not identified any uncertain tax positions requiring recognition in the accompanying consolidated financial statements. The Company includes interest and penalties accrued in the consolidated financial statements as a component of interest expense. No significant amounts were required to be recorded for the ~~three~~two year period ended December 31, ~~2014.~~2015.

Loss per Common Share

Basic net loss from continuing operations and basic net loss from discontinued operations attributable to common stockholders per share is computed by dividing the applicable net loss by the weighted average number of common shares outstanding during the period. ~~Vested restricted stock units, of 0.1 million which have been deferred, are included in this weighted average number of common shares calculation.~~ Diluted net loss from continuing operations per share was the same as basic net loss from continuing operations attributable to common stockholders per share for all periods presented, since the effects of any potentially dilutive securities are excluded as they are antidilutive due to the Company’s net losses. Diluted net earnings per share from discontinued operations was calculated in the same manner as diluted net loss from continuing operations per share in accordance with ASC 260, Earnings per Share.

F-12

Comprehensive Loss

Comprehensive loss includes net loss, foreign currency translation adjustments and an employee benefit plan adjustment consisting of changes to unrecognized pension actuarial gains and losses, net of tax.

~~F-12~~

Fair Value Measurements

The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the “exit price.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. An instrument’s level within the hierarchy is based on the lowest level of any significant input to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following is a discussion of the levels established for each input.

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Instruments classified as Level 1 consist of financial instruments such as listed equities and fixed income securities.

Level 2: Inputs other than quoted prices, included in Level 1, that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability. These are inputs for which there is no market data available or observable inputs that are adjusted using Level 3 assumptions.

Pension Plan

An acquired subsidiary of CoolBrands International Inc. (“CoolBrands”) maintained a defined benefit pension plan ("the Plan") covering approximately 90 ~~employees.~~employees and is included in the continuing operations. Subsequent to the acquisition ~~by Coolbrands~~of CoolBrands in 2000, all future participation and all benefits under the Plan were frozen. The Plan provides retirement benefits based primarily on employee compensation and years of service up to the date of acquisition. The Company recognizes in its continuing operations consolidated balance sheet the overfunded or underfunded status of the Plan measured as the difference between the fair value of Plan assets and the benefit obligation. The Company recognizes as a separate component of the continuing operations comprehensive loss the actuarial gains and losses that arise during the period that are not recognized as components of net periodic benefit cost. The Company measures the Plan assets and the Plan obligations as of December 31 and discloses additional information in the Notes to Consolidated Financial Statements about certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition of the actuarial gains and losses.

The calculation of net periodic benefit cost and the corresponding net liability requires the use of critical assumptions, including the expected long-term rate of return on Plan assets and the assumed discount rate. Changes in these assumptions can result in different expense and liability amounts. Net periodic benefit cost increases as the expected rate of return on Plan assets decreases. Future changes in Plan asset returns, assumed discount rates and other factors related to the participants in the Company’s Plan will impact the Company’s future net periodic benefit cost and liabilities. The Company cannot predict with certainty what these factors will be in the future however they are not expected to have a material effect on the Company’s ~~operating results,~~ financial position or cash flows. The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years.

Newly Issued Accounting Pronouncements

In April, ~~10,~~ 2014, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an ~~Entity.~~Entity. The amendments in this ~~accounting standard raise~~ASU raises the threshold for a disposal to qualify as a discontinued operation and requires ~~new~~expanded disclosures ~~of both~~about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, expenses and ~~certain other~~cash flows of discontinued operations. Under the new guidance, the disposal of a component or group of components of a business will be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Early adoption is permitted, but only for disposals that dohave not ~~meet the definition of a discontinued operation.~~been reported in financial statements previously issued. This accounting standard update is effective for annual periods beginning on or after December 15, 2014 and related interim periods, with early adoption allowed. This standard has been adopted by the Company and the impact is incorporated in the Company’s consolidated financial statements and disclosures.

F-13

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. This accounting standard creates common revenue recognition guidance for U.S. GAAP and IFRS. The guidance also requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. This accounting standard update is effective for annual reporting periods beginning after December 15, 2016, and related interim periods. Early adoption is not permitted. The Company is currently evaluating the impact of this standard.

In August 2014, the FASB issued ASU Update No. 2014-15, ~~Presentation of Financial Statements – Going Concern (Subtopic 205-40) (Topic 718),~~ Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU ~~Update No. 2014-15~~ provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. The new requirements are effective for the annual periods ending after December 15, 2016, and for interim periods and annual periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of this standard and has elected to not adopt the standard early.

~~F-13~~F-14

NOTE 2 — DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued Operations ~~– Waste Segment~~

~~On November 15, 2012,~~As described in Note 1, "Operations and Summary of Significant Accounting Policies," on August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc.'s U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab. At closing, Ecolab paid the closing purchase price of $40.5 million, less a $2.0 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. The net proceeds were adjusted by the following items subsequent to the closing: $0.2 million receivable for the final adjusted cash balance, $2.0 million of transaction costs for consulting and legal fees, and the $0.9 million purchased cash balance, net of $0.2 million debt assumed. In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of November 1, 2015. Subsequent to the Sale Transaction, it was determined the $2.0 million holdback would be paid to the Company without any adjustment for working capital. At December 31, 2015, the $2.2 million amount in accounts receivable on the consolidated balance sheet is due from Ecolab and includes the $2.0 million holdback plus $0.2 million final cash adjustment. The $2.0 million holdback was received from Ecolab in January 2016.

As a ~~stock sale~~result of ~~Choice,~~the Sale Transaction a loss of $2.6 million was recorded after the impairment charges described below were recognized in the quarter ended September 30, 2015, and ~~other acquired businesses, including Lawson Sanitation LLC, Central Carting Disposal,~~is included in discontinued operations in the consolidated statement of operations and comprehensive loss. Swisher Hygiene Inc. no longer has any continuing involvement with the operations or cash flows of Swisher International, Inc., ~~FSR Transporting~~ and ~~Crane Services,~~as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior years. In accordance with the criteria specified in ASC 205 Presentation of Financial Statements and ASC 360, Property, Plant and Equipment, these related assets and liabilities are reported as assets of discontinued operations in the consolidated balance sheet.

As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10,Impairment or Disposal of Long-Lived Assets, and an impairment analysis on intangible assets in accordance with ASC 350, Intangible-Goodwill and Other, as of August 31, 2015. Based on the analysis performed, it was determined that ~~comprised~~an impairment of the ~~Waste segment to Waste Services of Florida, Inc. for $123.3 million~~Company’s fixed assets and intangible assets had occurred, resulting in ~~a gain~~an impairment charge of ~~$13.8~~$12.6 million ~~net~~and $10.0 million, respectively, which is reported as part of ~~tax. The Company applied~~ discontinued operations ~~accounting treatment~~in the consolidated statement of operations and ~~disclosures related to this transaction.~~ comprehensive loss as discussed in Note 3, "Goodwill and Other Intangible Assets."

The ~~stock purchase agreement stipulated customary purchase price adjustments related to closing balance sheet working capital targets and in addition, that $12.5 million~~following tables provide a reconciliation of the ~~purchase price consideration would be reserved and held back in escrow by the purchaser ("the holdback amount") and paid subject to financial adjustments regarding defined long-term~~carrying amounts of major classes of assets and ~~2012 third quarter EBITDA targets. Management recorded the holdback amount~~liabilities which are included in discontinued operations in the ~~calculation of the gain on sale of the Waste segment and the amount is classified on the~~accompanying consolidated balance sheet ~~as "Accounts receivable due from sale of discontinued operations"~~ at December 31, ~~2012. Proceeds from~~2014. At December 31, 2015, there were no remaining assets or liabilities of the ~~holdback plus $0.1 million in working capital adjustments were received during the first half of 2013.~~discontinued operations.

	December 31,
Assets of discontinued operations	2014
Current assets:
Cash and cash equivalents	$	7,233
Restricted cash		231
Accounts receivable		18,751
Inventory		15,426
Deferred tax asset		534
Other current assets		1,615
Total current assets		43,790

Property and equipment		37,037
Intangibles		29,446
Other noncurrent assets		1,812
Total noncurrent assets		68,295

Total Assets	$	112,085

F-15

Liabilities of discontinued operations
Current liabilities:
Accounts payable	$	13,119
Accrued payroll and benefits		2,893
Accrued expenses		5,873
Short term obligations		94
Total current liabilities		21,979

Deferred tax liabilities		558
Long term obligations		107
Other long term liabilities		724
Total noncurrent liabilities		1,389

Total liabilities	$	23,368

The following table ~~presents summarized operating~~summarizes the results ~~for these~~of discontinued operations for the ~~fiscal~~ years ended ~~2014, 2013~~December 31, 2015 and ~~2012.~~2014:

	Year Ended December 31,
	2015			2014
Revenue	$	142,713		$	193,757

Cost of sales		66,684			89,101
Route expense		37,599			50,595
Selling, general and administrative		46,538			62,905
Depreciation and amortization		13,494			21,216
Impairments		22,807			8,810
Loss on Sale Transaction		2,615			-
Other (income) expenses, net		(717	)		1,529
Loss from discontinued operations		(46,307	)		(40,399	)
Income tax benefit		43			89
Net loss from discontinued operations	$	(46,264	)	$	(40,310	)

Assets Held For Sale

2014 2013 2012
Revenue $ - $ - $ 60,874
Net (loss) income after taxes and 2012 gain on disposal of $13.8 million - (2,516 ) 7,599

~~Any corporate management overhead charged to the Waste segment in prior year filings has been~~The disposal groups mentioned below are included in ~~continuing~~discontinued operations in the periods subsequent to the discontinuance as the overhead amounts are not expected to change as a result of the sale of the Waste segment. During fiscal year 2013, the Company incurred $2.5 million in expenses related to the discontinued operation as follows: $0.5 million increase to retained worker’s compensation liabilities and $2.0 million in legal fees and a settlement payment related to a contractual dispute involving one of the businesses sold that the Company accepted responsibility to resolve as a term of the sales agreement.Company’s consolidated financial statements.

Net cash of $2.1 million used in connection with discontinued operations for the twelve months ended December 31, 2014 principally represents payment for legal fees and the settlement of a contractual dispute that the Company accepted responsibility to resolve as a part of the sale of the Waste segment. For the twelve months ended December 31, 2013, net cash of $4.6 million used in connection with discontinued operations principally represents the payment of certain liabilities for severance and professional fees, previously accrued as a part of the sale, as well as cash payments related to retained worker’s compensation liabilities and litigation accruals. There were no cash inflows related to discontinued operations in 2014 or 2013.

~~Assets Held For Sale~~

During 2013, the Company commenced an active program to sell certain non-core assets and routes related to its linen and dust operations. ~~Additionally, in~~In 2014, the Company ceased operations at a linen processing ~~plant~~plant. During March 2015, the Board of Directors of the Company approved a resolution to sell the Company’s remaining linen operation and in ~~2013 a chemical manufacturing plant was closed in connection with~~July 2015, the ~~Company’s plant consolidation efforts. In accordance with~~ ~~ASC 360, Property, Plant and Equipment, these assets were classified as assets held for~~Board of Directors approved the sale inof the ~~Consolidated Balance Sheet and the asset balances were adjusted to the lower of historical carrying amounts or fair values.~~ Canadian operations.

The Company recorded impairment charges for the twelve months ended December 31, 2013 of $6.4 million. Included in this charge is $3.1 million that was recorded during the fourth quarter of 2013 as follows: $2.0 million related to the Board of Director’s approval, on November 8, 2013, of additional assets to be disposed of and the resultant adjustment of these assets from net carrying value to fair value; $1.1 million impairment adjustments to existing assets held for sale to reflect reductions in the estimated fair value as a result of events that occurred during the fourth quarter which indicated that the estimated net selling prices will be less than anticipated at the end of the third quarter.

~~F-14~~F-16

The Company completed the sale of the remaining linen operation on May 12, 2015 receiving $4.0 million in cash and notes receivable plus purchased accounts receivables, resulting in a gain of $0.9 million. The gain is included in other income of discontinued operations in the consolidated statement of operations and comprehensive loss. On August 4, 2015, the Company completed the sale of the Canadian operations for $2.6 million in cash and $0.1 million in respect of outstanding accounts payable, net of outstanding accounts receivable. The sale of the Canadian operations resulted in a gain on the sale of $1.4 million, which is included in other income of discontinued operations in the consolidated statement of operations and comprehensive loss.

The Company completed several sales transactions during the last half of 2013 totaling $6.3 million in net sales proceeds including $0.6 million in receivable balances that were contingent primarily upon 2014 revenues generated by certain of the sold assets during defined post-close periods. The resulting $0.2 million gain is included in “Other expense, net” in the consolidated statement of operations and comprehensive loss.

