-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QNH14awkEFe19vG5oehq93qt/IybN5fjB0wlynTR5mTYwQX4LxieklpU3kIs0Lpo Z7640m9RYpFWwnA5KJBZ1g== 0000098618-97-000001.txt : 19970225 0000098618-97-000001.hdr.sgml : 19970225 ACCESSION NUMBER: 0000098618-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970204 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALANCO ENVIRONMENTAL RESOURCES CORP CENTRAL INDEX KEY: 0000098618 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 860220694 STATE OF INCORPORATION: AZ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09347 FILM NUMBER: 97517763 BUSINESS ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 602-607-1010 MAIL ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO RESOURCES CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO LTD DATE OF NAME CHANGE: 19901004 FORMER COMPANY: FORMER CONFORMED NAME: TOMBSTONE MINERAL RESERVES INC DATE OF NAME CHANGE: 19801106 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of The Securities and Exchange Act of 1934 For the quarter ended . . . . . . . . . . . . . . . . . . . . December 31, 1996 Commission file number. . . . . . . . . . . . . . . . . . . . . . . . . .0-9347 ALANCO ENVIRONMENTAL RESOURCES CORPORATION (Exact name of registrant as specified in its charter) Arizona 86-0220694 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 15900 North 78th Street, Suite 101, Scottsdale, Arizona 85260 (Address of principal executive offices) (Zip Code) (602) 607-1010 (Registrant's telephone number, including area code) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES XX NO ---- ----- As of January 31, 1997, there were 34,623,401 shares of common stock outstanding. ALANCO ENVIRONMENTAL RESOURCES CORPORATION INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets December 31, 1996 (unaudited) and June 30, 1996 (audited). . . . . . . . . . . . . . 3 Consolidated Statements of Operations For the three months ended December 31, 1996 and 1995 (unaudited). . . . . . . . . . . . . 4 Consolidated Statements of Operations For the six months ended December 31, 1996 and 1995 (unaudited). . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows For the six months ended December 31, 1996 and 1995 (unaudited). . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements (unaudited). . . . . . . . . . . . . . . . . . . . 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 9-10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 11 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND JUNE 30, 1996 Dec 31, 1996 June 30, 1996 ASSETS (unaudited) (audited) -------------- -------------- Current Assets: Cash $ 1,065,163 $ 565,199 Accounts receivable 1,031,943 648,974 Notes receivable (note 4) 1,276,394 1,274,647 Inventories (note 2) 852,654 1,281,872 Prepaid expenses and other current assets 347,085 70,682 -------------- -------------- Total current assets 4,573,239 3,841,374 Property, plant and equipment 4,686,028 3,307,258 Costs in excess of book value on acquisition of wholly-owned subsidiaries, net of accumulated amortization of $742,066 and $529,066, 5,655,863 5,869,137 respectively Intangible assets, net of accumulated amortization of $118,179 and $108,119, respectively 188,881 188,808 Assets held for sale 6,855,063 6,855,063 Other assets 1,438,843 1,286,069 -------------- -------------- Total assets $ 23,397,917 $ 21,347,709 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities - long term obligations $ 655,620 $ 124,571 Accounts payable and accrued expenses 708,293 685,190 -------------- -------------- Total current liabilities 1,363,913 809,761 Long term obligations 1,096,584 372,020 Unrealized installment sales 864,553 864,553 Redeemable Class A Preferred Stocks (note 3) 770,548 330,468 Shareholders' equity Preferred Stock, Class B, cumulative voting; 20,000,000 shares authorized and none issued Common Stock, no par value, 100,000,000 shares authorized; 34,508,875 and 33,209,544 shares issued and outstanding, respectively 52,951,484 51,783,690 Accumulated deficit (33,649,165) (32,812,783) -------------- -------------- Total shareholders' equity 19,302,319 18,970,907 -------------- -------------- Total liabilities & shareholders' equity $ 23,397,917 $ 21,347,709 ============== ============== See notes to consolidated financial statements
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ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended December 31, 1996 and 1995 December 31 1996 1995 -------------- ------------- Net sales $ 1,678,577 $ 1,199,059 -------------- ------------- Operating expenses: Direct service and cost of goods sold 671,645 804,205 Selling, general and administrative 1,064,079 840,639 Depreciation and amortization 256,310 226,887 -------------- ------------- Total operating expenses 1,992,034 1,871,731 -------------- ------------- Loss from operations (313,457) (672,672) Other income (expense) (23,617) (64,872) -------------- ------------- Net loss (337,074) (737,544) -------------- ------------- Dividends on preferred stock (note 3) 13,500 - Net loss available for common shareholders $ (350,574) $ (737,544) ============== ============= Net loss per common share $ (0.01) $ (0.02) ============== ============= Weighted average common shares outstanding 33,830,716 31,308,113 ============== ============= See notes to consolidated financial statements
