q10qe093014.htm

0000098618-14-000025.txt : 20141114 0000098618-14-000025.hdr.sgml : 20141114 20141114153941 ACCESSION NUMBER: 0000098618-14-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20141114 FILED AS OF DATE: 20141114 DATE AS OF CHANGE: 20141114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALANCO TECHNOLOGIES INC CENTRAL INDEX KEY: 0000098618 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] 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: 141223620 BUSINESS ADDRESS: STREET 1: 7950 E. ACOMA DRIVE STREET 2: SUITE 111 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 4806071010 MAIL ADDRESS: STREET 1: 7950 E. ACOMA DRIVE STREET 2: SUITE 111 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 10-Q 1 q10qe093014.htm 10Q FOR THE QUARTER ENDED 9/30/14 q10qe093014.htm

ALANCO TECHNOLOGIES, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

_ X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

____TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to ____________

Commission file number 0-9347

ALANCO TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Arizona

(State or other jurisdiction of incorporation or organization)

86-0220694

(I.R.S. Employer Identification No.)

7950 E. Acoma Drive, Suite 111, Scottsdale, Arizona 85260

(Address of principal executive offices) (Zip Code)

(480) 607-1010

(Registrant’s telephone number)

______________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements in the past 90 days. X Yes ___ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). X Yes ___ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	Accelerated filer

Non-accelerated filer	Smaller reporting company	X

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of November 7, 2014 there were 5,037,500 shares of common stock outstanding.

ALANCO TECHNOLOGIES, INC.

INDEX
					Page Number
PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited)			4
			and June 30, 2014

		Condensed Consolidated Statements of Operations (Unaudited)			5
			For the three months ended September 30, 2014 and 2013

		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)			6
		For the three months ended September 30, 2014 and 2013

		Condensed Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)			7
			For the three months ended September 30, 2014

		Condensed Consolidated Statements of Cash Flows (Unaudited)
			For the three months ended September 30, 2014 and 2013		8

	Notes to Condensed Consolidated Financial Statements (Unaudited)				9
		Note A –		Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements
		Note B –		Stock-Based Compensation
		Note C –		Marketable Securities
		Note D –		Note Receivable
		Note E –		Land, Property and Equipment
		Note F –		Earnings Per Share
		Note G –		Equity
		Note H –		Contingent Payments
		Note I -		Asset Retirement Obligation
		Note J -		Commitments and Contingencies
		Note K -		Related Party Transactions
		Note L -		Subsequent Events
		Note M –		Liquidity

	Item 2.	Management’s Discussion and Analysis of Financial Condition
			and Results of Operations		19

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk			24

	Item 4.	Controls and Procedures			24

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings			24

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			24

	Item 6.	Exhibits			25

ALANCO TECHNOLOGIES, INC.

Except for historical information, the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” ”should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to the Company are intended to identify forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements are based on the expectations of management when made and are subject to, and are qualified by, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These risks and uncertainties include, but are not limited to, the following factors, among others, that could affect the outcome of the Company's forward-looking statements: general economic and market conditions; the inability to attract, hire and retain key personnel; the difficulty of integrating an acquired business; unforeseen litigation; unfavorable result of potential litigation; the ability to maintain sufficient liquidity in order to support operations; the ability to obtain satisfactory relationships with lenders; the ability to maintain satisfactory relationships with current and future suppliers; federal and/or state regulatory and legislative action; the ability to implement or adjust to new technologies and the ability to secure and maintain key contracts and relationships. New risk factors emerge from time to time and it is not possible to accurately predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Annual Report or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Quarterly Report on Form 10-Q.

ALANCO TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2014 AND JUNE 30, 2014

				September 30, 2014		June 30, 2014
ASSETS				(unaudited)
CURRENT ASSETS
	Cash and cash equivalents		$	1,354,800	$	1,215,600
	Accounts receivable - trade, net			87,300		96,800
	Other receivables - related party			4,200		9,200
	Note receivable, current - related party			245,000		300,000
	Marketable securities			230,000		560,100
	Prepaid expenses and other current assets			240,100		212,700
		Total current assets		2,161,400		2,394,400

LAND, PROPERTY AND EQUIPMENT, NET				4,281,200		4,163,000

OTHER ASSETS
	Note receivable, long-term - related party			124,000		109,000
	Trust account - asset retirement obligation			53,400		48,700
	Prepaid royalties, long-term			-		50,000
TOTAL ASSETS			$	6,620,000	$	6,765,100

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	416,800	$	278,000
	Contingent payments, current			50,000		50,000
		Total current liabilities		466,800		328,000

LONG-TERM LIABILITIES
	Contingent payments, long-term			1,130,300		1,138,300
	Asset retirement obligation			423,700		423,700
TOTAL LIABILITIES				2,020,800		1,890,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
	Preferred Stock - no shares issued or outstanding			-		-
	Common Stock
		Class A - 75,000,000 no par shares authorized, 4,962,500
		shares issued and outstanding at September 30, 2014
		and June 30, 2014		109,106,800		109,106,800
		Class B - 25,000,000 no par shares authorized, none issued or
		outstanding		-		-
	Accumulated Other Comprehensive Income			23,500		121,200
	Accumulated Deficit			(104,531,100)		(104,352,900)
		Total shareholders' equity		4,599,200		4,875,100

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	6,620,000	$	6,765,100

See accompanying notes to the condensed consolidated financial statements

ALANCO TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, (unaudited)

			2014		2013

NET REVENUES		$	232,400	$	14,800
	Cost of revenues		193,400		68,800
GROSS PROFIT (LOSS)			39,000		(54,000)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
	Corporate expenses		76,100		77,100
	Alanco Energy Services		199,500		232,900
			275,600		310,000

OPERATING LOSS			(236,600)		(364,000)

OTHER INCOME
	Interest income		11,500		7,800
	Gain on sale of marketable securities		46,700		204,800
	Other income		200		200
NET LOSS		$	(178,200)	$	(151,200)

NET LOSS PER SHARE - BASIC AND DILUTED		$	(0.04)	$	(0.03)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			4,962,500		4,944,300

See accompanying notes to the condensed consolidated financial statements

ALANCO TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, (unaudited)

		2014		2013

Net loss	$	(178,200)	$	(151,200)

Reclassification adjustment for realized gains included in net loss		(46,700)		(204,800)

Net unrealized gain (loss) on marketable securities held at September 30,		(66,800)		185,200

Net unrealized gain (loss) on marketable securities sold during the period		15,800		45,000

Comprehensive loss	$	(275,900)	$	(125,800)



See accompanying notes to the condensed consolidated financial statements

ALANCO TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 (unaudited)

						ACCUMULATED
						OTHER
		COMMON STOCK				COMPREHENSIVE		ACCUMULATED
		SHARES		AMOUNT		INCOME		DEFICIT		TOTAL
Balances, June 30, 2014		4,962,500	$	109,106,800	$	121,200	$	(104,352,900)	$	4,875,100
	Other comprehensive income adjustment	-		-		(97,700)		-		(97,700)
	Net loss	-		-		-		(178,200)		(178,200)
Balances, September 30, 2014		4,962,500	$	109,106,800	$	23,500	$	(104,531,100)	$	4,599,200

See accompanying notes to the condensed consolidated financial statements

ALANCO TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, (unaudited)

				2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss		$	(178,200)	$	(151,200)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		45,100		42,900
		Accretion of fair value - contingent payments		8,400		8,400
		Gain on sale of marketable securities		(46,700)		(204,800)
	Changes in operating assets and liabilities:
		Accounts receivable		9,500		(4,000)
		Other receivables - related party		5,000		19,400
		Prepaid expenses and other current assets		22,600		13,000
		Trust account - asset retirement obligation		(4,700)		(4,700)
		Accounts payable and accrued expenses		128,800		11,600
		Contingent payments liabilities		(16,400)		-
	Net cash used in operating activities			(26,600)		(269,400)

