-----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, KvR0AMS+ecbm4uEd/yCXA1XiYiyQJ4y3Y41eSkxp6kMZb4jlZ7vqGJyKMIemjSAz MIvGWEn/6zWmVy1362IO2Q== 0000098618-01-500003.txt : 20010515 0000098618-01-500003.hdr.sgml : 20010515 ACCESSION NUMBER: 0000098618-01-500003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALANCO TECHNOLOGIES INC 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-09347 FILM NUMBER: 1631380 BUSINESS ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 4806071010 MAIL ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO ENVIRONMENTAL RESOURCES CORP DATE OF NAME CHANGE: 19930708 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 10QSB 1 alan10qsb33101.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarter ended . . . . . . . . . . . . . . . . . March 31, 2001 Commission file number . . . . . . . . . . . . . . . . . . . . .0-9347 ALANCO TECHNOLOGIES, INC. ------------------------- (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) (480) 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 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 May 7, 2001 there were 6,778,918 shares of common stock issued and outstanding. Forward-Looking Statements: Some of the statements in this Form 10-QSB Quarterly Report, as well as statements by the Company in periodic press releases, oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words or phrases denoting the anticipated results of future events such as "anticipate," "believe," "estimate," "will likely," "are expected to," "will continue," "project," "trends" and similar expressions that denote uncertainty are intended to identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (i) general economic and business conditions; (ii) changes in industries in which the Company does business; (iii) the loss of market share and increased competition in certain markets; (iv) governmental regulation including environmental laws; and (v) other factors over which the company has little or no control.
ALANCO TECHNOLOGIES, INC. INDEX Page Number PART I. FINANCIAL INFORMATION Item 1.Financial Statements Consolidated Balance Sheets March 31, 2001 and June 30, 2000 . . . . . . . . 3 Consolidated Statements of Operations For the three months ended March 31, 2001 and 2000 . . . . . . . . . . . . .4 Consolidated Statements of Operations For the nine months ended March 31, 2001 and 2000 . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows For the nine months ended March 31, 2001 and 2000 . . . . . . . . . . . . .6 Notes to Consolidated Financial Statements . . . . . . . 8 Note A - Basis of Presentation Note B - Inventories Note C - Sale of Assets Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . .9 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . .11 Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . .11 Signature . . . . . . . . . . . . . . . . . . . . . . . . . .12
2
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001 AND JUNE 30, 2000 ASSETS March 31, 2001 June 30, 2000 -------------- ------------- CURRENT ASSETS Cash $ 41,600 $ 176,700 Accounts receivable, net 1,737,700 1,078,300 Notes receivable, current 872,200 3,019,000 Inventories 1,136,400 1,112,700 Prepaid expenses 50,100 38,300 -------------- -------------- Total current assets 3,838,000 5,425,000 -------------- -------------- PROPERTY, PLANT AND EQUIPMENT, NET 592,900 628,600 -------------- -------------- OTHER ASSETS Intangible assets, net 1,456,300 1,558,000 Notes Receivable 971,100 560,000 Investment at cost 2,474,900 2,465,700 Net assets held for sale 606,600 770,900 Other assets 38,500 26,000 -------------- -------------- Total other assets 5,547,400 5,380,600 -------------- -------------- TOTAL ASSETS $ 9,978,300 $ 11,434,200 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable & accruals $ 888,400 $ 1,096,800 Bank line 690,400 498,500 Notes payable, current 3,200 868,100 Deferred gain, pollution control products 589,700 -- -------------- -------------- Total Current Liabilities 2,171,700 2,463,400 LONG TERM LIABILITIES Lease payable, long term 2,600 -- Deferred gain, pollution control products 378,000 -- -------------- -------------- TOTAL LIABILITIES 2,552,300 2,463,400 -------------- -------------- SHAREHOLDERS' EQUITY Preferred Stock: Class A, cumulative convertible preferred stock; 5,000,000 shares authorized, of which 500,000 have been classified as Series B. Series B issued and outstanding of 294,600 at 3/31/01 1,178,300 1,040,000 Class B, cumulative preferred stock: 2,000,000 authorized and none outstanding -- -- Common Stock, no par value, 100,000,000 shares 6,778,918 and 6,286,415 shares issued, respectively 55,791,900 55,738,300 Treasury Stock (40,000) -- Accumulated deficit (49,504,200) (47,807,500) -------------- -------------- Total shareholders equity 7,426,000 8,970,800 -------------- -------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 9,978,300 $ 11,434,200 ============== ============== The accompanying notes are an integral part of these financial statements 3