There were no assets held for sale as of December 31, ~~2014. The major classes of assets held for sale as of~~2014 and December 31, ~~2013 are as follows:~~2015.

December 31,
2013
Property and equipment, net $ 2,410
Goodwill 1,272
Customer relationships, net 833
Other, net 5
Total $ 4,520

None of the disposal groups that could be classified as discontinued operations were material, individually or in the aggregate, to the Company’s consolidated financial statements and therefore these results were not separately classified in discontinued operations. The remaining portfolio of assets held for sale did not meet the criteria for discontinued operations as they did not represent operations and cash flows that are clearly distinguished, operationally and for financial reporting purposes consistent with the Company’s strategy of integrating these acquired assets into its existing business operations. Additionally, the Company anticipates maintaining continuing revenues with respect to a the majority of the sold routes and/or customers through the sale of chemical, paper and its other core hygiene and sanitizing products and services.

NOTE 3 ~~— ACQUISITIONS~~

~~2013 Acquisitions~~

During fiscal year 2013, the Company acquired a franchise located in Ottawa, Canada for $0.2 million primarily in cash plus receivables, resulting in a $0.1 million addition to goodwill. This acquisition is immaterial to the Company’s consolidated financial statements and therefore supplemental pro-forma information is not presented.

~~F-15~~

~~2012 Acquisitions~~

~~The following table summarizes the Company’s 2012 acquisitions and the estimated aggregate fair values of the assets acquired and liabilities assumed at the date of acquisition:~~

2012
Number of businesses acquired 4

Net assets acquired:
Accounts receivable and other assets $ 263
Inventory 86
Property and equipment 2,085
Other intangibles
Customer relationships 1,276
Non-compete agreements 120
Trademarks 130
Accounts payable and accrued expenses (42 )
Total net assets acquired 3,918
Goodwill 1,550
Total purchase price 5,468
Less: debt issued or assumed (1,121 )
Less: issuance of shares (37 )
Cash Paid $ 4,310

During 2012, the Company acquired four independent businesses and purchased the remaining non-controlling interest in one of its subsidiaries. The results of operations of these acquisitions have been included in the Company's consolidated financial statements and include $3.1 million in revenue and the related loss was insignificant to the Company's overall net loss from continuing operations. None of these acquisitions were significant individually or in the aggregate to the Company's consolidated financial results and therefore, supplemental pro forma financial information is not presented.

~~F-16~~

~~NOTE 4 — PRIOR PERIOD RECLASSIFICATION~~

In the first quarter of 2014, the Company began implementing a realignment of its field service and sales organization and as a result the primary function of certain job titles has shifted from primarily a sales, to a service focus. The additional service activities involve more frequent field visits to perform preventative maintenance, repairs, evaluation of product and service solutions and required inventory levels. This realignment of the field service and sales organization was implemented in stages during 2014. Payroll expense related to these job titles was historically classified within “Selling, general and administrative expenses” in the Consolidated Statement of Operations and Comprehensive Loss, based on the primary job focuses of sales and administration. Based on the changes in the job functions, the related payroll expense is classified within “Route expense”, which the Company defines as the employee costs incurred to provide service and deliver products to customers. To facilitate comparability between the periods presented in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the twelve months ended December 31, 2013 certain selling, general and administrative expenses have been reclassified to route expense to conform to the current period’s presentation which resulted in an $11.9 million increase in route expense and a $11.9 million decrease in selling, general and administrative expense. The reclassification for the twelve months ended December 31, 2012 resulted in a $12.5 million increase in route expense and a $12.5 million decrease in selling, general and administrative expense. There was no impact to loss from continuing operations, net loss or loss per share as a result of the 2013 and 2012 reclassifications.

~~NOTE 5~~ — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets ~~have been~~were recognized in connection with the Company’s acquisitions and substantially all of the balance iswas expected to be fully deductible for income tax purposes over 15 years. Changes in the carrying amount of goodwill during the ~~years~~year ended December 31, 2014 and ~~2013~~included in discontinued operations were as follows:

2014 2013
Gross balance- beginning $ 5,821 $ 107,228
Additions related to acquisitions (Note 3) - 150
Adjustment to the lower of carrying or fair market value for Assets Held for Sale (Note 2) - (4,703 )
Reclassification of goodwill to Assets Held for Sale (Note 2) - (2,790 )
Dispositions (Note 2) - -

Gross balance – ending 5,821 99,885
Accumulated impairment loss (5,821 ) (94,064 )
Net balance – ending $ - $ 5,821

	2014
Gross balance- beginning	$	5,821
Impairment loss		(5,821	)
Net balance – ending	$	-

The Company’s accounting policy was to perform an annual goodwill impairment test in the fourth quarter or more frequently whenever events or circumstances indicated that goodwill or the carrying value of intangible assets may not be recoverable. On a quarterly basis, we ~~monitor~~monitored the key drivers of fair value to detect the existence of indicators or changes that would warrant an interim impairment test for our goodwill and intangible assets. Due to a shortfall in sales compared to expectations in the quarter ended June 30, 2014, the Company elected to bypass the qualitative analysis step and proceed directly to step 1 of the goodwill impairment test. Step 1 of the goodwill impairment test was performed with the assistance of an independent valuation specialist using the discounted cash flow method (“DCF”.) Based on this analysis, it was determined that the Company’s net book value exceeded its fair value thereby necessitating the performance of step 2 of the goodwill impairment test. The decrease in estimated fair value was driven by lower actual revenue compared to 2014 projections. The growth rates for the second half of 2014 and the first half of 2015 were revised to reflect the lower revenue during the six months ended June 30, 2014. The effect of these revisions resulted in a loss of estimated fair value resulting in a write-off of the remaining goodwill balance with a non-cash impairment charge of $5.8 million during ~~2014.~~

~~In connection with its 2013 fourth quarter evaluation~~2014, which is included in discontinued operations in the consolidated statement of ~~goodwill, the Company elected to bypass the qualitative analysis step~~operations and proceed directly to step 1 of the goodwill impairment test. This decision was based largely on the results of the 2013 third quarter interim impairment test that indicated the Company’s goodwill was at high risk of impairment given the narrow difference identified between fair value and book value. It was determined that the Company’s net book value exceeded its fair value thereby necessitating the performance of step 2 of the goodwill impairment test. In performing Step 2 of the impairment test, with the assistance of valuation specialists, we compared the implied fair value of the reporting unit’s goodwill to its carrying value. This test resulted in a non-cash impairment charge of $93.2 million in 2013. The goodwill impairment can be attributed to the Company’s history of operating losses and continued deterioration of its stock price.comprehensive loss.

We believe the cash flow projections and valuation assumptions used were reasonable and consistent with market participants. The key variables that ~~drive~~drove our cash flows ~~are~~were customer growth and attrition and operational efficiencies. The terminal value growth rate assumption as well as the WACC rate both ~~represent~~represented additional key variables in the DCF model. The estimates and assumptions used are subject to uncertainty.

F-17

Other Intangible Assets

	Weighted-average Amortization Period (Years)			Carrying Amount		Accumulated Amortization			Net		Weighted-average Amortization Period (Years)	Gross Carrying Amount		AccCumulated Amortization			Net Book Value
At December 31, 2014
Customer relationships		8.9		$	50,635	$	(27,838	)	$	22,792	8.9	$	50,635	$	(27,838	)	$	22,797
Non-compete agreements		4			9,098		(8,032	)		1,066	4		9,098		(8,032	)		1,066
Formulas		20			4,544		(767	)		3,777	20		4,544		(772	)		3,772
Trademarks/ Trade names	(A		)		2,151		(340	)		1,811
Trademarks/Trade names											(A)		2,151		(340	)		1,811
Total				$	66,428	$	(36,982	)	$	29,446		$	66,428	$	(36,982	)	$	29,446

At December 31, 2013
Customer relationships		8.9		$	50,635	$	(22,060	)	$	28,575
Non-compete agreements		4			9,098		(6,380	)		2,718
Formulas		20			4,544		(545	)		3,999
Trademarks/ Trade names	(A		)		2,059		(340	)		1,719
Total				$	66,336	$	(29,325	)	$	37,011

(A) Consist of indefinite lived and finite lived intangible assets.

All of the other intangible assets at December 31, 2014 were related to the discontinued operations. As of December 31, 2015, there were no intangible assets remaining due to the Sale Transaction. The fair value of the customer relationships acquired iswere based on future discounted cash flows expected to be generated from those customers. These customer relationships ~~will be~~were amortized on a straight-line basis over five to ten years, which iswas primarily based on historical customer attrition rates. The fair value of the non-compete agreements ~~will be~~were amortized on a straight-line basis over the length of the agreements, typically with terms of five years or less. The fair value of formulas iswas amortized on a straight-line basis over twenty years. ~~As of December 31, 2012, all trademarks and trade names are considered indefinite lived intangibles.~~

~~During 2013, approximately $2.5~~The Company performed an assessment of its proprietary chemical formulas in the quarter ended June 30, 2015 because of initiatives throughout the organization to reduce the number of active stock keeping units (“SKUs”). Upon completion of the assessment and impairment testing, it was determined that the fair value of formulas was lower than the net book value, resulting in an impairment charge of $0.2 million for the quarter ended June 30, 2015, which is included in ~~customer relationships~~discontinued operations in the consolidated statement of operations and ~~non-compete assets were reclassified to assets held for sale as further discussed~~comprehensive loss.

As described above in Note 3,2, “Discontinued Operations and Assets Held for ~~Sale.~~Sale,” ~~The~~the Sale Transaction was completed on November 2, 2015, with an effective date of November 1, 2015. As a result of the Sale Transaction, the Company ~~recorded $0.6~~performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, and ASC 350, Intangible-Goodwill and Other, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s intangible assets had occurred, resulting in an impairment charge of $10.0 million, ~~in impairment losses related to customer relationships and non-compete agreements that was recognized and~~which is included in ~~other expense, net.~~ discontinued operations in the consolidated statement of operations and comprehensive loss.

Amortization expense was ~~$7.7 million, $8.1~~$5.1 million and ~~$8.7~~$7.7 million for the years ended December 31, 2015 and 2014, ~~2013~~respectively, which is included in discontinued operations in the consolidated statement of operations and 2012, respectively. At December 31, 2014, estimated future amortization of separately identifiable intangibles for each of the next five years and thereafter is: 2015 -$6.3 million, 2016 - $4.2 million, 2017 - $3.5 million, 2018 - $3.5 million, 2019 - $3.5 million and thereafter - $6.6 million.comprehensive loss.

NOTE 64 — INVENTORY

Inventory iswas comprised of the ~~following~~ components below at December 31, 2014 and ~~2013:~~is included in current assets of discontinued operations. All inventory was sold in the Sales Transaction, thus inventory balances at December 31, 2015 are zero.

	December 31,				December 31,
	2014		2013		2014
Finished goods	$	12,285	$	11,587	$	12,285
Raw materials		2,781		2,042		2,781
Work in process		360		403		360
Total	$	15,426	$	14,032	$	15,426

F-18

NOTE 75 — PROPERTY AND EQUIPMENT

All of the property and equipment and accumulated depreciation at December 31, 2015 is related to continuing operations and all of the property and equipment and accumulated depreciation at December 31, 2014 is related to discontinued operations. Property and equipment, net as of December 31, ~~2014~~2015 and ~~2013~~2014 consist of the following:

	December 31,						December 31,
	2014			2013			2015			2014
Items in service	$	48,928		$	47,851		$	-		$	48,928
Equipment, laundry facility equipment and furniture		10,276			9,456			-			10,276
Vehicles		2,380			2,723			-			2,380
Computer equipment		2,312			2,480			-			2,312
Computer software		7,378			7,236			27			7,378
Building and leasehold improvements		6,191			6,127			-			6,191
		77,465			75,873			27			77,465
Less accumulated depreciation and amortization		(40,428	)		(32,031	)		(1	)		(40,428	)
Property and equipment, net	$	37,037		$	43,842		$	26		$	37,037

~~Depreciation and amortization~~Discontinued operations’ depreciation expense on property and equipment for the years ended December 2015 and 2014 ~~2013, and 2012~~ was ~~$13.6 million, $14.0~~$8.4 million and ~~$12.3~~$13.5 million, ~~respectively.~~respectively, and is included in discontinued operations in the consolidated statement of operations and comprehensive loss. The cost and accumulated depreciation of fully depreciated assets are removed from the accounts when assets are disposed.

As of December 31, ~~2014~~2015 and ~~2013,~~2014, computer software includes costs of ~~$6.3 million~~zero and ~~$6.1~~$6.3 million, respectively for upgrades to our enterprise reporting management system and the development of our technology platform for field service operations, accounting, billing and collections. The accumulated depreciation was $5.0 million ~~and $4.1 million~~ as of December 31, 2014. The costs and accumulated depreciation are included in noncurrent assets of discontinued operations in the consolidated balance sheet. Software costs capitalized during 2015 and 2014 were $0.1 million and ~~2013,~~$0.3 million, respectively. The weighted average amortization period for capitalized software costs iswas 7 years. Depreciation and amortization expense for capitalized computer software costs included in discontinued operations in the consolidated statement of operations and comprehensive loss was $0.3 million for the year ended December 31, 2015 and $0.9 million for ~~each of~~ the ~~years~~year ended December 31, ~~2014, 2013,~~2014.