CASH FLOWS FROM INVESTING ACTIVITIES
	Issuance of note receivable to ACC			-		(25,000)
	Proceeds from repayment of ACC note			50,000		-
	Purchase of land, property, and equipment			(163,300)		(14,900)
	Proceeds from sale of marketable securities			279,100		499,100
	Net cash provided by investing activities			165,800		459,200

CASH FLOWS FROM FINANCING ACTIVITIES
	Purchase of treasury shares			-		(22,900)
	Net cash used in financing activities			-		(22,900)

NET INCREASE IN CASH AND CASH EQUIVALENTS				139,200		166,900

CASH AND CASH EQUIVALENTS, beginning of period				1,215,600		696,400

CASH AND CASH EQUIVALENTS, end of period			$	1,354,800	$	863,300

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION

	Non-cash investing & financing activities:
		Unrealized gain (loss) on marketable securities	$	(97,700)	$	25,400
		Note receivable issued for ACC amendment fee	$	(10,000)	$	-

See accompanying notes to the condensed consolidated financial statements

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note A – Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements

Nature of Operations

Alanco Technologies, Inc. (Stock Symbol: ALAN) was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the “Company” or “Alanco” refers to Alanco Technologies, Inc. and its wholly-owned subsidiaries. During the fiscal year ended June 30, 2012, the Company formed Alanco Energy Services, Inc. (“AES”), for the purpose of obtaining property to establish a water disposal facility near Grand Junction, CO to receive produced water generated as a byproduct from oil and natural gas production in Western Colorado. The new facility started to receive produced water in August 2012.

Background information on the creation of Alanco Energy Services, Inc.

During fiscal 2012, Alanco Energy Services, Inc. (“AES”), a wholly-owned subsidiary of the Company, executed an agreement with TC Operating, LLC (“TCO”) of Grand Junction, CO to transfer a land lease for approximately 24 acres near Grand Junction, CO (“Deer Creek site”) and all related assets to AES with the intent for AES to construct facilities for the treatment and disposal of large quantities of produced water generated by oil and natural gas producers in Western Colorado. The site was chosen due to its unique ability to meet stringent government requirements for disposal of the high saline water produced as a by-product of oil and gas production, and termed “produced water”. The agreement included the transfer of all related tangible and intangible assets as well as Federal, State and County permits (issued or in process) required to construct and operate the facilities. Subsequent to the TCO agreement, AES renegotiated an amended lease that became effective on May 1, 2012 and include a minimum monthly lease payment of $100 per acre ($2,400 per month) during the initial ten year term of the lease, plus approximately $.25 per barrel of produced water received at the site.

The design and construction of the Deer Creek water disposal facility required certain changes to the Goodwin Solid Waste facility (“Goodwin”) resulting in extra costs to the landlord, who also owned Goodwin. As incentive for the landlord to approve the facility design, AES agreed to limit landlord construction improvement costs related to the leased land to $200,000. Included in the $200,000 limited amount was $100,000 of landlord improvement costs to be paid by AES and reimbursed through a 50% credit against the $.25 per barrel royalty payments due landlord discussed above. AES recorded the $100,000 payment as prepaid royalties. The remaining prepaid balances at September 30, 2014 and June 30, 2014 were $51,300 and $58,700, respectively.

TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent deferred payment), approximately the initial term of the lease. Under certain circumstances, the acreage covered by the lease may be expanded by up to 50 acres to allow for additional expansion at the site. See Note H - Contingent Payments for additional discussion of the contingent deferred payment.

During April 2012, AES also entered into a definitive agreement with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre site near Grand Junction, CO, for additional expansion to the proposed water treatment and disposal facility. As consideration for the land purchase, AES paid $500,000 at the April 13, 2012 closing and assumed a non-interest bearing, secured, $200,000 note due November 15, 2012, which was repaid upon maturity. AES has also agreed to potential additional quarterly earn-out payments to DCD up to a maximum total of $800,000, generally determined as 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter (contingent land payment). See Note H - Contingent Payments for additional discussion of the contingent land payment. The land, known as Indian Mesa, is currently undeveloped as the Company is in the permitting process.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Related to the treatment and disposal facilities, in fiscal year 2012 AES entered into a management agreement with TCO to manage the project for a monthly management fee of $10,000 initially and $20,000 after final permits for the Deer Creek operation were obtained in May 2012. The management agreement expired in January 2013 and is continuing on a month to month basis. During the three months ended September 30, 2014, the Company paid TCO $60,000 under the management agreement. TCO also earned an additional variable fee of approximately $4,000 for September 2014 revenues which was paid in October 2014.

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In our opinion, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such necessary adjustments consist of normal recurring items and the elimination of all significant intercompany balances and transactions.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s June 30, 2014 Annual Report filed on Form 10-K. Interim results are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Fair Value of Assets and Liabilities – The estimated fair values for assets and liabilities are determined at discrete points in time based on relevant information. The Accounting Standards Codification (“ASC”) prioritizes inputs used in measuring fair value into a hierarchy of three levels: Level 1 – unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 – observable inputs other than quoted prices included within Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 – unobservable inputs in which little or no market activity exists that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. These estimates involve uncertainties and cannot be determined with precision. The Company’s policy is to recognize transfers into and out of Level 1, 2 and 3 categories as of the date of the event or change in circumstances occurs. The carrying amounts of receivables, prepaid expenses, accounts payable, and accrued liabilities approximate fair value given their short-term nature or their effective interest rates, which represent Level 3 input levels.

The following are the classes of assets and liabilities measured at fair value on a recurring basis at September 30, 2014, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

		Level 1:
		Quoted Prices		Level 2:
		in active		Significant		Level 3:		Total
		Markets		Other		Significant		at
		for Identical		Observable		Unobservable		September 30,
		Assets		Inputs		Inputs		2014
Marketable Securities	$	230,000	$	-	$	-	$	230,000

Asset Retirement Obligation		-		-		423,700		423,700

Contigent Land Payment		-		-		648,400		648,400

Contingent Purchase Price		-		-		531,900		531,900
	$	230,000	$	-	$	1,604,000	$	1,834,000

Fair Value of Marketable Securities – The estimated fair values of Marketable Securities are determined at discrete points in time based on relevant market information. The Marketable Securities are comprised entirely of ORBCOMM Inc. (“ORBCOMM”) common shares (NASDAQ: ORBC) registered under a currently effective ORBCOMM Form S-3 registration statement. The fair value measurement at September 30, 2014 is based on unadjusted quoted prices for identical assets in active markets and thus represents a Level 1 fair value measurement. The remaining shares will be revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period.

Fair Value of Asset Retirement Obligation – The Deer Creek asset retirement obligation is the estimated cost to close the Deer Creek facility under terms of the lease, meeting environmental and State of Colorado regulatory requirements. The estimate is determined at discrete points in time based upon significant unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Management’s estimate of the asset retirement obligation is based upon a cost estimate developed by a consultant knowledgeable of government closure requirements and costs incurred at similar water disposal facility operations. The process used was to identify each activity in the closure process, obtaining vendor estimated costs, in current dollars, to perform the closure activity and accumulating the various vendor estimates to determine the asset retirement obligation. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. The lack of an active market to validate the estimated asset retirement obligation results in the fair value of the asset retirement obligation to be a Level 3 fair value measurement. ASC Topic 410-20: Asset Retirement Obligations requires the Company to review the asset retirement obligation on a recurring basis and record changes in the period incurred.

Fair Value of Contingent Payments – The contingent land payment and contingent purchase price liabilities are also determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. In calculating the estimate of fair value for both of the contingent payments, management completed an estimate of the present value of each identified contingent liability based upon projected income, cash flows and capital expenditures for the Deer Creek facility developed under plans currently approved by the Company’s board of directors. Different assumptions relative to the expansion or alternative uses of the Deer Creek and Indian Mesa facilities could result in significantly different valuations. The projected payments have been discounted at a rate of 3% per annum to determine net present value. The lack of an active market to validate the estimated contingent land and purchase price liabilities results in the fair value of the contingent land and purchase price liabilities to be a Level 3 fair value measurement. ASC Topic 820: Fair Value Measurement requires the Company to review the contingent land and purchase price liabilities on a recurring basis and record changes in the period incurred.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance regarding revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period and early adoption is not permitted. The Company is currently assessing the impact on its financial position and results of operations.