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 2000 -------------- -------------- NET SALES $ 2,385,300 $ 497,400 Cost of goods sold 1,529,700 299,300 -------------- -------------- GROSS MARGIN 855,600 198,100 Selling, general and administrative 1,634,900 693,400 -------------- -------------- OPERATING LOSS (779,300) (495,300) Other income (expense), net 7,500 (1,800) -------------- -------------- LOSS - CONTINUING OPERATIONS (771,800) (497,100) Preferred stock dividend (41,700) -- -------------- -------------- LOSS - CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (813,500) 497,100) LOSS - DISCONTINUED OPERATIONS (9,500) (27,600) -------------- -------------- NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (823,000) $ 524,700) ============== ============== LOSS PER SHARE - BASIC AND DILUTED - Continuing Operations $ (0.12) $ (0.09) ============== ============== - Discontinued Operations $ (0.00) $ (0.00) ============== ============== - Net Loss $ (0.12) $ (0.09) ============== ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,787,900 5,616,700 ============== ============== The accompanying notes are an integral part of these financial statements 4
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2001 2000 -------------- ------------- NET SALES $ 7,694,500 $ 1,142,800 Cost of goods sold 4,665,000 589,600 -------------- ------------- GROSS MARGIN 3,029,500 553,200 Selling, general and administrative 4,899,600 1,517,300 -------------- ------------- OPERATING LOSS (1,870,100) (964,100) -------------- ------------- Other income (expense), net 22,700 (6,500) -------------- ------------- LOSS - CONTINUING OPERATIONS (1,847,400) (970,600) Preferred stock dividend (98,300) -- -------------- ------------- LOSS - CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (1,945,700) (970,600) -------------- ------------- Operating income (loss) - disc. operations (3,000) 91,000 Gain - sale of pollution control products 252,000 -- -------------- ------------- INCOME - DISCONTINUED OPERATIONS 249,000 91,000 -------------- ------------- NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (1,696,700) $ (879,600) ============== ============= EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED - Continuing Operations $ (0.29) $ (0.17) ============== ============= - Discontinued Operations $ 0.04 $ 0.02 ============== ============= - Net Loss $ (0.25) $ (0.16) ============== ============= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,787,900 5,616,700 ============== ============= The accompanying notes are an integral part of these financial statements 5
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2001 2000 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss from continuing operations $ (1,847,400) $ (970,600) Adjustments to reconcile net income to net Cash used in operating activities: Depreciation and amortization 308,700 251,700 (Increase) decrease in: Accounts receivable (659,400) 366,300 Inventory (23,600) (411,600) Prepaid expenses and other assets (11,700) (129,300) Other -- 84,200 (Increase) decrease in: Accounts payable and accrued expenses 208,400 327,800 Billings in excess of costs & est. earnings -- (95,200) -------------- -------------- Net cash used in continuing operations (2,441,800) (576,700) -------------- -------------- Income from discontinued operations 249,000 91,100 Net assets of disposed operations 164,300 -- -------------- -------------- Net cash used in operating activities (2,028,500) (485,600) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Collection of notes receivable 1,735,700 -- Purchase of property, plant and equipment (165,200) (449,100) Intangible Assets, related to acquisitions (6,100) (542,300) Deferred Gain 967,700 -- Purchase of treasury stock (40,000) -- Other (21,900) (22,700) -------------- -------------- Net cash provided by (used in) investing activities 2,470,200 (1,014,100) -------------- -------------- The accompanying notes are an integral part of these financial statements 6
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2001 2000 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment on borrowings (670,400) 8,500 Issuance of Stock 11,100 888,300 Proceeds from sale of preferred stock 138,300 -- Dividends on Preferred Stock (98,300) -- Proceeds from exercise of options 42,500 361,000 -------------- -------------- Net cash provided by (used in) financing activities (576,800) 1,257,800 -------------- -------------- NET DECREASE IN CASH $ (135,100) $ (241,900) CASH AND CASH EQUIVALENTS, beginning of year $ 176,700 $ 661,700 -------------- -------------- CASH AND CASH EQUIVALENTS, end of quarter $ 41,600 $ 419,800 ============== ============== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash paid for interest $ 15,287 $ 20,900 ============== ============= Value of stock issued for services $ 11,100 $ 81,900 ============== =============