There are no capital leases included in property and ~~2012. At~~equipment as of December 31, 2014, estimated amortization of computer software costs for each of the next five years is: 2015 - $0.4 million, 2016 - $0.3 million, 2017 - $0.3 million, 2018 - $0.2 million, and $0.1 million thereafter.

2015. As of December 31, 2014, property and equipment ~~includes~~included $0.4 million in recorded capital leases with $0.2 million in accumulated ~~depreciation.~~depreciation and is included in noncurrent assets of discontinued operations in the consolidated balance sheet. The gross amount of property and equipment recorded under capital leases ~~consists~~as of December 31, 2014 consisted of $0.2 million in computers and $0.2 million in machinery and equipment.

As described above in Note 2, “Discontinued Operations and Assets Held for Sale,” the Sale Transaction was completed on November 2, 2015, with an effective date of ~~December~~November 1, 2015. As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, as of August 31, ~~2013, property and equipment includes $0.9~~2015. Based on the analysis performed, it was determined that an impairment of the Company’s fixed assets had occurred, resulting in an impairment charge of $12.6 million, ~~recorded in capital leases with $0.4 million in accumulated depreciation. The gross amount~~which is reported as part of ~~property and equipment recorded under capital leases consists of $0.2 million in computers, $0.1 million in machinery and equipment and $0.6 million in dish machines.~~discontinued operations.

NOTE 86 — LONG-TERM DEBT AND OBLIGATIONS

The major components of debt as of December 31, 2014 are listed below. The amounts shown for discontinued operations are included in liabilities and ~~2013 consist~~long term liabilities of discontinued operations. Proceeds from the ~~following:~~

December 31,
2014 2013
Notes payable $ 1,193 $ 1,721
Convertible promissory notes, 4.0%: maturing at various dates through 2016 832 2,679
Capitalized lease obligations and other financing 1,044 2,854
Total debt and obligations 3,069 7,254
Long-term debt and obligations due within one year (1,884 ) (5,251 )
Long-term debt and obligations $ 1,185 $ 2,003
Sale Transaction were used to pay off the outstanding debt and Ecolab assumed capital leases in conjunction with the Sale Transaction and thus, the long-term debt and obligations balance as of December 31, 2015 is zero.

F-19

At December 31, 2014, principal debt payments due for each of the next five years and thereafter are: 2015 - $1.9 million, 2016 - $0.5 million, 2017 - $0.3 million, 2018 - $0.3 million, and thereafter – $0.1 million.

	December 31, 2014
	Continuing Operations			Discontinued Operations
Notes payable	$	1,193		$	-
Convertible promissory notes, 4.0%: maturing at various dates through 2016		832			-
Capitalized lease obligations and other financing		843			201
Total debt and obligations		2,868			201
Long-term debt and obligations due within one year		(1,790	)		(94	)
Long-term debt and obligations	$	1,078		$	107

~~Acquisition Related~~ Notes Payable

In connection with certain acquisitions, the Company incurred or assumed notes payable as part of the purchase price. Two of the seller notes payable totaling $1.2 million as of December 31, 2014 ~~are~~were secured by letters of credit and the remaining notes payable ~~are~~were secured by the Company. At December 31, 2014, ~~and 2013,~~ these obligations bore interest at rates ranging between 3.7% and 4.0%.

~~Capital lease obligations~~ The remaining notes were paid in full with the proceeds from the Sale Transaction and ~~Other Financing~~

~~The Company has entered into capitalized lease obligations with third party finance companies to finance~~ the ~~cost~~letters of ~~certain dish machines. At December 31, 2014 and 2013, these obligations bore interest at rates ranging between 4.0% and 18.4%. The Company has also entered into~~credit securing the notes ~~payables with third party finance companies to pay various insurance premiums. At December 31, 2014 and 2013, these obligations bore interest at rates ranging between 2.3% and 2.8%.~~were cancelled.

Convertible promissory notes

During 2012 and 2011, the Company issued eighteen convertible promissory notes with an aggregate principal value of $10.9 million as part of total consideration paid for acquisitions that were recorded at fair value on the date of issuance. The Company ~~makes~~made quarterly cash payments through each note’s maturity date. The ability to settle these notes with shares ~~exist~~existed at the Company’s election into a maximum of 2,823,853 shares of common stock. The Company may ~~settle~~have settled these notes at any time prior to and including the maturity date any portion of the outstanding principal amount, plus accrued interest in a combination of cash and shares of common stock. To the extent that the Company’s common stock iswas part of such settlement, the settlement price iswas the most recent closing price of the Company’s common stock on the trading day prior to the date of settlement. Although none of these notes ~~have been~~were settled ~~to date~~ with shares, if all notes outstanding at December 31, 2014 ~~were to be~~had been settled with shares, the Company would ~~issue~~have issued approximately 444,886 shares of common stock. ~~These notes do not require remeasurement to fair value after the business combination dates.~~

~~During 2011, the Company issued two convertible promissory notes with an aggregate principal value of $3.4 million as part of total consideration paid for acquisitions~~Capital lease obligations and were recorded at fair value on the date of issuance, maturing in 2012 and 2013. The holder was able to convert all or a portion of the principal and interest into shares of the Company’s common stock at any time, but not later than the maturity date at a fixed conversion rate of $5.00 per share. In addition, the Company had the option to deliver at any time prior to and including the maturity date any portion of the outstanding principal and accrued interest in shares of common stock. The conversion price at which the principal and accrued interest subject to settlement would be converted to common stock is the lesser of (i) the volume weighted average price for the five trading days on NASDAQ immediately prior to the date of conversion, and (ii) the fixed conversion rate; provided, however, that the closing price per share of common stock as reported on NASDAQ on the trading day immediately preceding the date of conversion was not less than $5.00. The notes were convertible by the holder into a maximum 675,040 shares of the Company’s common stock although conversion never occurred. The Company made the last required cash payment on these notes during the fourth quarter of 2012. These notes were carried at fair value and the Company adjusted their carrying value to fair value through operating results as described further in Note 9, “Fair Value Measurements."Other Financing

~~Equipment Financing~~

~~In August 2011, the~~The Company entered into an agreement, which provided financing up to $16.4 million for new and used trucks, carts, compactors, and containers for the Waste segment. The financing consisted of one or more fixed rate loans that had a term of five years. The interest rate for borrowings under this facility was determined at the time of each such borrowing and was based on a spread over the five year U.S. swap rate. The commitment letter had an expiration date of February 2012,capitalized lease obligations with a renewal option of six months, if approved. During 2011, the Company made borrowings of $8.9 million at an average interest rate of 3.55%. Separately in August 2011, the Company entered into an agreementthird party finance companies to finance ~~new and replacement vehicles for its fleet that allowed for one or more fixed rate loans totaling, in~~ the aggregate, no more than $18.6 million. The commitment, which expired in June 2012, was secured by Waste segment’s vehicles and containers. The interest rate for borrowings under this facility were determined at the time of the loan and were based on a spread above the U.S. swap rate for the applicable term, either four or five years. Borrowings under this loan commitment were subject to the same financial covenants as the $100.0 million credit facility discussed below and were $6.9 million during 2011. Borrowings under these agreements were subsequently paid off using proceeds from the disposition of the Waste segment as discussed in Note 2, “Discontinued Operations and Assets Held for Sale.”

~~F-20~~

~~2011 Revolving Credit Facilities~~

In March 2011, we entered into a $100.0 million senior secured revolving Credit Facility (the "Credit Facility"), which replaced the Company’s former credit facilities. Under the Credit Facility, the Company had an initial borrowing availability of $32.5 million, which increased to the fully committed $100.0 million upon delivery of our unaudited quarterly financial statements for the quarter ended March 31, 2011 and satisfactioncost of certain ~~financial covenants regarding leverage~~dish machines. At December 31, 2014, these obligations bore interest at rates ranging between 4.0% and coverage ratios and a minimum liquidity requirement, which requirements we met as of March 31, 2011. Borrowings under the Credit Facility were secured by a first priority lien on substantially all existing and subsequently acquired assets, including $25.0 million of cash on borrowings in excess of $75.0 million. Furthermore, borrowings under the facility were guaranteed by all domestic subsidiaries and secured by substantially all assets and stock of domestic subsidiaries and substantially all stock of foreign subsidiaries. Interest on borrowings under the Credit Facility typically accrued at London Interbank Offered Rate (“LIBOR”) plus 2.5% to 4.0%, depending on the ratio of senior debt to “Adjusted EBITDA” (as such term is defined in the credit facility, which included specified adjustments and allowances authorized by the lender)18.4%. The Company also ~~had the option to request swingline loans and borrowings using a base rate. Interest was payable monthly or quarterly on all outstanding borrowings.~~

Borrowings and availability under the Credit Facility were subject to compliance with financial covenants, including achieving specified consolidated Adjusted EBITDA levels and maintaining leverage and coverage ratios and a minimum liquidity requirement. The Credit Facility also placed restrictions on our ability to incur additional indebtedness, to make certain acquisitions, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities or enter into a change of control transaction. In August 2011, the Company entered into ~~an amendment~~notes payables with third party finance companies to ~~the Credit Facility that modified the covenants, including an increase in permitted new indebtedness to $40.0 million.~~pay various insurance premiums. At December 31, 2014, these obligations bore interest at rates ranging between 2.3% and 2.8%. The Credit Facility was subject to other standard default provisions. During 2012, we amended our Credit Facility with Wells Fargo Bank, National Association on each of April 12, 2012, May 15, 2012, June 28, 2012, July 30, 2012, August 31, 2012, September 27, 2012,capitalized leases and ~~October 31, 2012, in each case, primarily to extend the dates~~notes payable were either cancelled or assumed by which we were required to file our 2011 Form 10-K and Forms 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012 and to avoid potential defaults for not timely filing these reports. In addition, the August 31, 2012 amendment reduced the Company’s maximum borrowing limit to $50.0 million, provided that the Company met certain borrowing base requirements. The September 27, 2012 amendment further reduced the Company’s maximum borrowing limit to $25.0 million, provided that the Company met certain modified borrowing base requirements. The October 31, 2012 amendment required the Company to place certain amounts in a collateral account under the sole controlEcolab as part of the administrative agent to meet the Company’s unencumbered liquidity requirements. In connection with the sale of our Waste segment on November 15, 2012, as discussed in Note 2 “Discontinued Operations and Assets Held for Sale~~” we paid off the Credit Facility which resulted in its termination.~~ Transaction.

2014 Revolving Credit Facility

On August 29, 2014, the Company entered into a $20.0 million revolving credit facility, through the execution of a Loan and Security Agreement, by and among the Company, as Guarantor, and certain subsidiaries of the Company, collectively, as Borrower, and Siena Lending Group LLC, as Lender (the “Credit Facility”). The Credit Facility ~~matures~~was paid in full and terminated on ~~August 29, 2017.~~November 2, 2015 in connection with the Sale Transaction. Interest on borrowings under the Credit Facility ~~will accrue~~accrued at the Base Rate plus 2.00% and ~~will be~~were payable monthly. Base Rate iswas defined as the greater of (1) the Prime Rate, (2) the Federal Funds Rate plus 0.50%, or (3) 3.25%. Borrowings and availability under the Credit Facility ~~are~~were subject to a borrowing base and limitations, and compliance with other terms specified in the agreement. Borrowings under the Credit Facility ~~are~~were secured by a first priority lien on certain of the Company’s and its subsidiaries’ assets. The ~~calculated borrowing base as of December 31, 2014 was $13.3 million, of which $4.4 million was outstanding under letters of credit and $8.9 million was unused. The~~ Credit Facility ~~contains~~contained certain customary representations and warranties, and certain customary covenants on the Company’s ability to, among other things, incur additional indebtedness, create liens or other encumbrances, sell or otherwise dispose of assets, pay dividends, and merge or consolidate with other entities or enter into a change of control transaction. The Credit Facility ~~contains~~contained various events of default. ~~The Company was not in default with covenants under the Credit Facility as of December 31, 2014. As of March 30, 2015, the balance on the Credit Facility is $3.2 million.~~

NOTE 97 — FAIR VALUE MEASUREMENTS

The fair value of the above convertible promissory notes issued as part of acquisitions is based primarily on a Black-Scholes pricing model. The significant management assumptions and estimates used in determining the fair value include the expected term and volatility of the Company’s common stock. The expected volatility is based on an analysis of industry peer's historical stock price over the term of the note, which is estimated at approximately 25.0%. The Company believes that using a peer group stock volatility rate is appropriate given the Company’s relatively short history as a public company, which involved a high growth phase and the audit committee investigation, discussed further in Note 16 “Commitments and Contingencies,” which resulted in the delinquent filings of certain of the Company's financial statement filings with the SEC related to 2011 and 2012. The convertible promissory notes are Level 3 financial instruments since they are not traded on an active market and there are unobservable inputs, such as expected volatility used to determine the fair value of these instruments.