There have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended September 30, 2014, that are of significance, or potential significance, to us.

Note B – Stock-Based Compensation

The Company has stock-based compensation plans and reports stock-based compensation expense for all stock-based compensation awards based on the estimated grant date fair value. The value of the compensation cost is amortized on a straight-line basis over the requisite service periods of the award (generally the option vesting term).

The Company estimates fair value using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:

·	Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available;

·	Expected volatility of award grants made under the Company’s plans is measured using the historical daily changes in the market price of the Company’s common stock over the expected term of the award and contemplation of future activity;

·	Risk-free interest rate is the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and,

·	Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures.

The Company has several employee stock option and officer and director stock option plans that have been approved by the shareholders of the Company. The plans require that options be granted at a price not less than market on the date of grant and are more fully discussed in our Form 10-K for the year ended June 30, 2014.

The following table summarizes the Company’s stock option activity during the first three months of fiscal 2015:

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

				Weighted
			Weighted	Average
			Average	Remaining		Aggregate		Aggregate
			Exercise Price	Contractual		Fair		Instrinsic
		Shares	Per Share	Term (1)		Value (3)		Value (2)

Outstanding July 1, 2014		823,400	$0.63	3.35	$	212,600	$	-
	Granted	-	-	-		-		-
	Exercised	-	-	-		-		-
	Forfeited or expired	(9,400)	$1.50	-		(5,800)		-
Outstanding September 30, 2014		814,000	$0.62	3.14	$	206,800	$	-
Exercisable September 30, 2014		814,000	$0.62	3.14	$	206,800	$	-

(1)	Remaining contractual term presented in years.
(2)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
	awards and the closing price of the Company's common stock as of September 30, 2014, for those awards that
	have an exercise price currently below the closing price as of September 30, 2014 of $.43.
(3)	Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based
	compensation.

As of September 30, 2014, there were no unamortized Black Scholes values related to stock option grants made in prior periods. There were no new grants during the three months ended September 30, 2014.

Note C – Marketable Securities

At September 30, 2014, the Company had Marketable Securities in the amount of $230,000 representing the market value ($5.75 per share) of 40,000 ORBCOMM Common Shares (NASDAQ: ORBC). The average cost basis of these shares at September 30, 2014 and June 30, 2014 is $5.16 per share.

The shares held are revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period. Based primarily upon the change in market value of $6.59 per share at June 30, 2014 to $5.75 per share at September 30, 2014, the Company recorded an unrealized loss on marketable securities held during the three months ended September 30, 2014 (presented in the Condensed Consolidated Statements of Comprehensive Income (Loss)), of ($66,800) and an unrealized gain on marketable securities sold during the three months ended September 30, 2014 of $15,800, offset by a $46,700 adjustment for unrealized gains previously recorded related to securities sold during the period. The actual gain on securities sold is reported in the Statement of Operations. At September 30, 2014, the Accumulated Other Comprehensive Income of $23,500 was presented in the Shareholders’ Equity section of the Condensed Consolidated Balance Sheet.

The Company sold a total of 45,000 shares of ORBCOMM, Inc. Common Stock during the three months ended September 30, 2014 for total proceeds of $279,100, and an average selling price of approximately $6.20 per share, resulting in a net gain of $46,700. The cost of the securities sold for purposes of computing the realized gain is based on the average cost of the securities.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following table summarizes the activities related to investment in Marketable Securities for the three months ended September 30, 2014:

Marketable Securities
											Accumulated
	Net		Cost Basis				Market Value				Unrealized
	Shares		Per Share		Cost Basis		Per Share		Total Value		Gain		(Loss)
June 30, 2014	85,000	$	5.16	$	439,100	$	6.59	$	560,100	$	121,200	$	-

Shares sold	(45,000)		5.16		(232,600)

September 30, 2014	40,000	$	5.16	$	206,500	$	5.75	$	230,000	$	23,500	$	-

Note D – Note Receivable

Note receivable of $369,000 and $409,000 at September 30, 2014 and June 30, 2014, respectively, represents a note due from American Citizenship Center, LLC (“ACC”), a related party. The $369,000 balance at September 30, 2014 represents the outstanding amount drawn on a $369,000 credit line under modifications made during September 2014 which resulted in a decrease in monthly payments, an increase to the interest rate from 9% to 9.5% effective October 1, 2014, and a $10,000 loan fee that was added to the note balance.

In October 2014, ACC and the Company again modified the loan agreement by revising the loan amount to $388,000 which includes $9,000 of accounting fees for July through September 2014 and a $10,000 loan fee. In addition, the minimum monthly payments from September through December 2014 were reduced to $5,000. The minimum payment required starting in January 2015 returns to $25,000 and the entire loan balance is payable in full by the maturity date of August 31, 2015. Based on the history of the note modifications, the recent modification thereto, and ACC’s history of an ability to make a certain level of payments, the Company has classified $245,000 of the note as current and $124,000 of the note as long-term.

ACC’s current business plan is designed to capitalize on the significant opportunity that would be created by immigration reform, initially expected to occur in late 2012. Immigration reform has not occurred as expected. In fact, immigration reform has not occurred to date and the most recent news on immigration reform was a commitment by President Obama in early September 2014 that he would act on immigration reform via “Executive Action” after the United States mid-term elections that occurred during early November 2014. The plan is based upon the assumption that an Executive Action will be issued by December 2014. No provision for collectability has been recorded as of September 30, 2014 as current ACC financial projections indicate the note will be paid under the amended terms by the maturity date of August 31, 2015. ACC is currently in compliance with all terms of the October 2014 amendment.

Note E – Land, Property and Equipment

Land, Property and Equipment at September 30, 2014 and June 30, 2014 consist of the following:

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)


		June 30, 2014		Additions		September 30, 2014
Office furniture and equipment	$	51,300	$	-	$	51,300
Water disposal facility		2,714,600		2,100		2,716,700
Production equipment		232,000		106,100		338,100
		2,997,900		108,200		3,106,100
Less accumulation depreciation		(371,800)		(45,100)		(416,900)
Land and improvements		1,536,900		55,100		1,592,000
Net book value	$	4,163,000	$	118,200	$	4,281,200

Note F – Earnings Per Share

Basic and diluted loss per share of common stock was computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding.

Diluted earnings per share are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period using the treasury stock method. Dilutive securities are options, warrants, convertible debt, and preferred stock that are freely exercisable into common stock at less than the prevailing market price. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the earnings per share or decrease the loss per share. For the three months ended September 30, 2014 and 2013, there were no dilutive securities included in the loss per share calculation as the effect would be antidilutive. Considering all holders’ rights, total common stock equivalents issuable under these potentially dilutive securities are approximately 814,000 and 1,076,600 at September 30, 2014 and 2013, respectively.

Note G – Equity

The Company did not issue any shares of Common Stock during the three months ended September 30, 2014.

During the three months ended September 30, 2014, the Company recognized a comprehensive income adjustment in the amount of ($97,700), reported in the Condensed Consolidated Statement of Changes in Shareholders’ Equity.

In December 2011, the Company announced that its board of directors had authorized a stock repurchase program whereby the Company could repurchase up to 2 million shares of its outstanding common stock over the next 12 months. The stock repurchase program was extended, under the same limitation, through December 31, 2013. For the six months ended December 31, 2013, the Company had repurchases under the program for a total of 56,800 shares at a cost of approximately $26,100, or $.46 per share. During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program, extending it through December 31, 2014 and establishing an aggregate future amount of shares that may be purchased under the program to 2 million shares. There were no shares repurchased under the program in the current quarter.