The accompanying notes are an integral part of thse financial statements 7 ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR NINE MONTHS ENDED MARCH 31, 2001 Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB. 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, 2000, Annual Report on Form 10-KSB. 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 statement of cash flows as of March 31, 2001, and for all periods presented. The results of operations for the nine months ending March 31, 2001, 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 B - Inventories Inventories have been recorded at the lower of cost or market. The composition of inventories as of March 31, 2001 and June 30, 2000, is listed below: March 31, 2001 June 30, 2000 -------------- ------------- Finished goods $ 706,700 $ 1,008,100 Work-in-process 147,300 87,100 Raw material 282,400 17,500 -------------- -------------- $ 1,136,400 $ 1,112,700 ============== ==============
Note C - Sale of Assets During the quarter ended December 31, 2000, the Company sold its subsidiary, Alanco Environmental Technologies (Beijing) Co., Ltd., and the patents related to Charged Dry Sorbent Injection (CDSI) technology to a private New Jersey corporation for $1,450,000. The transaction completed the sale of the Company's remaining Pollution Control Products assets. The sales proceeds consist of cash and notes with payments scheduled through December 31, 2003. In addition, the Company will receive a cash royalty on each CDSI system sold for a period of five years. 8 The transaction resulted in a potential Gain on Sale of approximately $1.2 million, of which $252,000 was recognized during the second quarter with the remaining gain to be recognized upon receipt of future payments. At March 31, 2001, approximately $589,700 of the deferred gain was classified as current and $378,000 was classified as long term. Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Results of Operation In accordance with Generally Accepted Accounting Principles, the Company has limited its reported consolidated revenues for fiscal quarter and nine months ended March 31, 2001 to revenues from its Computer Data Storage segment, the only operation classified currently as a continuing operation. To maintain comparability, certain balances from the Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the respective periods ended March 31, 2000 have been restated. (A) Three months ended 3/31/01 versus 3/31/00 Consolidated revenue for the quarter ended March 31, 2001 was $2,385,300 compared to $497,400 for the comparable quarter of the previous year. Consolidated revenue for the quarter ended March 31, 2001 included revenues from Excel/Meridian Data, Inc. ("Excel/Meridian"), an acquisition that was effective in June of 2000. If that acquisition had been effective during the quarter ended March 31, 2000, comparative prior fiscal year quarter revenues would increase by approximately $1,730,400 (pro forma). The Company reported a loss from continuing operations attributable to common shareholders for the quarter ended March 31, 2001 of $813,500, or $.12 per share, compared to a loss of $497,100, or $.09 per share, for the comparable quarter in 2000. The higher loss reported for the current quarter was primarily attributable to increased investments in the Company's Storage Area Network (SAN) market development initiative and weakness in the general IT markets, which caused delays in purchase commitments for SAN products, and resulted in reduced revenue from other data storage products, including Network Attached Storage (NAS) products. The Consolidated Statement of Operations for the quarter ended March 31, 2001 reflected a loss from discontinued operations of $9,500, or $nil per share, compared to a loss from discontinued operations of $27,600, or $nil per share, for the comparable quarter in 2000. The net loss for the quarter attributed to common shareholders was $823,000, or $.12 per share, compared to a loss of $524,700, or $.09 per share, for the same quarter in 2000. 