~~F-21~~

In addition, during 2011, the Company issued an earn-out that was to be settled in up to 90,909 shares of common stock held in escrow within one year from the date of acquisition or once the acquired business’s revenue achieves an agreed upon level. In 2012, the Company released from escrow all 90,909 shares of common stock to the sellers. The following table is a reconciliation of changes in fair value of the notes and contingent earn-outs that are required to be marked to market each subsequent reporting period under generally acceptable accounting principles, and have been classified as Level 3 in the fair value hierarchy for the years ended December 31, 2014 and 2013:

2014 2013

Balance at beginning of period $ - $ 886
Settlement/conversion of convertible promissory notes - (886 )
Balance at end of period $ - $ -

In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow ~~does fall~~fell below the agreed-to annual minimums, the Company ~~will reimburse~~would have reimbursed the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at December 31, 2014 ~~and December 31, 2013~~ based on a probability assessment of the projected cash flows. This liability would be considered a Level 3 financial instrument given the unobservable inputs used in the projected cash flow model. There have been no transfers between Level 1, 2, and 3 financial instruments during the ~~three~~two years ended December 31, ~~2014.~~2015. This distribution agreement was assumed by Ecolab in conjunction with the Sale Transaction.

F-20

Non-Recurring Fair Value Measurements

There were no assets held for sale at December 31, 2015 and 2014. ~~The asset held for sale balance at December 31, 2013 was $4.5 million.~~ Total impairment adjustments to the estimated fair value of the Company’s assets held for sale for the twelve months ended December 31, 2015 and 2014 were zero and ~~2013 were~~ $3.0 million, ~~and $6.4 million, respectively.~~respectively, which are included in discontinued operations. Fair value iswas based on the estimated net proceeds from the sale of the assets which ~~are~~were derived based on a number of factors; including standard industry multiples of revenues or operating metrics and the status of ongoing sales negotiations and asset purchase agreements where available. Our estimates of fair value ~~are~~were regularly reviewed and subject to changes based on market conditions, changes in the customer base of the operations or routes and our continuing evaluation as to the facility's acceptable sale price. These assets ~~are~~were measured using Level 3 inputs.

~~NOTE 10 — ADVANCES FROM SHAREHOLDERS~~

~~In August 2010,~~ During 2014, in conjunction with its impairment test, the Company ~~borrowed $2.0~~recorded a goodwill impairment charge of $5.8 million, ~~for working capital purposes, pursuant to an unsecured note payable to one~~and is included in discontinued operations in the consolidated statement of ~~its shareholders that bore interest at the short-term Applicable Federal Rate. The note was paid in full following the sale of the Waste segment which is~~operations and comprehensive loss as further discussed in Note ~~2 “Discontinued Operations~~3, “Goodwill and ~~Assets Held~~Other Intangible Assets”. Determining fair value included the use of significant estimates and assumptions. Management utilized an income approach, specifically the discounted cash flow technique as a means for ~~Sale”. As~~estimating fair value. This discounted cash flow analysis required various assumptions including those about future cash flows, customer growth rates and discount rates. Expected cash flows were based on historical customer growth, including attrition, future strategic initiatives and continued long-term growth of the ~~date~~business. The discount rates used for the analysis reflected a weighted average cost of capital based on industry and capital structure adjusted for equity risk and size risk premiums. These estimates could have been affected by factors such as customer growth, pricing, and economic conditions that could have been difficult to predict. These assets were measured using Level 3 inputs.

During the third quarter of 2015, as a result of the ~~Merger,~~Sale Transaction, the Company ~~had borrowed $21.4 million under~~performed an ~~unsecured note payable to one~~impairment analysis of its ~~shareholders. The note bore interest at the one month LIBOR plus 2.0%. Interest accrued~~intangible assets in accordance with ASC 350, Intangible-Goodwill and Other and its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets as of August 31, 2015. Based on the ~~note~~analysis performed, it was ~~included in accrued expenses and was $0.8 million as~~determined that an impairment of the ~~date~~Company’s intangible assets had occurred, resulting in an impairment charge of $10.0 million, which is reported as part of discontinued operations in the consolidated statement of operations and comprehensive loss as discussed in Note 3, "Goodwill and Other Intangible Assets" and an impairment of the ~~Merger.~~Company’s fixed assets had occurred, resulting in an impairment charge of $12.6 million, which is reported as part of discontinued operations in the consolidated statement of operations and comprehensive loss as discussed in Note 5, "Property and Equipment." These ~~advances plus accrued interest~~assets were ~~converted into equity upon completion of the Merger.~~measured using Level 3 inputs.

NOTE 118 —OTHER RELATED PARTY TRANSACTIONS

The Company paid fees for training course development and utilization of the delivery platform from a company, the majority of which iswas owned by a partnership in which a former director and two former executives of the Company ~~have~~had a controlling interest. Fees paid during fiscal years ~~2014, 2013~~2015 and ~~2012~~2014 were $0.1 million in each of the ~~three years.~~two years and are included in discontinued operations in the consolidated statement of operations and comprehensive loss.

The Company purchased chemical products from an entity owned, in full or in part, by a Company employee. Purchases were ~~$5.4 million, $7.2 million~~zero and ~~$7.4~~$5.4 million for the fiscal years ended 2015 and 2014, ~~2013,~~respectively, and ~~2012, respectively.~~are included in discontinued operations. At December 31, ~~2014~~2015 and ~~2013,~~2014, the Company ~~has~~had zero and $0.3 ~~million and $0.6~~ million included in accounts payable of discontinued operations to these entities, respectively.

During the year ended December 31, ~~2014,~~2015, the Company was obligated to make lease payments pursuant to certain real property and equipment lease agreements with employees that were former owners of acquired companies. During ~~2014, 2013,~~2015 and ~~2012,~~2014, the Company paid ~~$0.9 million, $1.2~~$0.6 million and ~~$1.3~~$0.9 million, respectively, related to these ~~leases.~~leases and the amounts are included in discontinued operations in the consolidated statement of operations and comprehensive loss.

In connection with the acquisition of Choice, we entered into capital leases that had initial terms of five or ten years with companies owned by former shareholders of Choice, to finance the cost of leasing office buildings and properties, including warehouses. The Company sold its Waste segment, which consisted principally of Choice, during the fourth quarter of 2012, as more fully described in Note 2, “Discontinued Operations and Assets Held for Sale,” and in connection therewith transferred all remaining capital lease obligations to the buyers.

~~F-22~~

NOTE 129 — INCOME TAXES

Net loss from continuing operations before income taxes for the years ended December 31, ~~2014, 2013~~2015 and ~~2012~~2014 includes:

2014 2013 2012
Domestic $ (42,457 ) $ (152,061 ) $ (61,400 )
Foreign (4,440 ) (1,065 ) (622 )

Net loss from continuing operations before income taxes $ (46,897 ) $ (153,126 ) $ (62,022 )

F-21

~~The components of~~

	2015			2014
Domestic	$	(11,326	)	$	(6,498	)
Net loss from continuing operations before income taxes	$	(11,326	)	$	(6,498	)

Net loss from discontinued operations before income taxes for the years ended December 31, 2015 and 2014 includes:

	2015			2014
Domestic	$	(45,441	)	$	(35,959	)
Foreign		(866	)		(4,440	)
Net loss from discontinued operations before income taxes	$	(46,307	)	$	(40,399	)

There is no income tax ~~(benefit)~~benefit or expense on continuing operations for the years ended December 31, ~~2014, 2013~~2015 and ~~2012 includes:~~2014.

The components of the income tax benefit on discontinued operations for the years ended December 31, 2015 and 2014 include:

	2014			2013			2012			2015			2014
Current Federal, state and foreign	$	2		$	(41	)	$	383		$	(19	)	$	2
Deferred:
Federal and state		13			(2,596	)		18,565			(24	)		13
Foreign		(104	)		43			(195	)		-			(104	)
Total income tax (benefit) expense	$	(89	)	$	(2,594	)	$	18,753
Total benefit from income taxes										$	(43	)	$	(89	)

A reconciliation of the statutory U.S. Federal income tax rate to the Company’s effective income tax rate applicable tofor continuing operations for the years ended December 31, ~~2014, 2013,~~2015 and ~~2012~~2014 is as follows:

	2014			2013			2012			2015			2014

U.S. Federal statutory rate		35	%		35	%		35	%		34	%		35	%
State and local taxes, net of Federal benefit		3			3			3			3			4
Goodwill impairment		(1	)		(3	)		-
Other permanent expenses		(1	)		-			-			(6	)		-
Change in valuation allowance		(36	)		(33	)		(68	)		(31	)		(39	)
Effective income tax rate		-	%		2	%		(30	) %		-	%		-	%

~~F-23~~

Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The major components of deferred tax assets and liabilities from continuing operations are as follows:

2014 2013
Deferred tax assets
Basis difference in goodwill $ 26,449 $ 29,040
Net operating loss carryforward 55,862 39,772
Basis difference in other intangible assets 3,462 2,838
Stock based compensation 3,498 3,382
Allowance for uncollectible receivables 1,184 908
State basis difference in property and equipment 890 916
Inventory 550 1,559
Accrued liabilities 1,827 2,205
Other 127 127
Total deferred income tax assets 93,849 80,747
Valuation allowance (86,784 ) (71,363 )
Net deferred tax assets 7,065 9,384

Deferred tax liabilities
Basis difference in property and equipment 7,089 9,502
Total deferred tax liabilities 7,089 9,502

Total net deferred income tax liabilities $ 24 $ 118

The net deferred income tax liability of $0.1 million as of December 31, 2014 consists of the current asset of $0.5 million and non-current liability of $0.6 million. The net deferred income tax liability of $0.1 million as of December 31, 2013 consists of the current asset of $0.9 million and non-current liability of $1.0 million.

F-22

For the year ended December 31, 2013, there was a deferred tax liability associated with excess book over tax goodwill as it relates to the Company’s Canadian subsidiary. As goodwill is considered to be an indefinite lived intangible, this associated deferred tax liability is not allowed to be netted with other deferred tax assets in determining the need for a valuation allowance. This resulted in an overall net deferred tax liability after applying the valuation allowance.

	2015			2014
Deferred tax assets
Capital loss carryforward	$	50,373		$	-
Net operating loss carryforward		14,319			11,007
Accrued liabilities		197			-
Other		22			-
Total deferred income tax assets		64,911			11,007
Valuation allowance		(64,911	)		(11,007	)
Net deferred tax assets		-			-

Deferred tax liabilities
Total deferred tax liabilities		-			-

Total net deferred income tax liabilities	$	-		$	-

Due to the impairment of goodwill for book purposes as of June 30, 2014, a deferred tax asset exists related to goodwill for the Canadian subsidiary. Given the change from 2013 to 2014, from a deferred tax liability to a deferred tax asset, a tax benefit for 2014 of approximately $0.1 million was recognized.

On September 13, 2013 the U.S. Department of the Treasury issued final regulations that provide guidance on capitalization of tangible property. These regulations will result in our adoption of certain accounting method changes with respect to property and equipment, inventory and supplies. We are currently analyzing these accounting method changes, which will be adopted during the 2015 tax year, but we do not believe they will have a material impact on the consolidated financial statements.

The Company has incurred significant net losses for financial reporting purposes. Recognition of deferred tax assets will require generation of future taxable income. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. During the twelve month period ended December 31, ~~2014,~~2015, the Company concluded that the likelihood of realization of the benefits associated with its ~~U.S.~~ deferred tax assets does not reach the level of more likely than not. As a result, the Company continues to recognize a full valuation allowance on all ~~U.S.~~ deferred tax assets as of at December 31, ~~2014.~~2015. As of each reporting date, the Company will consider new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. ~~The Company does not consider the deferred tax liabilities related to indefinite lived intangible assets when determining the need for a valuation allowance.~~

AtThe December 31, ~~2014 and 2013,~~2015, net operating loss (“NOL”) ~~carryforwards~~carryforward for federal income tax purposes ~~were $145.9~~is $38.1 million for continuing operations. The federal and ~~$104.4 million. The Federal NOL’s~~state NOLs will begin to expire in ~~2030~~2029.

The Sale Transaction resulted in capital losses for tax purposes. However, due to various tax limitations, including tax matters included in the terms of the Sale Transaction and some of which are controlled by Ecolab, we are unable to determine the ~~various state NOL’s will begin to~~amount of capital loss that can be recognized until filing the tax returns. In addition, any capital loss recognized can only be deducted against capital gains and would become a capital loss carryforward which would expire ~~between the years 2025 and 2030.~~in 2020.