The Company has authorized 25,000,000 shares of Preferred Stock of which 5,000,000 shares have been allocated to Series A, 500,000 have been allocated to Series B, 400,000 have been allocated to Series C Junior Participating, 500,000 have been allocated to Series D, and 750,000 have been allocated to Series E. At September 30, 2014 and June 30, 2014, no Preferred Stock of any series was issued or outstanding.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Note H - Contingent Payments

Contingent payments at September 30, 2014 and June 30, 2014 relate to AES asset purchase transactions completed in conjunction with the construction of water disposal facilities for the treatment and disposal of produced water generated by oil and natural gas producers in Western Colorado. Details of the contingent payments are as follows:

		September 30,		June 30,
		2014		2014
Contingent land payment	$	648,400	$	660,200
Contingent purchase price		531,900		528,100
		1,180,300		1,188,300
Less current portion		(50,000)		(50,000)
Contingent payments, long-term	$	1,130,300	$	1,138,300

Contingent land payment of $648,400 at September 30, 2014 represents the net present value of $800,000 of estimated contingent land payments due under an agreement whereby Alanco Energy Services, Inc. (“AES”) acquired 160 acres of land known as Indian Mesa. The maximum total of $800,000 of contingent land payments is based upon 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter for activity at both the Deer Creek and the Indian Mesa locations. The payments were projected considering current operating plans as approved by the Alanco Board of Directors, with the payments discounted at a rate of 3% per annum. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the three months ended September 30, 2014 by $4,700. During the three months ended September 30, 2014, approximately $16,500 was earned and payable under the contingency formula.

Contingent purchase price of $531,900 at September 30, 2014 represents the net present value of projected payments to be made to TC Operating, LLC (“TCO”) pursuant to an Asset Purchase Agreement under which TC Operating transferred a land lease for approximately 24 acres of land known as Deer Creek and all related tangible and intangible assets. Per the agreement, the contingent payments are determined as 28% of the Cumulative EBITDA in excess of all of AES’s capital investment for the ten (10) year period commencing on January 1, 2014. AES’s Capital investment shall mean the aggregate amount incurred by AES in acquiring the Assets, the Indian Mesa Facility, and or improving either the Deer Creek Facility or the Indian Mesa Facility. Payments of said Contingent Purchase Price shall be payable quarterly. The projected payments consider current operating plans as approved by the Alanco Board of Directors, with payments discounted at a rate of 3% per annum to determine net present value. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent purchase price during the three months ended September 30, 2014 by $3,700.

Note I – Asset Retirement Obligation

The Company has recognized estimated asset retirement obligations (closure cost) of $423,700 to remove leasehold improvements, remediate any pollution issues and return the Deer Creek water disposal property to its natural state at the conclusion of the Company’s lease. The closure process is a requirement of both the Deer Creek lease and the State of Colorado, a permitting authority for such facilities. The closure cost estimate, in current dollars, was completed by an approved independent consultant experienced in estimating closure costs for water disposal operations and the estimated amount was approved by the State of Colorado. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The Company reviews the asset retirement obligation quarterly and performs a formal annual assessment of its estimates to determine if an adjustment to the value of the asset retirement obligation is required.

The laws of the State of Colorado require companies to meet environmental and asset retirement obligations by selecting an approved payment method. The Company has elected to meet its obligation by making quarterly payments of approximately $4,700 into a trust that, over the expected lease period, will build liquid assets to meet the asset retirement obligation. During the three months ended September 30, 2014, the Company made the required quarterly payments. The balances in the trust account for the asset retirement obligation as of September 30, 2014 and June 30, 2014 were $53,400 and $48,700, respectively.

Note J – Commitments and Contingencies

Employment Agreements

On June 30, 2014, the Company entered into employment agreements, effective July 1, 2014 with the Company’s newly elected Chief Executive and Chief Financial Officers. The elections resulted due to the March 2014 death of Robert Kauffman, past President and CEO of the Company. The employment agreements provide for levels of compensation and continuation of benefit under Company benefit plans. The agreements have severance provisions and are effective until 18 months after notice of termination is given by either party. Copies of the employment agreements were attached as exhibits to the Form 8-K filed on July 1, 2014.

Legal Proceedings

The Company is a defendant and counterclaimant in litigation involving its subsidiary, TSI Dissolution Corp. (formerly known as Alanco/TSI Prism Inc. (“TSI”)) and the purchaser of TSI’s assets, Black Creek Integrated Systems Corp. Black Creek filed a complaint in the Maricopa County Superior Court against TSI and the Company, being Civil Case NO. CV2011-014175, claiming various offsets from the purchase price, primarily concerning inventory adjustments, and TSI counterclaimed for monies due from Black Creek under the purchase agreement. Following a trial during fiscal 2014, the court awarded a net judgment in favor of Black Creek in the amount of $16,800, plus attorney’s fees and accrued interest, resulting in a total judgment in the amount of $128,300. At September 30, 2014 and June 30, 2014, the Company recorded an accrued liability of $128,300 for the judgment. The Company believes the net judgment amount fails to address, among other matters, inventory reserves established for the specific items of inventory which were the subject of Black Creek’s concerns, which if properly addressed would result in a net judgment in favor of the Company, with an attendant award of attorney’s fees in favor of the Company. The Company has filed its Appeal and intends to vigorously pursue the appeal of the judgment. As required under the appeal process, the Company posted a bond with the court for $128,300, which is included in prepaid expenses and other current assets at September 30, 2014 and June 30, 2014.

The Company may from time to time be involved in litigation arising from the normal course of business. As of September 30, 2014, there was no such litigation pending deemed material by the Company.

Note K – Related Party Transactions

At September 30, 2014 and June 30, 2014 the Company had a note due from American Citizenship Center, LLC (“ACC”), a related party, with balances of $369,000 and $409,000, respectively. Refer to Note D – Note Receivable for further discussion. During the three months ended September 30, 2014 the Company billed ACC a total of approximately $10,200, which includes amounts for accounting services, legal services related to note modifications, and interest on the note. At September 30, 2014, the Company had unpaid receivables from ACC in the amount of $4,200, consisting of $2,700 representing one quarter of interest and $1,500 of legal fees. All required payments have been subsequently paid.

ALANCO TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

At September 30, 2014 and June 30, 2014 the Company had accrued $15,000 and $15,000 (a total of $30,000), respectively, in recognition of the estimated value of stock awards anticipated to be granted to directors, or some other form of compensation, to compensate the directors for the lack of stock options granted during fiscal year 2014. Refer to Note L – Subsequent Events for an update.

Note L – Subsequent Events

In October 2014, ACC and the Company amended the loan agreement increasing the loan amount to $388,000 by adding $9,000 of accounting fees for July through September 2014 and a $10,000 loan fee. In addition, minimum monthly payments for September through December 2014 were reduced to $5,000. The minimum payment required starting in January 2015 returns to $25,000 and the entire loan balance is payable in full by the maturity date of August 31, 2015. Subsequent to September 30, 2014 and through the date of this report, ACC paid $10,000 on its loan and brought all fee amounts due current.

In November 2014, the Company’s Board of Directors approved the Alanco Technologies, Inc. 2014 Stock Incentive Plan (“2014 Plan”) authorizing 500,000 shares of common stock available for issuance under the 2014 Plan. The Company issued 390,000 stock options at a strike price of $0.50 per share, which was above market price on the date of grant. 115,000 of these stock options were issued under the 2014 Plan and 275,000 options were issued under existing plans which were previously approved.

In November 2014, the Company issued each of the Company’s three independent members of the Board of Directors 25,000 stock grants for a total of 75,000 shares. The Company has accrued $30,000 of expense associated with the grants as of the quarter ended September 30, 2014 which is also discussed in Note K – Related Party Transactions.

Note M - Liquidity

During the three months ended September 30, 2014, the Company reported a net loss of ($178,200) and for fiscal year ended June 30, 2014, the Company reported a net loss of ($106,200). For the next year, the Company expects to meet its working capital and other cash requirements with its current operations, cash reserves and sales of marketable securities as required. However, if for any reason, the Company does require additional working capital to complete its business plan, there can be no assurance that the Company’s efforts to acquire the required additional working capital will be successful. The Company’s continued existence is dependent upon its ability to achieve and maintain profitable operations, identify profitable acquisition/merger candidates and/or successfully invest its capital.