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ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended December 31, 1996 and 1995 December 31 1996 1995 -------------- ------------- Net sales $ 3,435,448 $ 2,881,171 -------------- ------------- Operating expenses: Direct service and cost of goods sold 1,617,885 1,748,978 Selling, general and administrative 2,119,131 1,789,308 Depreciation and amortization 488,285 460,039 -------------- ------------- Total operating expenses 4,225,301 3,998,325 Loss from operations (789,853) (1,117,154) Other income (expense) (33,029) (78,089) -------------- ------------- Net loss (822,882) (1,195,243) -------------- ------------- Dividends on preferred stock (note 3) 13,500 - Net loss available for common shareholders $ (836,382) $ (1,195,243) ============== ============= Net loss per common share $ (0.02) $ (0.04) ============== ============= Weighted average common shares outstanding 33,597,497 30,806,371 ============== ============= See notes to consolidated financial statements
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ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended December 31, 1996 and 1995 December 31 1996 1995 -------------- -------------- Cash flows from operating activities: Net loss $ (822,882) $ (1,195,243) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 488,285 460,039 Other 22,530 63,281 (Increase) decrease in: Accounts receivable (382,109) (141,321) Inventory 54,616 (445,226) Prepaid expenses and other current assets (158,215) (54,951) Other assets (63,467) - Increase (decrease) in: Accounts payable and accrued expenses 63,307 (147,924) -------------- -------------- Net cash provided by (used in) operating activities (797,935) (1,461,345) -------------- -------------- Cash flows from investing activities: Notes receivable (1,747) 375,000 Purchase of property, plant and equipment (446,527) (314,775) Other (9,203) (23,884) -------------- -------------- Net cash used in investing activities (457,477) 36,341 -------------- -------------- Cash flows from financing activities: Proceeds from borrowings 300,000 - Payments on obligations (120,818) (57,773) Proceeds from the sale of common stock 381,444 2,470,000 Proceeds from the sale of preferred stock 1,194,750 - -------------- -------------- Net cash provided by financing activities 1,755,376 2,412,227 -------------- -------------- Net increase in cash 499,964 987,223 Cash, beginning of period 565,199 607,411 -------------- -------------- Cash, end of period $ 1,065,163 $ 1,594,634 ============== ============== Supplemental disclosure of non-cash operating, investing and financing activities: Capital leases entered into during period: $ 1,034,650 $ - Issuance of capital stock: Other $ 11,850 $ 6,700 For conversion of preferred stock 774,500 - See Notes to consolidated financial statements
6 ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR SIX MONTHS ENDED DECEMBER 31, 1996 Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been condensed or omitted. These interim consolidated financial statements should be read in conjunction with the Company's June 30, 1996, Annual Report on Form 10-K. In the opinion of management, the accompanying consolidated financial statements include all adjustments consisting of normal recurring accruals necessary to present fairly the financial position, results of operations and cash flows as of December 31, 1996, and for all periods presented. The results of operations for the six months ending December 31, 1996, are not necessarily indicative of the operating results to be expected for an entire year. All significant intercompany balances, transactions and stock holdings have been eliminated from the accompanying interim financial statements. Note 2 - Inventories Inventories have been recorded at the lower of cost or market. The composition of inventories as of December 31, 1996, and June 30, 1996, is listed below: December 31, 1996 June 30, 1996 Finished goods $ 365,558 $ 761,977 Work-in-process 130,862 171,204 Raw material 356,234 348,691 --------- ------------ $ 852,654 $ 1,281,872 ========= ============ 7 Note 3 - Redeemable Preferred Stock The following is a listing of Redeemable Preferred Stock outstanding: December 31, 1996 June 30, 1996 Redeemable Preferred Stock, $20,000 par value, Class A, Series 1, convertible, non-cumulative, voting; 5,000,000 shares authorized; 26 shares issued and outstanding $ 350,300 $ 330,468 Redeemable