We have no recorded uncertain tax positions, therefore there would be no impact to the effective tax rate. The Company includes interest and penalties accrued in the consolidated financial statements as a component of interest expense. No significant amounts were required to be recorded as of December 31, ~~2014~~2015 and ~~2013~~2014 or during the ~~three~~two year period ended December 31, ~~2014.~~2015. The tax years ended December 31, ~~2011~~2012 through December 31, ~~2014~~2015 are considered to be open under statute and therefore may be subject to examination by the Internal Revenue Service and various state jurisdictions. We do not expect the unrecognized tax benefits to change significantly over the next 12 months.

There are no deferred tax assets or liabilities of discontinued operations at December 31, 2015 due to the Sale Transaction. The major components of deferred tax assets and liabilities from discontinued operations as of December 31, 2014 are as follows:

F-23

	2014
Deferred tax assets
Basis difference in goodwill	$	26,449
Net operating loss carryforward		44,855
Basis difference in other intangible assets		3,462
Stock based compensation		3,498
Allowance for uncollectible receivables		1,184
State basis difference in property and equipment		890
Inventory		550
Accrued liabilities		1,827
Other		127
Total deferred income tax assets		82,842
Valuation allowance		(75,777	)
Net deferred tax assets		7,065

Deferred tax liabilities
Basis difference in property and equipment		7,089
Total deferred tax liabilities		7,089

Total net deferred income tax liabilities	$	24

The total net deferred income tax liability of $0.1 million as of December 31, 2014 is classified between other current assets of $0.5 million and noncurrent liability of $0.6 million. Due to the Sale Transaction, these deferred tax assets and liabilities are now reflected in discontinued operations.

Due to the impairment of goodwill for book purposes as of June 30, 2014, a deferred tax asset existed related to goodwill for the Canadian subsidiary. Given the change from 2013 to 2014, from a deferred tax liability to a deferred tax asset, a tax benefit for 2014 of approximately $0.1 million was recognized and is included in discontinued operations.

For the year ended December 31, 2014, there was a deferred tax liability associated with excess book over tax tradenames as it relates to a U.S. subsidiary of the Company. Since tradenames are considered to be an indefinite lived intangible, the associated deferred tax liability is not allowed to be netted with other deferred tax assets in determining the need for a valuation allowance. This resulted in an overall net deferred tax liability after applying the valuation allowance.

Due to the impairment of tradenames for book purposes in the third quarter of 2015, a deferred tax asset now exists related to tradenames for a U.S. subsidiary. Given the change from 2014 to 2015 from a deferred tax liability to a deferred tax asset, a tax benefit for 2015 was recognized and is included in discontinued operations.

After the Sale Transaction, the net operating loss (“NOL”) carryforwards for federal income tax purposes were $139.6 million. The federal and state NOL relating to the discontinued operations were acquired by Ecolab.

F-24

NOTE 1310 — EQUITY MATTERS

Comprehensive Loss

A summary of the changes in each component of accumulated other comprehensive loss for the year ended December 31, ~~2014~~2015 is provided below:

Foreign Exchange Defined Benefit Plan Total
Balance at December 31, 2013 $ (94 ) $ (435 ) $ (529 )
Current period other comprehensive loss (31 ) (747 ) (778 )
Balance at December 31, 2014 $ (125 ) $ (1,182 ) $ (1,307 )

	Foreign Exchange			Defined Benefit Plan			Total
Balance at December 31, 2014	$	(125	)	$	(1,182	)	$	(1,307	)
Current period other comprehensive income		125			(82	)		43
Balance at December 31, 2015	$	-		$	(1,264	)	$	(1,264	)

Stock Based Compensation

In November 2010, our board of directors approved, subject to shareholder approval, the Swisher Hygiene Inc. 2010 Stock Incentive Plan (the “SIP Plan”) to attract, retain, motivate and reward key officers and employees. The SIP Plan, which was approved by shareholders in May 2011 ~~allows~~allowed for the grant of stock options, restricted stock units and other equity instruments up to a total of 1,140,000 shares of the Company’s common stock. On November 1, 2015 in connection with the Sale Transaction, the change of control under the SIP Plan was triggered and all outstanding stock options became vested. Participants were allowed a period of time to exercise the options, then all unexercised outstanding stock options were cancelled February 2, 2016. On November 5, 2015, as a consequence of the Sale Transaction, the Board of Directors approved the cancellation of outstanding vested and deferred restricted stock units and the payment of $1.05 for each share underlying the restricted stock units in lieu of issuing shares of stock as provided for in the terms of the Restricted Stock Unit plan documents. The payment for the restricted stock units was paid to recipients on January 15, 2016. Effective February 19, 2016, the SIP Plan was terminated by the Board of Directors.

All options ~~are~~were exercisable at a price equal to the closing market value of the Company’s common stock on the date immediately preceding the grant. Options generally ~~vest~~vested in four equal annual installments beginning on the first anniversary of the grant date and generally ~~expire~~expired ten years from the date of grant. Restricted stock units ~~are~~were issued at the closing market value of the Company’s common stock on the date immediately preceding the grant and generally ~~vest~~vested over four years with the first vesting occurring twelve months after the award and the remaining vesting ~~occurring~~occurred on the subsequent anniversary dates of the award. Recipients of both options and restricted stock units ~~may~~were not allowed to sell or transfer their shares until the recipient ~~receives~~received the shares underlying the award.

Stock Option Activity

A summary of the Company’s stock option activity and related information for ~~2014~~2015 and ~~2013~~2014 is as follows:

Outstanding Options
Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in millions)

Balance at December 31, 2012 305,366 $ 43.84
Options granted 321,632 $ 7.89
Options cancelled (101,118 ) $ 46.14
Options exercised -
Balance at December 31, 2013 525,880 $ 22.05
Options granted 378,000 $ 4.10
Options cancelled (194,634 ) $ 18.00
Options exercised -
Balance at December 31, 2014 709,246 $ 13.59 8.66 $ -

Expected to Vest after December 31, 2014 138,094 $ 12.21 8.47 $ -
Exercisable at December 31, 2014 153,924 $ 33.85 7.05 $ -

F-25

	Outstanding Options
	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)

Balance at December 31, 2013		525,880		$	22.05
Options granted		378,000		$	4.10
Options cancelled		(194,634	)	$	18.00
Options exercised		-
Balance at December 31, 2014		709,246
Options granted		-
Options cancelled		(222,033	)	$	13.93
Options exercised		-
Balance at December 31, 2015		487,213		$	13.45		0.1	$	-

Expected to Vest after December 31, 2015		-						$	-
Exercisable at December 31, 2015		487,213		$	13.45		0.1	$	-

The aggregate intrinsic value ~~represents~~represented the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted average exercise price multiplied by the number of options outstanding or exercisable. Total intrinsic value of options at time of exercise was $0.0 million ~~$0.0 million~~for 2015 and ~~$0.2 million for~~ 2014, ~~2013 and 2012,~~ respectively. The weighted average grant-date fair value of options granted was $1.47 ~~$2.80 and $7.20~~ for ~~2014, 2013 and 2012, respectively.~~

~~F-25~~

2014. There were no options granted in 2015.

In connection with the Merger, options previously issued by CoolBrands that were outstanding at the date of the Merger were fully vested and all related compensation expense was recognized by CoolBrands prior to November 2, 2010, the Merger date. At December 31, 2012, 17,500 options remain outstanding and exercisable at a weighted average price of $7.89, weighted average remaining contractual life of 1.6 years and an aggregate intrinsic value of $0.2 million. At December 31, 2013, 17,500 options remain outstanding and exercisable at a weighted average price of $7.89, weighted average remaining contractual life of 0.6 years and an aggregate intrinsic value of $0.0 million. At December 31, 2014, 6,000 options ~~remain~~remained outstanding and exercisable at a weighted average price of $11.50, weighted average remaining contractual life of 0.2 years and an aggregate intrinsic value of $0.0 million. At December 31, 2015, none of the options remained outstanding and exercisable.

The exercise prices for options granted during 2014 ~~and 2013~~ ranged from $4.04 to $4.80 per ~~share and $5.90 to $9.30 per share, respectively.~~ share. There were no options granted in 2015.

As noted above, all unexercised options at February 2, 2016 were cancelled.

Restricted Stock Units

A summary of the Company’s restricted stock activity for ~~2014~~2015 and ~~2013~~2014 is as follows:

	Number of Restricted Stock Units			Weighted - Average Grant Date Fair Value		Aggregate Intrinsic Value (in millions)		Number of Restricted Stock Units			Weighted - Average Grant Date Fair Value		Aggregate Intrinsic Value (in millions)

Balance at December 31, 2012		89,660		$	51.47	$	1.6
Granted		32,229		$	12.32
Vested		(66,921	)	$	31.57
Forfeited		(16,782	)	$	40.53
Balance at December 31, 2013		38,186		$	56.06	$	0.2		38,186		$	56.06	$	0.2
Granted		53,873		$	3.71				53,873		$	3.71
Vested		(73,786	)	$	17.67				(73,786	)	$	17.67
Forfeited		(11,507	)	$	42.26				(11,507	)	$	42.26
Balance at December 31, 2014		6,766		$	81.38	$	-		6,766
Granted									-
Vested									(6,748	)	$	77.39
Forfeited									(18	)	$	28.83
Balance at December 31, 2015									-		$	-	$	-

F-26

There were no restricted stock units granted in 2015 as the Directors received a cash payment in lieu of a restricted stock unit grant. As noted above, the outstanding restricted stock units at November 5, 2015 were cancelled by the Board of Directors and recipients were paid $1.05 per share in lieu of receiving shares of stock.

Stock Based Compensation

The Company measured and recognized all stock based compensation at fair value at the date of grant and recognized compensation expense over the requisite service period for awards expected to vest. Stock based compensation cost in 2014 for stock options asgranted were calculated by the Company using Black-Scholes option-pricing model with the following assumptions:

2014 2013 2012

Expected dividend yield - - -
Risk free interest rate 1.9% - 2.0 % 1.5% - 1.9 % 0.9% - 1.2 %
Expected volatility 32.70 % 30.70 % 30.70 %
Expected life (years) 6.25 6.25 6.25

	2014

Expected dividend yield		-
Risk free interest rate		1.9% - 2.0	%
Expected volatility		32.70	%
Expected life (years)		6.25

The expected dividend yield was assumed to be zero as we ~~have~~had not paid, and dodid not anticipate paying, cash dividends on our shares of common stock. The risk-free interest rate iswas determined based on a yield curve of U.S. treasury rates based on the expected life of the options granted. The expected volatility was based on an analysis of industry peers historical stock price and the terms of the equity awards. The Company ~~believes~~believed that using a peer group stock volatility rate iswas appropriate given the Company’s relatively short history as a public company, which involved a high growth phase and the audit committee investigation discussed further in Note 1513 “Commitments and Contingencies,” both of which occurred in 2012. The expected life is based on the simplified method as we dodid not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected life of our stock options. The Company ~~estimates~~estimated forfeitures based on estimated turnover by relevant employee categories. The Company ~~recognizes~~recognized stock based compensation on a straight line basis over the requisite service period.

~~F-26~~

For the years ended December 31, ~~2014, 2013~~2015 and ~~2012,~~2014, the Company recognized stock based compensation expense of $0.7 million and $1.7 million, ~~$2.9 million and $3.5 million,~~ respectively, in discontinued operations in the consolidated statements of operations for both stock options and restricted stock units. Due to the change in control as a result of the Sale Transaction, stock compensation through 2018 of $0.4 million was accelerated and recognized in 2015 and is included in the $0.7 million stock compensation expense. At December 31, ~~2014, the total~~2015 there were no unrecognized compensation costs related to outstanding stock options and restricted stock ~~units is $1.0 million.~~

Subsequent to the Company’s notification from NASDAQ in June of 2013, that indicated the Company had completed all outstanding filing requirements and had regained compliance with NASDAQ listing rules, the Company was in a position to settle previously vested RSUs. During 2013, the Company issued the underlying 832,819 shares of common stock and withheld 274,061 shares to cover the required statutory withholding tax totaling $0.2 million, which was determined based on the closing price of our common stock on the date of issuance. These shares are considered retired under the provisions of the Swisher Hygiene Inc. 2010 Stock Incentive Plan. See Note 16, "Commitments and Contingencies" - in the Other Related Matters section.units.

NOTE 1411 — RETIREMENT PLAN

An acquired subsidiary of CoolBrands maintained a defined benefit pension plan (the "Plan") covering substantially all salaried and certain executive employees. Subsequent to the acquisition of this subsidiary in 2000 by CoolBrands, all future participation and all benefits under the Plan were frozen. The Plan provides retirement benefits based primarily on employee compensation and years of service up to the date of acquisition. As part of the Merger, on November 2, 2010, Swisher Hygiene Inc. recorded the net underfunded pension obligation of $0.6 million. In December 2015, the Company sent a notice of plan termination to participants and expects to terminate the Plan in 2016. In connection with the termination, the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years.