ALANCO TECHNOLOGIES, INC.

Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements: Except for historical information, the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” ”should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to the Company are intended to identify forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements are based on the expectations of management when made and are subject to, and are qualified by, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These risks and uncertainties include, but are not limited to, the following factors, among others, that could affect the outcome of the Company's forward-looking statements: general economic and market conditions; the inability to attract, hire and retain key personnel; the difficulty of integrating an acquired business; unforeseen litigation; unfavorable result of potential litigation; the ability to maintain sufficient liquidity in order to support operations; the ability to obtain satisfactory relationships with lenders; the ability to obtain satisfactory relationships with current and future suppliers; federal and/or state regulatory and legislative action; the ability to implement or adjust to new technologies and the ability to secure and maintain key contracts and relationships. New risk factors emerge from time to time and it is not possible to accurately predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Annual Report or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Quarterly Report on Form 10-Q.

During fiscal year ended June 30, 2012, the Company formed AES, a wholly owned subsidiary and constructed the Deer Creek water treatment and disposal facility located near Grand Junction, CO. The facility started to receive produced water in August 2012. During fiscal 2014 and 2013, the Company continued the permitting process for the 160 acre site known as Indian Mesa for water treatment and disposal and a landfill/land farm operation.

Current Status of Deer Creek facility

The Deer Creek produced water disposal facility, located near Grand Junction, CO, became operational in August 2012 with annual evaporative capacity of approximately 300,000 barrels, providing Piceance Basin producers with significant transportation cost savings compared to alternative water disposal sites. In November 2013, the facility received approval from the Mesa County Board of Commissioners allowing 24 hours a day, seven days per week operations for one year and the Company is currently reapplying for an extension. The facility had previously been restricted to daylight hours Monday through Saturday.

Current Status of Indian Mesa facility

The permitting process for the Indian Mesa facility, located approximately 4 miles North West of the Deer Creek site, has been in process for a number of years with an initial County Use Permit issued in 2010 covering, among other things, evaporation ponds and land farming. In December 2013, in response to an AES request to amend its County User Permit (“CUP”), the Mesa County Board of Commissioners unanimously approved a new CUP for AES to construct and operate on its 160 acre Indian Mesa site evaporation ponds and/or landfill for disposal of solid oil and gas (O&G) waste, such as drill cuttings, tank bottoms, sock filters, etc. The approval also allows for solid and produced water disposal of Naturally-Occurring Radioactive Materials (NORM) and Technically Enhanced Naturally-Occurring Radioactive Materials (TENORM). In June 2014 AES received final construction approval from the Colorado Department of Public Health and Environment (CDPHE) for twelve produced water disposal ponds, which if developed as planned, would be located on the north 80 acres of the Indian Mesa site.

ALANCO TECHNOLOGIES, INC.

The capacity of Indian Mesa is dependent on its type of development, which the Company is still planning. If 80 acres is developed as 12 ponds as discussed above, the annual capacity at Indian Mesa for produced water, not considering enhanced evaporation, would be approximately 1 million barrels. If the remaining 80 acres were developed into landfills, the capacity would be approximately 3 million cubic yards. If the entire 160 acres were developed into landfill, the solid waste capacity would increase to approximately 8 million cubic yards. Complete build-out of its Indian Mesa facility, including both landfill and evaporative ponds, would result in a unique Western Colorado “one stop shop” for all O&G waste products, including NORM and TENORM contaminated waste streams.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, we evaluate our estimates and assumptions concerning classification and valuation of investments, the estimated fair value of stock-based compensation, realization of deferred tax assets, collectability of accounts and note receivables, estimated useful lives and carrying value of fixed assets, the recorded values of accruals and contingencies including the estimated fair values of the Company’s asset retirement obligation and the contingent land and purchase price liabilities, and the Company’s ability to continue as a going concern. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions.

The SEC suggests that all registrants discuss their most “critical accounting policies” in Management’s Discussion and Analysis. A critical accounting policy is one which is both important to the portrayal of the Company’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the critical accounting policies as those accounting policies that affect its more significant judgments and estimates in the preparation of its consolidated financial statements. The Company’s Audit Committee has reviewed and approved the critical accounting policies identified. These policies include, but are not limited to, revenue recognition, realization of note receivable, stock-based compensation, the recorded values of accruals and fair values of assets and liabilities including the Company’s contingent liabilities.

Revenue Recognition

The Company uses four factors to determine the appropriate timing of revenue recognition. Three of these factors are generally factual considerations that are not subject to material estimates (evidence of an arrangement exists, the service has been performed and the fee is determinable). The fourth factor includes judgment regarding the collectability of the sales price. The Company’s written arrangement with customers establishes payment terms and the Company only enters into arrangements when it has reasonable assurance that it will receive payment from the customer. The assessment of a customer’s credit-worthiness is reliant on management’s judgment on factors such as credit references and market reputation. If any sales are made that become uncollectible, the Company establishes a reserve for the uncollectible amount.

ALANCO TECHNOLOGIES, INC.

Realization of Note Receivable

The Company has reviewed ACC’s projected revenues, related assumptions and cash flows when evaluating the collectability of the note receivable and determining the need for any reserve. These assumptions are further influenced by current political activities.

Stock-Based Compensation

The Company has stock-based compensation plans and the associated compensation cost is amortized on a straight-line basis over the vesting period. The Company estimates the fair value of stock-based compensation using the Black-Scholes valuation model using the following inputs: the plain-vanilla method for expected term based on the contractual term and vesting period of the award, the expected volatility of daily changes in the market price of the Company’s common stock, the assumed risk-free interest rate and an assumption of future forfeitures based on historical cancellations and management’s analysis of potential forfeitures.

Recorded Values of Accruals

The Company makes accruals for contingent liabilities based on reasonable estimates for known or anticipated obligations. Estimates may be based on known inputs, experience with similar situations, or anticipated outcomes. Estimates for the Company’s asset retirement obligation and contingent payments are determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Estimates for the asset retirement obligation were developed by a consultant knowledgeable about the State of Colorado regulatory requirements and use vendor estimates for the various activities required for the closure of the Deer Creek facility. Estimates for the contingent payments were calculated based on projected income, cash flows and capital expenditures for the Deer Creek and Indian Mesa facilities under current plans.

Fair Values of Assets and Liabilities

The Company estimates fair values for assets and liabilities at certain points in time based on information known at that time using the Accounting Standards Codification (“ASC”) and recognizes transfers as they occur. The ASC uses a three level hierarchy: Level 1 – unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 – observable inputs, other than quoted prices included with Level 1, and Level 3 – unobservable inputs in which little or no market activity exists that are significant to the fair value. The fair value of the Company’s Marketable Securities is based on Level 1 inputs using ORBCOMM’s quoted prices. The asset retirement obligation and contingent payments discussed above use Level 3 inputs.

Results of Operations

Presented below is management’s discussion and analysis of financial condition and results of operations for the periods indicated:

(A)	Three months ended September 30, 2014 versus three months ended September 30, 2013

Net Revenues

Net revenues reported for the quarter ended September 30, 2014 were $232,400 versus $14,800 for the quarter ended September 30, 2013, an increase of $217,600. Revenues are comprised of produced water delivery fees and sales of reclaimed oil. The significant improvement for the comparative three month period is reflective of the Company’s development of customer relationships in the region. Water deliveries are impacted by the prices of oil and gas which drives drilling activities in the region, the restriction on drilling during winter months which negatively impact water deliveries, and alternative uses of produced water, such as for fracking fluid that some current and potential customers are utilizing. As additional customers are expected to recognize the savings of using a local water disposal company and the Company expands its customer base, we expect revenues to increase.