9 Gross profit for the quarter amounted to $855,600, or 35.9%, compared to $198,100, or 39.8%, for the comparable quarter a year earlier. The increase in Gross Profit resulted from increases in sales while the decrease in Gross Profit Percentage resulted from changes in product mix. Selling, general and administrative expenses for the current quarter increased to $1,634,900, compared to $693,400 incurred in the comparable quarter of 2000. The increase is attributable to sales costs associated with the higher sales volume and the continued operating investment related to the implementation of the SanOne Storage Area Network (SAN) market development. (B) Nine Months ended 3/31/01 versus 3/31/00 Consolidated revenue for the nine months ended March 31, 2001 was $7,694,500, compared to $1,142,800 for the comparable period of the previous year. Revenues for the nine-month period ended March 31, 2001 include revenues from Excel/Meridian Data, Inc. ("Excel/Meridian"), an acquisition that was effective in June of 2000. If that acquisition had been effective during the comparable nine-month period ended March 31, 2000, reported revenues for the nine months ended March 31, 2000 would increase by approximately $4,818,000 (pro forma). The Company reported a loss from continuing operations attributable to common shareholders for the nine-month period ended March 31, 2001 of $1,945,700, or $.29 per share, compared to a net loss of $970,600, or $.17 per share for the comparable period in 2000. The increased loss for the current period was attributable primarily to planned operating investments related to the implementation of the Company's SAN market development initiative. The Consolidated Statement of Operations for the nine months ended March 31, 2001 reflected income from discontinued operations of $249,000, or $.04 per share, compared to income from discontinued operations of $91,000, or $.02 per share, for the comparable period in 2000. Included in income from discontinued operations for the nine-month period is a gain on sale of pollution control assets of $252,000. The net loss for the nine months ended March 31, 2001 attributed to common shareholders was $1,696,700, or $.25 per share, compared to a loss of $879,600, or $.16 per share, for the same nine-month period of 2000. Gross profit for the period amounted to $3,029,500, or 39.4%, compared to $553,200, or 48.4%, for the comparable nine-month period a year earlier. The increase in Gross Profit resulted from increased sales while the decrease in Gross Profit percentage resulted from changes in the types of products sold. Selling, general and administrative expenses for the current nine months ended March 31, 2001 increased to $4,899,600, compared to $1,517,300 incurred in the comparable period of 2000. The increase in selling, general and administrative expense is attributable to costs associated with the 10 substantially higher sales volume and the continued operating investment related to the implementation of the SanOne Storage Area Network (SAN) market development initiative. 2. Liquidity and Capital Resources The Company's current assets at March 31, 2001 of approximately $3.8 million exceeded current liabilities of $2.2 million by $1.6 million, and resulted in a current ratio of 1.7 to 1. At June 30, 2000 the Company reported current assets of approximately $5.4 million with current liabilities of $2.5 million, resulting in a current ratio of 2.2 to 1. The decrease in current assets resulted from collection of notes receivable related to the sale of Alanco Environmental Manufacturing, Inc. (completed effective June of 2000), offset by increases in accounts receivable and inventories. The decrease in current liabilities resulted from reductions in notes payable and accounts payable and accruals, offset by increases in bank lines and the deferred gain on sale of assets, (see Note C above). Cash used in continuing operations for the nine months was approximately $2,441,800, an increase of $1,865,100 when compared to cash used in continuing operations of $576,700 for the comparable nine-month period ended March 31, 2000. The increase in cash used in continuing operations was due to increases in losses from continuing operations, increases in accounts receivable and decreases in accounts payable and accrued expenses. During the second quarter of the current fiscal year, the Company renewed its formula-based Bank Line of Credit Agreement ("Agreement"). The new Agreement, which expires on December 26, 2001, increased the line of credit from $1.0 million to $1.5 million and reduced the interest rate to prime plus 1.0%. Management believes that cash balances and current bank lines are adequate to fund the Company's working capital needs for the next twelve months. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS - none Item 6. EXHIBITS (A) Reports on Form 8-K - None (B) Reports on Form S-8 - 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 there under duly authorized. ALANCO TECHNOLOGIES, INC. (Registrant) /s/John A. Carlson --------------------- John A. Carlson Chief Financial Officer Date: May 11, 2001 12 -----END PRIVACY-ENHANCED MESSAGE-----