The following table reconciles the changes in benefit obligations and Plan assets as of December 31, ~~2014~~2015 and ~~2013~~2014 and reconciles the funded status to accrued benefit cost at December 31, ~~2014~~2015 and ~~2013:~~2014:

Benefit Obligation (In thousands)

At December 31, 2012 $ 3,421
Interest cost 125
Actuarial gain (353 )
Benefit payments (117 )
At December 31, 2013 3,076
Interest cost 139
Actuarial loss 697
Benefit payments (117 )
At December 31, 2014 $ 3,795

F-27

Plan Assets (In thousands)

At December 31, 2012 $ 2,045
Actual return on plan assets 272
Employer contributions 21
Benefit payments (117 )
At December 31, 2013 2,221
Actual return on plan assets 108
Employer contributions 98
Benefit payments (117 )
At December 31, 2014 $ 2,310

	Benefit Obligation (In thousands)

At December 31, 2013	$	3,076
Interest cost		139
Actuarial loss		697
Benefit payments		(117	)
At December 31, 2014		3,795
Interest cost		139
Actuarial gain		(185	)
Benefit payments		(129	)
At December 31, 2015	$	3,620

	Plan Assets (In thousands)

At December 31, 2013	$	2,221
Actual return on plan assets		108
Employer contributions		98
Benefit payments		(117	)
At December 31, 2014		2,310
Actual return on plan assets		(66	)
Employer contributions		93
Benefit payments		(129	)
At December 31, 2015	$	2,208

As of December 31, ~~2014~~2015 and ~~2013,~~2014, the net underfunded status of the defined benefit plan is ~~$1.5~~$1.4 million and ~~$0.8~~$1.5 million, respectively, which is recognized as accrued benefit cost in other long-term liabilities on the Consolidated Financial Statements. Unrecognized (gains) losses recorded in accumulated other comprehensive loss in the consolidated financial statements were ($~~1.2) million, ($0.5)~~1.3) million and ~~$0.1~~($1.2) million for the periods ended December 31, 2015 and 2014, ~~2013 and 2012,~~ respectively.

~~F-27~~

The following table provides the components of the net periodic benefit cost (income) for each of the respective fiscal years:

	2014			2013			2012
										2015			2014
Interest cost	$	139		$	125		$	131		$	140		$	139
Expected return on Plan assets		(166	)		(149	)		(138	)		(172	)		(166	)
Recognized net actuarial loss		8			27			21			33			8
Net periodic benefit cost (income)	$	(19	)	$	3		$	14		$	1		$	(19	)

The key assumptions used in the measurement of the benefit obligation are the discount rate and the expected return on Plan assets for each of the respective years are:

	2014			2013			2012			2015			2014

Discount rate		3.8	%		4.6	%		3.7	%		3.8	%		3.8	%
Expected return on Plan assets		7.5	%		7.5	%		7.5	%		7.5	%		7.5	%

The rate used to discount pension benefit plan liabilities was based on the Citigroup Pension Discount Curve at December 31, ~~2014~~2015 and ~~2013.~~2014. The estimated future cash flows for the pension obligation were matched to the corresponding rates on the yield curve to derive a weighted average discount rate.

The expected return on Plan assets was developed by determining projected stock and bond returns and then applying these returns to the target asset allocations of the employee benefit trusts, resulting in a weighted average return on Plan assets. The actual historical returns of the Plan assets were also considered.

~~Based on~~

F-28

The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the ~~latest actuarial report as of December 31, 2014,~~Plan in 2016. In connection with the termination, the Company ~~expects that~~will fund the Plan so there will be no minimum regulatory funding ~~requirements~~requirement in 2016. Since the Company will fund the total Projected Benefit Obligation of ~~$0.1~~$3.6 million, ~~that~~there will ~~need to~~ be ~~made during fiscal 2015.~~

~~Expected~~no expected benefit payments under the Plan ~~over~~in future ~~years are: 2015 - $0.1 million, 2016 - $0.2 million, 2017 - $0.2 million, 2018 - $0.2 million, 2019 - $0.2 million and 2020 to 2024 – $1.0 million.~~years.

Plan Assets

The Company’s investment strategy is to obtain the highest possible return commensurate with the level of assumed risk. Investments are well diversified within each of the major asset categories. The Company’s allocation of Plan assets and target allocations are as follows:

	Fair Value Measurements				Fair Value Measurements
	Level 1 as of December 31,				Level 1 as of December 31,
	2014		2013		2015		2014
Equities:
U. S.	$	1,116	$	1,205	$	919	$	1,116
International		337		340		199		337
Fixed Income:
U. S.		560		554		692		560
International		82		81		93		82
Cash, cash equivalents and other		215		51		305		215
Total	$	2,310	$	2,231	$	2,208	$	2,310

~~F-28~~

The U.S. and International equities are actively traded on a public exchange and are considered Level 1 assets. The fixed income securities are corporate and government bonds that are valued based on prices in active markets for identical transactions and are considered Level 1 assets. There were no Plan assets categorized as Level 2 or Level 3 as of December 31, ~~2014~~2015 or ~~2013.~~2014. There were no significant transfers between Level 1, 2, or Level 3 during the fiscal years ~~2014~~2015 or ~~2013.~~2014. See Note 1, “Operations and Summary of Significant Accounting Policies,” for a description of the fair value hierarchy.

NOTE 1512 — LOSS PER SHARE

Basic net loss from continuing operations and discontinuing operations attributable to common stockholders per share is computed by dividing the applicable net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Shares of common stock underlying outstanding stock options of which the market price of the common stock is lower than the exercise price of the related options were not considered for any dilutive earnings per share calculation. Shares of common stock underlying unvested restricted stock awards of ~~6,766, 38,234~~zero and ~~395,180~~6,766 were not included in the computation of diluted loss per share for 2015 and 2014, ~~2013 and 2012,~~ respectively, assince their inclusion would be anti-dilutive.

NOTE 1613 — COMMITMENTS AND CONTINGENCIES

F-29

Securities Litigation

~~Between March 30,~~

On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina as part of MDL No. 2384, captionedcaption In re Swisher Hygiene, Inc. Securities and Derivative ~~Litigation.~~Litigation ~~In response, on~~, MDL No. 2384. On August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there. On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendants' time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the Arsenault derivative action, pending the outcome of the securities class ~~actions.~~

actions, which as previously disclosed were subsequently settled in August 2014. On April 24, 2013, lead plaintiffs filed their first amended consolidated class action complaint (the "Class Action Complaint") asserting similar claims as those previously alleged as well as additional allegations stemming fromFebruary 9, 2016, the Company's restated financial statements. The Class Action Complaint also named the Company's former Senior Vice President and Treasurer as an additional defendant who was later dismissed from the case. On June 24, 2013, defendants moved to dismiss the Class Action Complaint. Briefing on the motions to dismiss was completed on August 9, 2013.

~~F-29~~

On July 11, 2013, a purported stockholder filed a derivative action on behalf of the Company in the General Court of Justice, Superior Court Division in the State of North Carolina, Mecklenburg County, captioned Borthwick v. Berrard, et. al., No. 13-CVS-12397. The action asserted claims against the Company as a nominal defendant, its former CEO and former CFO, and certain former and current Company directors for breaches of fiduciary duties, gross mismanagement, abuse of control, waste of corporate assets, and aiding and abetting thereof in connection with the Company's restatement of its financial statements. Among other things, the action sought damages on behalf of the Company and an order directing the Company to implement corporate governance reforms. On August 7, 2013, the Company filed a notice to remove the action from the General Court of Justice, Superior Court Division in the State of North Carolina, Mecklenburg County to the Western District of North Carolina. On August 30, 2013, the Company moved to consolidate this action with the actions previously consolidated before8, 2015, the Western District of North Carolina ruled on the motions to dismiss. The Western District of North Carolina dismissed plaintiffs' federal securities claims and ~~to stay~~certain of their state law claims. All claims against the ~~action. On September 25, 2013,~~former CFO were dismissed. After issuing its ruling, the Western District of North Carolina ~~granted~~recommended by letter to the ~~Company's motion~~MDL Panel that the action be transferred back to ~~consolidate and stay~~ the ~~action. On October 23, 2014, following its approval of the settlement of the securities class actions, the Western~~Southern District of North Carolina set a briefing schedule whereby the Company, as nominal defendant, filed a motion to dismiss the derivative action on November 4, 2014. Pursuant to the schedule, the remaining defendants did not need to file any motions to dismiss until after the Court ruled on the Company's motion.Florida. On ~~December 10, 2014, the parties filed a Stipulation and Proposed Order for the dismissal of the complaint filed in this action with prejudice. On December 11, 2014,~~July 16, 2015, the Western District of North Carolina issued an order staying all proceedings in the action pending a determination by the MDL Panel on its recommendation. Thereafter, the MDL Panel issued a Conditional Remand Order, remanding the action to the Southern District of Florida, which was finalized and filed on July 28, 2015. On September 4, 2015, as requested by the Southern District of Florida, the parties submitted a Joint Status Report. On September 9, 2015, the Southern District of Florida issued an Order to Show Cause as to why the remaining state law claims should not be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3). On September 18, 2015, the parties filed their respective responses to the Order to Show Cause. On September 21, 2015, the Southern District of Florida issued an order dismissing the ~~Borthwick~~remaining state law claims in the action ~~with prejudice.~~

without prejudice on subject matter jurisdiction grounds pursuant to 28 U.S.C. § 1367(c)(3). On ~~December 17, 2013,~~November 6, 2015, the parties reached a ~~purported stockholder commenced a putative securities class action on behalf of purchasers~~settlement of the matter. The terms of the settlement are confidential. The Company's ~~common stock~~financial obligation under the settlement will be covered by insurance and accordingly, the terms of the settlement did not have a material effect on the Toronto Stock Exchange or any other Canadian trading platforms in the Ontario Superior Court of Justice, captioned Edwards v. Swisher Hygiene, Inc., et al., CV 13-20282 CP, against the Company, the former CEO and former CFO. The action alleges claims under Canadian law for alleged misrepresentations of the Company's financial position relating to its business acquisitions. On February 13, 2014, a Fresh Statement of Claim and Fresh Notice of Action were filed, adding an additional named plaintiff. On March 28, 2014, another purported stockholder commenced a putative securities class action on behalf of purchasers of the Company's common stock on the Toronto Stock Exchange or any other Canadian trading platforms in the Ontario Superior Court of Justice, captioned Phillips v. Swisher Hygiene, Inc., et al., CV 14-00501096-0000, against the Company, the former CEO, the former CFO and the Company's former Senior Vice President and Treasurer. The action alleges claims under Canadian law stemming from the Company's restatement.

F-30

~~Other Matters~~On September 8, 2015, a lawsuit seeking to be certified as a class action (Paul Berger v. Swisher Hygiene Inc., et al., Case No. 2015 CH 13325 (Ill. Cir. Ct. Cook Co.)) was filed in the Circuit Court of Cook County, Illinois County Department, Chancery Division by Paul Berger, on behalf of himself and all others similarly situated, against Swisher Hygiene Inc., the members of Swisher Hygiene Inc.’s board of directors, individually, and Ecolab in connection with the Sale Transaction. The plaintiff has alleged that (i) faced with an ongoing investigation by the Securities and Exchange Commission and the USAO, the individual defendants embarked upon a self-interested scheme to sell off Swisher International, Inc.’s assets and to liquidate Swisher Hygiene Inc., (ii) the individual defendants, through an alleged insufficient process, caused Swisher Hygiene Inc. to agree to sell substantially all of its assets for insufficient consideration, (iii) each member of Swisher Hygiene Inc’s. Board of Directors is interested in the Sale Transaction and the plan of dissolution, and (iv) the proxy statement was materially misleading and/or incomplete. The causes of action set forth in the complaint are (i) a claim for breaches of the fiduciary duties of good faith, loyalty, fair dealing and due care, (ii) a claim for failure to disclose, and (iii) a claim against Ecolab for aiding and abetting breaches of fiduciary duty. The plaintiff sought to enjoin the consummation of the Sale Transaction unless and until defendants provide all material facts in the proxy statement, and the plaintiff also seeks compensatory and/or rescissory damages as allowed by law for the plaintiff. This summary is qualified by reference to the full text of the complaint as filed with the Court.

On October 6, 2015, Defendants filed a motion to dismiss the Illinois action given that a substantially similar action, Raul, was pending in North Carolina. On December 15, 2015, the parties agreed to hold defendants’ motion to dismiss in abeyance until the court in the Raul action ruled on the pending motions to dismiss in that case, described below. A status hearing is scheduled for February 26, 2016. The Company believes the claims alleged by the plaintiff are without merit and it intends to vigorously defend against them.