ALANCO TECHNOLOGIES, INC.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2014 and 2013 were $193,400 and $68,800, respectively, an increase of $124,600 or 181.1% when comparing the periods. Cost of revenues consists of direct labor costs, equipment costs (including depreciation), land lease costs and other operating costs. The increase is primarily due to higher variable costs as a result of increased revenues and includes labor costs, fees tied to water volumes, fuel costs and high pond maintenance costs during the warmer months. Fixed costs such as depreciation, amortization, accretion and lease costs represent approximately 30% and 75% of the cost of revenues for three months ended September 30, 2014 and 2013, respectively. The gross margin for the three months ended September 30, 2014 and 2013 were 16.8% and (364.9%), respectively. While the cost of revenues significantly increased in the current quarter, there was a corresponding increase in revenue resulting in gross profit in the current quarter versus a gross loss in the same quarter of the prior year as the Company had not reached the break-even point.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the quarter ended September 30, 2014 (consisting of corporate expenses and AES selling, general and administrative expense) was $275,600, a decrease of $34,400, or 11.1%, compared to $310,000 reported for the quarter ended September 30, 2013. Corporate expenses for the current quarter was $76,100 and represented a decrease of $1,000, or 1.3%, compared to corporate expenses of $77,100 reported for the comparable quarter ended September 30, 2013. The net decrease is primarily comprised of a decrease to salary expense offset by a related decrease to the allocation of corporate service cost to AES. AES expense of $199,500 for the quarter ended September 30, 2014 compared to $232,900 for the quarter ended September 30, 2013 reflects a decrease of $33,400 or 14.3% when comparing the two periods and primarily reflects the decreased allocation of corporate service cost.

Operating Loss

Operating loss for the quarter ended September 30, 2014 was ($236,600), a decrease of $127,400, or 35.0%, compared to an Operating loss of ($364,000) reported for the same quarter of the prior year. The decreased operating loss resulted primarily from a $93,000 improvement in gross profit to a gross profit of $39,000 for the quarter ended September 30, 2014 from a gross loss for the quarter ended September 30, 2013 of ($54,000) and a $34,400 decrease in selling, general and administrative expenses during the current quarter as compared to the same quarter of the previous year as discussed above.

Other Income

Interest income for the quarter ended September 30, 2014 was $11,500, an improvement of $3,700, or 47.4%, when compared to net interest income of $7,800 for the quarter ended September 30, 2013. The increase in interest income related primarily to an increase in the average outstanding balance of the ACC note receivable and the increased interest rate on the note pursuant to the renegotiated terms during fiscal 2014.

During the quarter ended September 30, 2014, the Company recorded net gains on the sale of marketable securities of $46,700, resulting from the sale of 45,000 shares of its ORBCOMM Common Stock at an average selling price of $6.20 per share and average cost of $5.16 per share, compared to net gains on sale of marketable securities in the comparable quarter of the prior year of $204,800, resulting from the sale of 101,118 shares of ORBCOMM Common Stock at an average selling price of $4.94 per share and average cost of $2.91 per share.

Net Loss

Net loss for the quarter ended September 30, 2014 amounted to ($178,200), or ($.04) per share, compared to net loss of ($151,200), or ($.03) per share, in the comparable quarter of the prior year for reasons previously discussed.

Comprehensive Income (Loss)

Comprehensive loss for the current quarter of ($275,900) reflects the change in market value of the Company’s Marketable Securities held during the current quarter compared to the prior period. In addition to the current quarter’s net loss of $178,200, the comprehensive loss for the quarter ended September 30, 2014 consisted of the net value of three items: 1) the quarter ending market value reclassification adjustment for realized gains included in Net Loss of $46,700; 2) an Unrealized Loss on Marketable Securities of ($66,800) resulting from a decrease in the market value of the shares held at September 30, 2014 compared to the recorded cost, and; 3) the net unrealized gain on marketable securities sold during the period of $15,800. At September 30, 2014 the Company valued 40,000 shares of ORBCOMM, Inc. Common Stock at $5.75 per share for a total value of $230,000.

ALANCO TECHNOLOGIES, INC.

Liquidity and Capital Resources

The Company’s current assets at September 30, 2014 exceeded current liabilities by $1,694,600, resulting in a current ratio of 4.6 to 1. At June 30, 2014, current assets exceeded current liabilities by $2,066,400 reflecting a current ratio of 7.3 to 1. The reduction in net current assets at September 30, 2014 versus June 30, 2014 was due primarily to the sale of Marketable Securities the Company held in ORBCOMM, Inc. offset primarily by increases to cash and cash equivalents and increases to accounts payable and accrued expenses.

Accounts receivable – trade, net of $87,300 represents the outstanding billings at September 30, 2014 of the AES water disposal operation. Other receivables – related party totaling $4,200 at September 30, 2014 represents billings to ACC for interest of $2,700 and legal fees associated with the note modification of $1,500.

Cash used in operations for the three month period ended September 30, 2014 was ($26,600), a decrease of ($242,800), or 90.1% compared to ($269,400) reported for the same period of the prior year. The decrease in net cash used in operations for the three months ended September 30, 2014 was due primarily to an increase in accounts payable and accrued expenses and a decrease in operating loss as compared to the same period of the prior year.

Cash provided by investing activities for the three month period ended September 30, 2014 was $165,800, a decrease of $293,400, or 63.9% compared to the $459,200 provided for the same period of the prior year. The decrease was primarily due to lower proceeds from the sale of marketable securities during the period offset by an increase in the purchase of land, property and equipment as compared to the prior year. Purchases of land, property and equipment include permitting costs for the Indian Mesa site and the purchase of equipment for the Deer Creek facility.

Cash used by financing activities for the three month period ended September 30, 2014 was zero compared to cash used by financing activities of ($22,900) for the same period of the prior year which reflects the repurchase of treasury shares during the three months ended September 30, 2013.

During fiscal 2015, the Company expects to meet its working capital and other cash requirements with its current operations, cash reserves and sales of marketable securities as required. However, the Company may require additional working capital for future operations. While the Company believes that it will succeed in attracting additional required capital and will generate capital from future operations, there can be no assurance that the Company’s efforts will be successful. The Company’s continued existence is dependent upon its ability to achieve and maintain profitable operations, identify profitable acquisition/merger candidates and/or successfully invest its capital.

Item 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting company.

ALANCO TECHNOLOGIES, INC.

Item 4 - CONTROLS AND PROCEDURES

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company carried out, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended). Based on their evaluation, the Company’s Chief Executive Officer and its Chief Financial Officer concluded that, as of September 30, 2014, the Company’s disclosure controls and procedures were effective. Management has concluded that the condensed consolidated financial statements in this Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations, comprehensive income (loss) and cash flows for the periods and dates presented.

(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Legal Proceedings - The Company is a defendant and counterclaimant in litigation involving its subsidiary, TSI Dissolution Corp. (formerly known as Alanco/TSI Prism Inc. (“TSI”)) and the purchaser of TSI’s assets, Black Creek Integrated Systems Corp. Black Creek filed a complaint in the Maricopa County Superior Court against TSI and the Company, being Civil Case NO. CV2011-014175, claiming various offsets from the purchase price, primarily concerning inventory adjustments, and TSI counterclaimed for monies due from Black Creek under the purchase agreement. Following a trial during fiscal 2014, the court awarded a net judgment in favor of Black Creek in the amount of $16,800, plus attorney’s fees and accrued interest, resulting in a total judgment in the amount of $128,300. At September 30, 2014 and June 30, 2014, the Company recorded an accrued liability of $128,300 for the judgment. The Company believes the net judgment amount fails to address, among other matters, inventory reserves established for the specific items of inventory which were the subject of Black Creek’s concerns, which if properly addressed would result in a net judgment in favor of the Company, with an attendant award of attorney’s fees in favor of the Company. The Company has filed its Appeal and intends to vigorously pursue the appeal of the judgment. As required under the appeal process, the Company posted a bond with the court for $128,300, which is included in prepaid expenses and other current assets at September 30, 2014 and June 30, 2014.