Preferred Stock, $10 par value, Class A, Series 2, convertible, voting; 110,000 shares authorized and issued and 35,000 shares outstanding 309,749 - Redeemable Preferred Stock, $10 par value, Class A, Series 3, convertible, voting; 25,000 shares authorized and issued and 12,500 shares outstanding 110,499 - ----------- ---------- Total $ 770,548 $ 330,468 =========== ========== The Class A, Series 2 and Series 3 Preferred Stock have a cumulative per share dividend of eighty ($0.80) per annum, paid quarterly. Note 4 - Subsequent Events During January, 1997, the Company received $495,000 from Amarante Financial S.A. relating to the Company's sale of 86% of its 70% interest in Phoenix Medical Management, Inc. The $495,000 was the balloon payment due from the sale and had been in default since December, 1995. 8 Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources As of December 31, 1996, the Company's current assets exceeded current liabilities by $3,209,000, a ratio of 3.4 to 1. Consolidated cash increased during the six months ended December 31, 1996 by $500,000 to $1,065,000, which represented 23% of current assets. Cash flow from operating activities improved by $663,000 for the six months ended December 31, 1996. Subsequent to December 31, 1996, $495,000 was collected on an outstanding receivable. Refer to Note 4. The Company entered into capital lease obligations of $1,035,000 which were used entirely for expansion of the Fry Guy Integrated Food System. The Company will continue to use available lease financing to fund growth in the Fry Guy operations. As the program matures, internally generated cash could be used to a larger degree to satisfy capital requirements. The Company is not anticipating significant capital needs in the other business segments. As of December 31, 1996, the Company maintained a ratio of 9% debt to 91% equity. The Company continues to actively seek opportunities to maximize the value of its mining assets. Currently, payments received from a contingent sale are adequate to cover expenses relating to the mining properties. The Company believes it has adequate cash and capital available to fund consolidated operations for the coming year. 2. Results of Operations (a.) Three months ended 12/31/96 versus 12/31/95 Consolidated revenues for the quarter ended December 31, 1996 were $1,679,000, an increase of 40% over the comparable period in 1995. Revenues from the manufacturing and insurance segments were down 16% and 72%, respectively. These decreases were offset by revenues in the food service segment, which increased by 542%. The pollution control segment reported sales of $56,000 during the current quarter. Consolidated operating expenses for the quarter ended December 31, 1996 increased by 6% over the prior comparable period. The increase can be principally attributed to additional marketing efforts to place food service equipment and to attract new customers in the manufacturing, insurance and environmental business segments. The Company has taken steps to reduce office overhead, as well as initiated other cost saving measures, to lower operating expenses. The consolidated loss for the current quarter was $337,000 or $.01 per share. This compares to a net loss of $738,000 or $.02 a share for the three months ended December 31, 1995. (b.) Six months ended 12/31/96 versus 12/31/95 Revenues for the six months ended December 31, 1996 were $3,435,000, an increase of 19% over the comparable period in 1995. Revenues from the manufacturing and insurance segments were down 14% and 44%, respectively. These decreases were offset by revenues in the food service segment, which increased by 300%. Revenues in the pollution control segment were $150,000 during the current six months. There were no sales reported for this segment in the comparable period in 1995. Consolidated operating expenses for the six months ended December 31, 1996 increased by 6% over the prior comparable period. The increase can be principally attributed to additional marketing efforts and increased personnel in the food service segment offset by an improved gross profit margin in that 9 segment. The consolidated loss for the current six months was $823,000 or $.02 per share. This compares to a net loss of $1,195,000 or $.04 a share for the six months ended December 31, 1995. 10 PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K None 11 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. ALANCO ENVIRONMENTAL RESOURCES CORPORATION (Registrant) /s/John E. Haggar _____________________________ John E. Haggar Chief Financial Officer Date: February 4, 1997 12 EX-27 2
5 6-MOS JUN-30-1997 DEC-31-1996 1065163 0 2358337 50000 852654 4573239 5681953 995925 23397917 1363913 1096584 770548 0 52951484 (33649165) 23397917 1826821 3435448 1232831 4225301 2698 0 86289 (836382) 0 (836382) 0 0 0 (836382) (.02) 0
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