On September 11, 2015, a derivative and putative class action (Malka Raul v. Swisher Hygiene Inc. et al., Case No. 15-CVS-16703 (Superior Court, Mecklenburg County, North Carolina)) was filed in the General Court of Justice, Superior Court Division, Mecklenburg County, North Carolina by Malka Raul. The action was brought derivatively on behalf of Swisher Hygiene Inc., and individually and on behalf of all others similarly situated, against Swisher Hygiene Inc., the members of Swisher Hygiene, Inc’s board of directors, individually, and Ecolab in connection with the Sale Transaction. The plaintiff has alleged that (i) the sale of Swisher International, Inc. to Ecolab contemplated by the purchase agreement is unfair and inequitable to the Swisher Hygiene Inc’s stockholders and constitutes a breach of the fiduciary duties of the directors in the sale of Swisher International, Inc. (ii) defendants have exacerbated their breaches of fiduciary duty by agreeing to lock up the Sale Transaction with deal protection devices that preclude other bidders from making a successful competing offer for Swisher International, Inc. and preclude stockholders from voting against the Sale Transaction, (iii) the Sale Transaction will divest the Swisher Hygiene Inc’s stockholders of their ownership interest in Swisher International, Inc. for inadequate consideration; (iv) each of the defendants violated and continues to violate applicable law by directly breaching and/or aiding and abetting the defendants’ breaches of fiduciary duties of loyalty, due care, independence, good faith and fair dealings, (v) the Sale Transaction is the product of a flawed process that was designed to sell Swisher International, Inc. to Ecolab on terms detrimental to plaintiff and the other Swisher Hygiene Inc’s stockholders, (vi) the proxy statement fails to provide Swisher Hygiene Inc’s stockholders with material information and/or provides them with materially misleading information and (vii) the proxy statement fails to provide Swisher Hygiene Inc.’s stockholders with all material information concerning the financial analysis of Cassel Salpeter & Co., LLC. The causes of action set forth in the complaint are (i) a claim for breach of fiduciary duty against the individual defendants, (ii) a claim for aiding and abetting breaches of fiduciary duty against Ecolab, (iii) a derivative claim for breach of fiduciary duties against the individual defendants, and (iv) a derivative claim for unjust enrichment against the individual defendants. The plaintiff primarily sought to (i) enjoin defendants from consummating the Sale Transaction unless and until the individual defendants adopt and implement a fair procedure or process to sell Swisher International, Inc., (ii) direct the individual defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of Swisher Hygiene Inc. and its stockholders and (iii) rescind, to the extent already implemented, the purchase agreement or any of the terms thereof. The plaintiff also seeks costs and disbursements, including reasonable attorneys’ and experts fees, and such other equitable and/or injunctive relief as the Court may deem just and proper. This summary is qualified by reference to the full text of the complaint as filed with the Court.

F-31

Other Matters

The Honeycrest Holdings, Ltd. v. Integrated Brands, Inc. matter relates to a longstanding dispute between Honeycrest Holdings, Ltd. (“Honeycrest”) and Integrated Brands, Inc. (“Integrated”) f/k/a Steve’s Homemade Ice Cream, Inc. involving a license granted by Honeycrest to Integrated in 1990, which licensed the manufacture and sale of ice cream products by Honeycrest in the United Kingdom. In 1998 Honeycrest filed an action against Integrated (Honeycrest Holdings, Ltd. v. Integrated Brands, Inc., New York Supreme Court, Queens County (Index No. 5204/1998)) alleging a breach of the licensing agreement; Integrated responded by denying the material allegations and alleging Honeycrest had breached the license agreement. Subsequently, Integrated merged with a subsidiary of Coolbrands International Inc (“Coolbrands”) and in 2001, Honeycrest filed a similar action against Coolbrands and Integrated (Honeycrest Holdings, Ltd. v. Coolbrands International, Inc., et al., New York Supreme Court, Queens County (Index No. 29666/01)). The actions against Integrated and Coolbrands have been combined (although not consolidated) for joint trial. In 2010, Coolbrands (formerly a Canadian corporation) was domesticated in the State of Delaware as Swisher Hygiene Inc. and thereafter acquired Swisher International Inc. In the Sale Transaction, Swisher Hygiene Inc. sold all of the stock of Swisher International Inc. to Ecolab Inc., but retained indirect ownership of Integrated. The litigation involving Honeycrest and Integrated and/or Coolbrands spans 17 years, has been episodically dormant with periods of extended discovery, motion practice, mediation, attempted settlements and other activities. In January 2016, Honeycrest filed a motion to amend the Coolbrands complaint to add Swisher Hygiene Inc. as a defendant in that case. Swisher Hygiene Inc.'s opposition papers were served on February 29, 2016. Swisher Hygiene Inc. believes any possible claim by Honeycrest against it is without merit and intends to vigorously defend itself against any such claims. The foregoing summary is qualified in its entirety by the pleadings that have been filed in the foregoing cases.

On October 7, 2015, the Company entered into a Deferred Prosecution Agreement (the “DPA”) with the United States Attorney’s Office for the Western District of North Carolina (“USAO”) relating to the USAO’s investigation of the Company’s accounting practices. Under the terms of the DPA, the USAO filed, but deferred prosecution of, a criminal information charging Swisher Hygiene Inc. with conspiracy to commit securities fraud and other charges relating to the Company’s accounting and financial reporting practices reflected in the Company's originally filed Quarterly Reports on Form 10-Q for the periods ended March 31, 2011, June 30, 2011, and September 30, 2011. Pursuant to the DPA, the Company agreed to pay a $2 million fine to the USAO payable in four annual installments of $500,000 each if the Company is financially able to do so. Pursuant to the terms of the DPA, the fine became immediately due and payable in full upon a change in control of the Company. As a result, the fine was paid in full upon the closing of the Sale Transaction, and we are awaiting dismissal of the Bill of Information pursuant to the terms of the DPA.

In 2012, the Company was contacted by the staff of the Atlanta Regional Office of the SEC ~~and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office")~~ after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to make certain individuals available and to provide certain information about these matters to the ~~SEC and the U.S. Attorney's Office.~~SEC. The Company is fully cooperating with the ~~SEC and the U.S. Attorney's Office.~~SEC. Any action by the SEC ~~the U.S. Attorney's Office~~ or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

Purchase Obligations and Leases

In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, the Company will reimburse the distributor for any such short fall up to a pre-designated amount. As discussed in Note, 97 “Fair Value Measurements” no value was assigned to the fair value of the guarantee at December 31, 2014 ~~and December 31, 2013~~ based on a probability assessment of the projected cash flows. ~~Management currently does not believe that it is probable that any amounts will be paid under this~~This agreement ~~and thus there is no amount accrued for~~was assumed by Ecolab in connection with the ~~guarantee in the Consolidated Financial Statements.~~Sale Transaction.

F-32

The Company entered into a Manufacturing and Supply Agreement (the "Cavalier Agreement") with another plant in conjunction with its acquisition of Sanolite in July of 2011. The Cavalier Agreement, which was scheduled to expire on December 31, 2012, was extended for an additional two year period with an automatic 18-month renewal term and a 6-month termination option. The Cavalier Agreement ~~provides~~provided for pricing adjustments, up or down, on the first of each month based on the vendor's actual average product costs incurred during the prior month. Additional product payments made by the Company due to pricing adjustments under the Cavalier Agreement ~~have~~were not ~~been~~ significant and ~~have~~did not ~~represented~~represent costs materially above the market price for such products. The Cavalier Agreement was terminated in September 2014 pursuant to the terms of the agreement.

The Company ~~leases~~leased its headquarters and other facilities, equipment and vehicles under operating leases that ~~expire~~expired at varying times through 2024. ~~Future minimum lease payments for operating~~All outstanding leases ~~that had initial~~were either cancelled or ~~remaining non-cancelable lease terms~~transferred to Ecolab in ~~excess of one year as of December 31, 2014 are: 2015 - $5.8 million, 2016 - $4.8 million , 2017 - $3.5 million, 2018 - $2.5 million, 2019 - $2.3 million, and thereafter - $2.3 million.~~conjunction with the Sale Transaction.

Total rent expense for operating leases, including those with terms of less than one year was ~~$6.5 million, $6.3~~$5.6 million and ~~$6.2~~$6.5 million for the years ended December 31, 2015 and 2014, ~~2013~~respectively, and ~~2012, respectively.~~are included in discontinued operations in the consolidated statement of operations and comprehensive loss.

~~F-31~~F-33

NOTE 1714 — OTHER EXPENSE, NET

Other expense of continuing operations consists of the following for the years ended December 31, ~~2014, 2013~~2015 and ~~2012:~~2014:

2014 2013 2012

Interest Income $ 9 $ 41 $ 75
Interest Expense (387 ) (485 ) (3,406 )
Realized and unrealized gain/(loss) on fair value of convertible notes - - 66
Earn-out - - 170
Foreign Currency (167 ) (5 ) (15 )
Loss from impairment - - (507 )
Other (1,118 ) (205 ) 524
Total other expenses $ (1,663 ) $ (654 ) $ (3,093 )

	2015			2014

Interest Expense	$	(65	)	$	(134	)
Fine Paid to the United States of America		(2,000	)		-
Total Other Expenses	$	(2,065	)	$	(134	)

~~“Other” primarily~~

The “Fine Paid to the United States of America” is pursuant to the terms of a previously announced Deferred Prosecution Agreement entered into between the Company and the United States Attorney’s Office for the Western District of North Carolina.

Other income (expense) of discontinued operations consists of the ~~loss related to the sale of assets held for sale~~following for the years ended December 31, ~~2014~~2015 and 2013 as described further in Note 2, “Discontinued Operations and Assets Held for Sale”. During fiscal year 2012, a fire occurred at a linen warehouse of one of the Company’s subsidiaries in Tampa, Florida. The fire heavily damaged the leased building and its contents requiring the building to be demolished. After consideration of the insurance recoveries received, we recorded a gain in other (expense), net on the involuntary conversion of assets of approximately $0.6 million in the fourth quarter of 2012. 2014:

	2015			2014

Interest Income	$	-		$	9
Interest Expense		(334	)		(253	)
Foreign Currency		(620	)		(167	)
Gain (Loss) on Sale of Assets		2,080			(1,070	)
Loss on Extinguishment of Revolving Credit Facility		(923	)		-
Other		514			(48	)
Total Other Income (Expenses)	$	717		$	(1,529	)

~~F-32~~

“Other” primarily consists of a legal settlement received and a refund of insurance in the year ended December 31, 2015.

NOTE 1815 — GEOGRAPHIC INFORMATION

The following table includes our discontinued operation’s revenue from geographic locations for the years ended December 31, ~~2014, 2013,~~2015 and ~~2012~~2014 were:

Geographic Information

	2015		2014
Revenue
United States	$	138,449	$	184,854
Canada		4,264		8,903
Total revenue	$	142,713	$	193,757

2014 2013 2012
Revenue
United States $ 184,854 $ 203,453 $ 220,624
Canada 8,903 10,235 9,897
Total revenue $ 193,757 $ 213,688 $ 230,521

The following table summarizes our discontinued operation’s foreign long-lived assets, which relate to our Canadian subsidiaries, as of December 31, ~~2014 and 2013:~~

2014 2013
Long-Lived Assets
Property and equipment, net $ 739 $ 589
Goodwill $ - $ 3,291
Other intangibles, net $ 528 $ 1,478

2014. In conjunction with the Sale Transaction, there are no remaining long-lived assets as of December 31, 2015.

	2014
Long-Lived Assets
Property and equipment, net	$	739
Other intangibles, net		528
Total long-lived assets	$	1,267

~~F-33~~F-34

NOTE 1916 — QUARTERLY FINANCIAL DATA (UNAUDITED)

2014 First Quarter Second Quarter Third Quarter Fourth Quarter Year
Revenue $ 48,295 $ 49,955 $ 49,650 $ 45,857 $ 193,757
Gross profit (1)
$ 26,483 $ 26,982 $ 26,979 $ 24,212 $ 104,656
Loss from continuing operations $ (13,038 ) $ (14,706 ) $ (7,613 ) $ (9,877 ) $ (45,234 )
Net loss from continuing operations $ (13,792 ) $ (15,147 ) $ (7,776 ) $ (10,093 ) $ (46,808 )
Basic and diluted loss per share $ (0.78 ) $ (0.86 ) $ (0.44 ) $ (0.56 ) $ (2.64 )