The Company may from time to time be involved in litigation arising from the normal course of business. As of September 30, 2014, there was no such litigation pending deemed material by the Company.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2014, no shares of Company stock were sold.

ALANCO TECHNOLOGIES, INC.

Item 6. EXHIBITS

	31.1	Certification of Chief Executive Officer
	31.2	Certification of Chief Financial Officer
	32	Certification of Chief Executive Officer and Chief Financial Officer
	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
	101.DEF	XBRL Taxonomy Extension Definition Linkbase

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 TECHNOLOGIES, INC.

(Registrant)

/s/ Danielle L. Haney

Danielle L. Haney

Chief Financial Officer

Alanco Technologies, Inc.

November 14, 2014

EX-31.1 2 exhibit31_1.htm EXHIBIT 31.1 exhibit31_1.htm

EXHIBIT 31.1

Certification of

President and Chief Executive Officer

of Alanco Technologies, Inc.

I, John A. Carlson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alanco Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2014

/s/ John A. Carlson

________________________

John A. Carlson

President and Chief Executive Officer

EX-31.2 3 exhibit31_2.htm EXHIBIT 31.2 exhibit31_2.htm

EXHIBIT 31.2

Certification of

Chief Financial Officer

of Alanco Technologies, Inc.

I, Danielle L. Haney, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alanco Technologies, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2014

/s/ Danielle L. Haney

________________________

Danielle L. Haney

Chief Financial Officer

EX-32 4 exhibit32.htm EXHIBIT 32 exhibit32.htm

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Alanco Technologies, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John A. Carlson, as President and Chief Executive Officer of the Company and Danielle L. Haney, as Chief Financial Officer of the Company, each hereby certifies, to the best of his/her knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.

/s/ John A. Carlson

John A. Carlson

President and Chief Executive Officer

Alanco Technologies, Inc.

Dated: November 14, 2014

/s/ Danielle L. Haney

Danielle L. Haney

Chief Financial Officer

Alanco Technologies, Inc.

Dated: November 14, 2014

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Alanco Technologies, Inc. and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-101.INS 5 alan-20140930.xml XBRL INSTANCE DOCUMENT 0000098618 2014-07-01 2014-09-30 0000098618 2014-09-30 0000098618 2013-06-30 0000098618 us-gaap:CommonStockMember 2014-09-30 0000098618 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-09-30 0000098618 us-gaap:RetainedEarningsMember 2014-09-30 0000098618 us-gaap:FairValueInputsLevel1Member 2014-09-30 0000098618 us-gaap:FairValueInputsLevel2Member 2014-09-30 0000098618 us-gaap:FairValueInputsLevel3Member 2014-09-30 0000098618 us-gaap:LandImprovementsMember 2014-07-01 2014-09-30 0000098618 us-gaap:LandImprovementsMember 2014-06-30 0000098618 us-gaap:LandImprovementsMember 2014-09-30 0000098618 us-gaap:OfficeEquipmentMember 2014-07-01 2014-09-30 0000098618 us-gaap:OfficeEquipmentMember 2014-06-30 0000098618 us-gaap:OfficeEquipmentMember 2014-09-30 0000098618 us-gaap:ManufacturingFacilityMember 2014-07-01 2014-09-30 0000098618 us-gaap:ManufacturingFacilityMember 2014-06-30 0000098618 us-gaap:ManufacturingFacilityMember 2014-09-30 0000098618 us-gaap:EquipmentMember 2014-07-01 2014-09-30 0000098618 us-gaap:EquipmentMember 2014-06-30 0000098618 us-gaap:EquipmentMember 2014-09-30 0000098618 2013-07-01 2013-09-30 0000098618 2014-06-30 0000098618 us-gaap:CommonStockMember 2014-06-30 0000098618 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-07-01 2014-09-30 0000098618 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-06-30 0000098618 us-gaap:RetainedEarningsMember 2014-07-01 2014-09-30 0000098618 us-gaap:RetainedEarningsMember 2014-06-30 0000098618 ALAN:NetBookValueMember 2014-07-01 2014-09-30 0000098618 ALAN:NetSharesMember 2014-07-01 2014-09-30 0000098618 ALAN:CostBasisPerShareMember 2014-07-01 2014-09-30 0000098618 ALAN:CostBasisTotalCostMember 2014-07-01 2014-09-30 0000098618 ALAN:MarketValuePerShareMember 2014-07-01 2014-09-30 0000098618 ALAN:MarketValueTotalValueMember 2014-07-01 2014-09-30 0000098618 ALAN:AccumulatedUnrealizedGainMember 2014-07-01 2014-09-30 0000098618 ALAN:AccumulatedUnrealizedLossMember 2014-07-01 2014-09-30 0000098618 2013-07-01 2013-12-31 0000098618 2014-11-07 0000098618 2013-09-30 0000098618 2013-07-01 2014-06-30 0000098618 ALAN:AmericanCitizenshipCenterLlcMember 2014-09-30 0000098618 ALAN:AmericanCitizenshipCenterLlcMember 2014-06-30 0000098618 ALAN:AmericanCitizenshipCenterLlcMember 2014-07-01 2014-09-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure ALANCO TECHNOLOGIES INC 0000098618 10-Q 2014-09-30 false --06-30 No No Yes Smaller Reporting Company Q1 2015

75000000

25000000 25000000 0 0 0 0 5037500

1354800

696400

1215600

863300

87300

96800

4200

9200

245000

300000

230000

560100

240100

212700

2161400

2394400

4281200

4163000

6620000

6765100

50000

53400 48700

466800

328000

50000 50000

416800

278000

2020800

1890000

423700

1130300 1138300

109106800

6620000

6765100

4599200

109106800

23500

-104531100

4875100

109106800

121200

-104352900

-104531100

-104352900

23500

121200

4962500

39000

-54000

193400

68800

232400

14800

199500 232900

76100

77100

-236600

-364000

-11500

-7800

200

46700

204800

-178200

-151200

-178200

-106200

4962500

4944300

-0.04

-0.03

-275900

-125800

15800

45000

-66800

185200

46700

204800

4962500

-26600

-269400

128800

11600

-4700 -4700

22600

13000

5000

19400

9500

-4000

-22900

139200

166900

-97700 25400 -46700 -204800

8400

45100

42900

165800

459200

279100

499100

163300

14900

50000 25000 -10000 16400

1834000

230000

1604000

531900 0 0 531900 648400 0 0 648400 423700 0 0 423700

230000

60000

51300 58700

814000

823400

-9400

0.62

0.63

1.5

P3Y4M6D

P3Y1M21D P3Y1M21D P0Y 206800 206800 212600 -5800

P0Y

P0Y 85000 5.16 439100 6.59 560100 121200 - -45000 5.16 -232600 40000 5.16 206500 5.75 230000 23500 -

230000

5.75 6.59 369000 409000

3106100

1536900

1592000

51300

2714600

2716700

232000

338100

2997900

108200

55100

2100

106100

118200

-416900

-371800

-45100

814000 1076600 56800

26100

0.46 1130300 1138300 -50000 -50000 1180300 1188300 531900 528100 648400 660200 648400 0.03 531900 16500 4700