2013
Revenue $ 52,022 $ 55,386 $ 55,916 $ 50,364 $ 213,688
Gross profit (1)
$ 29,457 $ 30,987 $ 30,682 $ 26,977 $ 118,103
Loss from operations $ (16,742 ) $ (14,456 ) $ (12,778 ) $ (108,496 ) $ (152,472 )
Net loss from continuing operations $ (17,240 ) $ (14,885 ) $ (13,192 ) $ (105,215 ) $ (150,532 )
Basic and diluted loss per share $ (0.98 ) $ (0.88 ) $ (0.75 ) $ (5.94 ) $ (8.55 )

2015	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Year
Loss from continuing operations	$	(2,226	)	$	(1,675	)	$	(2,506	)	$	(2,854	)	$	(9,261	)
Net loss from continuing operations	$	(2,271	)	$	(1,717	)	$	(4,589	)	$	(2,749	)	$	(11,326	)
Net loss from discontinued operations	$	(6,560	)	$	(5,973	)	$	(27,191	)	$	(6,540	)	$	(46,264	)
Basic and diluted loss per share - continuing operations	$	(0.13	)	$	(0.10	)	$	(0.26	)	$	(0.15	)	$	(0.64	)
Basic and diluted loss per share - discontinued operations	$	(0.37	)	$	(0.34	)	$	(1.53	)	$	(0.37	)	$	(2.61	)

2014
Loss from continuing operations	$	(2,425	)	$	(1,461	)	$	(1,177	)	$	(1,301	)	$	(6,364	)
Net loss from continuing operations	$	(2,475	)	$	(1,484	)	$	(1,210	)	$	(1,329	)	$	(6,498	)
Net loss from discontinued operations	$	(11,317	)	$	(13,662	)	$	(6,567	)	$	(8,764	)	$	(40,310	)
Basic and diluted loss per share - continuing operations	$	(0.14	)	$	(0.08	)	$	(0.07	)	$	(0.08	)	$	(0.37	)
Basic and diluted loss per share - discontinued operations	$	(0.64	)	$	(0.77	)	$	(0.37	)	$	(0.49	)	$	(2.27	)

~~(1) Revenue less cost of sales, which is exclusive of route expense and related depreciation and amortization.~~

~~The following non-recurring transactions occurred during the fourth quarter of fiscal year 2013: (i) a $93.2 million non-cash goodwill impairment charge recorded~~Certain amounts have been reclassified in ~~conjunction~~prior quarters to be consistent with the ~~performance~~current discontinued operations classification as of the Company’s annual impairment test that is further described in Note 5, “Goodwill and Other Intangibles” in the Notes to the Consolidated Financial Statements and (ii) a $3.1 million impairment charge related to assets held for sale that is further described in Note 2, Discontinued Operations and Assets Held for Sale,” in the Notes to the Consolidated Financial Statements.December 31, 2015.

NOTE 2017 – SUBSEQUENT ~~EVENT~~

~~During March 2015, the Board of Directors of the Company approved a board resolution to sell its remaining non-core linen operation. During the first quarter of 2015, in accordance with~~ ~~ASC 360, Property, Plant and Equipment,~~ these assets will be classified as assets held for sale and will be adjusted to the lower of historical carrying amount or fair value. The estimated fair value is derived based on the assessment of potential net selling prices. The carrying value of the assets will be compared to the estimated fair value and if applicable, any write down will be recognized in the first quarter of 2015. The Company expects the linen operation will be sold in the second quarter of 2015. The carrying value of the major classes of the assets are as follows:EVENTS

December 31,
2014
Accounts receivable, net 445
Property and equipment, net 1,957
Customer relationships, net 477
Other intangibles, net 330
Total $ 3,209

Resignation and appointment of officers

On ~~March 26, 2015,~~February 19, 2016, the Company entered into a ~~letter agreement, dated~~Separation Agreement and Release with Mr. Pierce pursuant to which Mr. Pierce will continue to serve as ~~of March 25, 2015 ("Letter Agreement"), with its lender, Siena Lending Group LLC, in respect~~President and Chief Executive Officer of the ~~occurrence~~Company under the same terms as his current employment agreement through the date of ~~a Springing DACA Event, as such term is defined~~his resignation, and Mr. Pierce, or his assignees, will receive severance in the ~~Credit Facility. The Letter Agreement temporarily waives, until April 10, 2015, certain cash management requirements~~aggregate amount of $234,615, which will be paid in seven installments on a monthly basis. On February 26, 2016, Mr. Pierce tendered his resignation as Chief Executive Officer and ~~certain enhanced reporting requirements that would otherwise go into effect upon~~President of the ~~occurrence of a Springing DACA Event.~~

Company, effective March 31, 2016.

~~F-34~~On February 19, 2016, Mr. Nanovsky resigned as Senior Vice President, Chief Financial Officer and Secretary of the Company, effective March 31, 2016. As a result, the Executive Services Agreement between the Company and The SCA Group, LLC, effective June 9, 2013, pursuant to which Mr. Nanovsky provides his services to the Company will be terminated effective March 31, 2016.

On February 26, 2016, the Board of Directors appointed Richard Handley as President (principal executive officer) and Secretary of the Company, effective April 1, 2016. The Board of Directors is currently finalizing the terms of a consulting agreement with Mr. Handley. Also, the Company is currently reviewing candidates for the position of Chief Financial Officer.

Termination of 2010 Stock Incentive Plan

Effective February 19, 2016, the SIP was terminated by the Board of Directors. All stock options and restricted stock units were cancelled before the plan was terminated. See Note 10, “Equity Matters,” for further information regarding the SIP.

Termination of Retirement Plan

The Company sent a notice of plan termination to participants in December 2015 and expects to terminate the Plan in 2016. In connection with the termination the Company will fund the Plan so there will be no minimum regulatory funding requirement in 2016. Since the Company will fund the total benefit obligation, there will be no expected benefit payments under the Plan in future years. See Note 11, “Retirement Plan” for further information regarding the Plan.

F-35

CONSOLIDATED FINANCIAL STATEMENT SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

FOR THE ~~THREE~~TWO YEARS ENDED DECEMBER 31, ~~2014~~2015

In thousands
									Balance at the Beginning of the Year		Charged to Costs and Expenses		Deductions from Allowance		Sold to Ecolab		Balance at the End of the Year
31-Dec-15
Allowances for receivables									$	976	$	935	$	980	$	931	$	-
Other allowances										816		-		166		650		-
	Balance at the Beginning of the Year		Charged to Costs and Expenses		Deductions from Allowance		Balance at the End of the Year		$	1,792	$	935	$	1,146	$	1,581	$	-
31-Dec-14
Allowances for receivables	$	1,999	$	196	$	1,219	$	976	$	1,999	$	196	$	1,219	$	-	$	976
Other allowances		892		-		76		816		892		-		76		-		816
	$	2,891	$	196	$	1,295	$	1,792	$	2,891	$	196	$	1,295	$	-	$	1,792
31-Dec-13
Allowances for receivables	$	2,335	$	936	$	1,272	$	1,999
Other allowances		437		455		-		892
	$	2,772	$	1,391	$	1,272	$	2,891
31-Dec-12
Allowances for receivables	$	2,185	$	2,396	$	2,246	$	2,335
Other allowances		471		-		34		437
	$	2,656	$	2,396	$	2,280	$	2,772

The allowance accounts are included in assets of discontinued operations in the consolidated balance sheet. As a result of the Sale Transaction, the allowance accounts were assumed by Ecolab.

~~F-35~~F-36

EXHIBIT INDEX

Exhibit Number		Description
~~10.38~~10.43		~~Second Amendment to Employment~~Deferred Prosecution Agreement, dated October 7, 2015, by and between the United States of America and Swisher Hygiene Inc. ~~and William M. Pierce, dated January 31, 2015.~~
~~10.39~~		~~Letter Agreement, dated as of March 25, 2015, by and among Siena Lending Group LLC and the Borrowers listed thereto.~~
21.1		Subsidiaries of Swisher Hygiene Inc.
~~23.1~~		~~Consent of BDO USA, LLP.~~
31.1		Section 302 Certification of Chief Executive Officer.
31.2		Section 302 Certification of Chief Financial Officer.
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase.
101.LAB		XBRL Taxonomy Extension Label Linkbase.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase.

__________________

* Furnished herewith.

Delaware		27-3819646
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

~~4725 Piedmont Row Drive,~~c/o Akerman LLP, Suite ~~400, Charlotte, North Carolina~~1600, 350 East Las Olas Boulevard, Fort Lauderdale, FL		~~28210~~33301
(Address of Principal Executive Offices)		(Zip Code)

Title of Each Class		Name of Each Exchange On Which Registered
Common Stock		The NASDAQ Stock Market LLC
$0.001 par value

Large accelerated filer	o	Accelerated filer	þo
Non-accelerated filer	o	Smaller reporting company	oþ
(Do not check if a smaller reporting company)

PART I
ITEM 1.	BUSINESS.	12
ITEM 1A.	RISK FACTORS.	89
ITEM 1B.	UNRESOLVED STAFF COMMENTS.	1412
ITEM 2.	PROPERTIES.	1412
ITEM 3.	LEGAL PROCEEDINGS.	1412
ITEM 4.	MINE SAFETY DISCLOSURES.	1615
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	1716
ITEM 6.	SELECTED FINANCIAL DATA.	1916
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	1916
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	3628
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.	3628
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	3628
ITEM 9A.	CONTROLS AND PROCEDURES.	3629
ITEM 9B.	OTHER INFORMATION.	3830
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.	3931
ITEM 11.	EXECUTIVE COMPENSATION.	3933
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	3938
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.	39
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES.	3940
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES.	4042
SIGNATURES		4346

Name	Position	Age

William M. Pierce	Director, President and Chief Executive Officer	6364
William T. Nanovsky	Senior Vice President, ~~and~~ Chief Financial Officer and Secretary	66
~~Blake Thompson~~	~~Senior Vice President and Chief Operating Officer~~	6067

	Base
	Period
Company / Index	01/10/11		2/02/11		3/31/11		6/30/11		9/30/11		12/31/11		3/31/12		6/30/12		9/30/12		12/31/12
Swisher Hygiene, Inc.		100		114.55		109.13		99.98		71.92		66.42		43.69		44.66		24.68		31.08
S&P SmallCap 600 Index		100		101.46		107.41		107.24		85.97		100.73		112.81		108.77		114.64		117.18
Peer Group		100		101.47		104.15		114.43		98.18		117.72		127.58		138.07		135.10		147.00

Company / Index					3/31/13		6/30/13		9/30/13		12/31/13		3/31/14		6/30/14		9/30/14		12/31/14
Swisher Hygiene, Inc.						22.55		15.27		10.77		9.13		7.99		7.64		5.40		3.32
S&P SmallCap 600 Index						131.02		136.15		150.76		165.59		167.46		170.92		159.42		175.12
Peer Group						164.65		173.99		201.25		216.60		222.93		230.45		239.98		234.09

	For the Year Ended December 31,
	2014 (2)			2013 (2)			2012 (1)			2011 (1)			2010
Selected Income Statement Data:

Revenue	$	193,757		$	213,688		$	230,521		$	160,617		$	63,652

Loss from continuing operations	$	(45,234	)	$	(152,472	)	$	(58,929	)	$	(34,574	)	$	(15,113	)

Net loss from continuing operations	$	(46,808	)	$	(150,532	)	$	(80,775	)	$	(24,723	)	$	(17,570	)

Loss per share, continuing operations:

Basic and diluted	$	(2.64	)	$	(8.55	)	$	(4.62	)	$	(1.55	)	$	(2.62	)

Selected Balance Sheet Data:

Total Assets	$	113,198		$	161,717		$	327,685		$	478,404		$	106,234

Swisher Hygiene Inc. Stockholders' equity	$	81,290		$	127,186		$	277,121		$	343,834		$	45,917

Long-term debt and obligations	$	1,185		$	2,003		$	5,284		$	47,267		$	44,408

	2014		% (1)			2013	% (1)
Cost of Sales	(In thousands)
Products	$	88,287	50.9	%	$	93,280	49.2	%
Services		361	1.9	%		1,594	7.0	%
Franchise and other		453	32.9	%		711	54.2	%
Total cost of sales	$	89,101	46.0	%	$	95,585	44.7	%

	2013		%(1)			2012	%(1)
Selling, General & Administrative Expenses	(In thousands)
Compensation	$	48,823	22.8	%	$	50,182	21.8	%
Occupancy		9,935	4.6	%		10,068	4.4	%
Other		35,862	16.8	%		50,725	22.0	%
Total selling, general & administrative expenses	$	94,620	44.3	%	$	110,975	48.2	%

	Total		Less Than 1 Year		1-2 Years		3-4 Years		5 or More Years
	( In thousands )
Long-term debt and obligations	$	2,887	$	1,809	$	695	$	383	$	-
Operating and capital leases (1)		21,424		5,877		8,329		4,895		2,323
Employment contracts		1,375		875		500		-		-
Interest payments		156		83		62		11		-
Total long-term contractual cash obligations	$	25,842	$	8,644	$	9,586	$	5,289	$	2,323