53400

48700

Nature of Operations   Alanco Technologies, Inc. (Stock Symbol: ALAN) was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the Company or Alanco refers to Alanco Technologies, Inc. and its wholly-owned subsidiaries. During the fiscal year ended June 30, 2012, the Company formed Alanco Energy Services, Inc. (AES), for the purpose of obtaining property to establish a water disposal facility near Grand Junction, CO to receive produced water generated as a byproduct from oil and natural gas production in Western Colorado. The new facility started to receive produced water in August 2012.   Background information on the creation of Alanco Energy Services, Inc.   During fiscal 2012,Alanco Energy Services, Inc. (AES), a wholly-owned subsidiary of the Company, executed an agreement with TC Operating, LLC (TCO) of Grand Junction, CO to transfer a land lease for approximately 24 acres near Grand Junction, CO (Deer Creek site) and all related assets to AES with the intent for AES to construct facilities for the treatment and disposal of large quantities of produced water generated by oil and natural gas producers in Western Colorado. The site was chosen due to its unique ability to meet stringent government requirements for disposal of the high saline water produced as a by-product of oil and gas production, and termed produced water. The agreement included the transfer of all related tangible and intangible assets as well as Federal, State and County permits (issued or in process) required to construct and operate the facilities. Subsequent to the TCO agreement, AES renegotiated an amended lease that became effective on May 1, 2012 and include a minimum monthly lease payment of $100 per acre ($2,400 per month) during the initial ten year term of the lease, plus approximately $.25 per barrel of produced water received at the site.   The design and construction of the Deer Creek water disposal facility required certain changes to the Goodwin Solid Waste facility (Goodwin) resulting in extra costs to the landlord, who also owned Goodwin. As incentive for the landlord to approve the facility design, AES agreed to limit landlord construction improvement costs related to the leased land to $200,000. Included in the $200,000 limited amount was $100,000 of landlord improvement costs to be paid by AES and reimbursed through a 50% credit against the $.25 per barrel royalty payments due landlord discussed above. AES recorded the $100,000 payment as prepaid royalties. The remaining prepaid balances at September 30, 2014 and June 30, 2014 were $51,300 and $58,700, respectively.   TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent deferred payment), approximately the initial term of the lease. Under certain circumstances, the acreage covered by the lease may be expanded by up to 50 acres to allow for additional expansion at the site. See Note H - Contingent Payments for additional discussion of the contingent deferred payment.   During April 2012, AES also entered into a definitive agreement with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre site near Grand Junction, CO, for additional expansion to the proposed watertreatment and disposal facility. As consideration for the land purchase, AES paid $500,000 at the April 13, 2012 closing and assumed a non-interest bearing, secured, $200,000 note due November 15, 2012, which was repaid upon maturity. AES has also agreed to potential additional quarterly earn-out payments to DCD up to a maximum total of $800,000, generally determined as 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter (contingent land payment). See Note H - Contingent Payments for additional discussion ofthe contingent land payment. The land, known as Indian Mesa, is currently undeveloped as the Company is in the permitting process.   Related to the treatment and disposal facilities, in fiscal year 2012 AES entered into a management agreement with TCO to manage the project for a monthly management fee of $10,000 initially and $20,000 after final permits for the Deer Creek operation were obtained in May 2012. The management agreement expired in January 2013 and is continuing on a month to month basis. During the three months ended September 30, 2014, the Company paid TCO $60,000 under the management agreement. TCO also earned an additional variable fee of approximately $4,000 for September 2014 revenues which was paid in October 2014.   Basis of Presentation   The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. In our opinion, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such necessary adjustments consist of normal recurring items and the elimination of all significant intercompany balances and transactions.   These interim condensed consolidated financial statements should be read in conjunction with the Companys June 30, 2014 Annual Report filed on Form 10-K. Interim results are not necessarily indicative of results for a full year.   The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.   Fair Value of Assets and Liabilities The estimated fair values for assets and liabilities are determined at discrete points in time based on relevant information. The Accounting Standards Codification (ASC) prioritizes inputs used in measuring fair value into a hierarchy of three levels: Level 1 unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 observable inputs other than quoted pricesincluded within Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are notactive or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 unobservable inputs in which little or no market activity exists that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. These estimates involve uncertainties and cannot be determined with precision. The Companys policy is to recognize transfers into and out of Level 1, 2 and 3 categories as of the date of the event or change in circumstances occurs. The carrying amounts of receivables, prepaid expenses, accounts payable, and accrued liabilitiesapproximate fair value given their short-term nature or their effective interest rates, which represent Level 3 input levels.   The following are the classes of assets and liabilities measured at fair value on a recurring basis at September 30, 2014, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 34%"> </td> <td nowrap="nowrap" style="width: 3%"> </td> <td nowrap="nowrap" style="width: 14%">Level 1:</td> <td nowrap="nowrap" style="width: 3%"> </td> <td nowrap="nowrap" style="width: 12%"> </td> <td nowrap="nowrap" style="width: 3%"> </td> <td nowrap="nowrap" style="width: 14%"> </td> <td nowrap="nowrap" style="width: 3%"> </td> <td nowrap="nowrap" style="width: 12%"> </td> <td nowrap="nowrap" style="width: 2%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Quoted Prices</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Level 2:</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">in active</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Significant</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Level 3:</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Total</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Markets</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Other </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Significant </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">at</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">for Identical</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Observable</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Unobservable</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">September 30,</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Assets</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Inputs</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Inputs</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">2014</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Marketable Securities</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">             230,000 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">                    -   </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">                       -   </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">          230,000 </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Asset Retirement Obligation</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                       -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                    -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">             423,700 </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">          423,700 </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Contigent Land Payment </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                       -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                    -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">             648,400 </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">          648,400 </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Contingent Purchase Price</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                       -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                    -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">             531,900 </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">          531,900 </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">             230,000 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">                    -   </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">          1,604,000 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">       1,834,000 </td> <td nowrap="nowrap"> </td></tr> </table>   Fair Value of Marketable Securities The estimated fair values of Marketable Securities are determined at discrete points in time based on relevant market information. The Marketable Securities are comprised entirely of ORBCOMM Inc. (ORBCOMM) common shares (NASDAQ: ORBC) registered under a currently effective ORBCOMM Form S-3 registration statement. The fair value measurement at September 30, 2014 is based on unadjusted quoted prices for identical assets in active markets and thus represents a Level 1 fair value measurement. The remaining shares will be revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period.   Fair Value of Asset Retirement Obligation The Deer Creek asset retirement obligation is the estimated cost to close the Deer Creek facility under terms of the lease, meeting environmental and State of Colorado regulatory requirements. The estimate is determined at discrete points in time based upon significant unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Managements estimate of the asset retirement obligation is based upon a cost estimate developed by a consultant knowledgeable of government closure requirements and costs incurred at similar water disposal facility operations. The process used was to identify each activity in the closure process, obtaining vendor estimated costs, in current dollars, to perform the closure activity and accumulating the various vendor estimates to determine the asset retirement obligation. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. The lack of an active market to validate the estimated asset retirement obligation results in the fair value of the asset retirement obligation to be a Level 3 fair value measurement. ASC Topic 410-20: Asset Retirement Obligations requires the Company to review the asset retirement obligation on a recurring basis and record changes in the period incurred.   Fair Value of Contingent Payments The contingent land payment and contingent purchase price liabilities are also determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. In calculating the estimate of fair value for both of the contingent payments, management completed an estimate of the present value of each identified contingent liability based upon projected income, cash flows and capital expenditures for the Deer Creek facility developed under plans currently approved by the Companys board of directors. Different assumptions relative to the expansion or alternative uses of the Deer Creek and Indian Mesa facilities could result in significantly different valuations. The projected payments have been discounted at a rate of 3% per annum to determine net present value. The lack of an active market tovalidate the estimated contingent land and purchase price liabilities results in the fair value of the contingent land and purchase price liabilities to be a Level 3 fair value measurement. ASC Topic 820: Fair Value Measurement requires the Company to review the contingent land and purchase price liabilities on a recurring basis and record changes in the period incurred.   Recent Accounting Pronouncements   In May 2014, the FASB issued guidance regarding revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period and early adoption is not permitted. The Company is currently assessing the impact on its financial position and results of operations.   There have been no other recent accounting pronouncements or changes in accounting pronouncements during the threemonths ended September 30, 2014, that are of significance, or potential significance, to us.

The Company has stock-based compensation plans and reports stock-based compensation expense for all stock-based compensation awards based on the estimated grant date fair value. The value of the compensation cost is amortizedon a straight-line basis over the requisite service periods of the award (generally the option vesting term).   The Company estimates fair value using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:   <table cellpadding="0" cellspacing="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top"> <td style="width: 0.5in"></td><td style="width: 0.25in">·</td><td style="text-align: justify">Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available;</td></tr></table>   <table cellpadding="0" cellspacing="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top"> <td style="width: 0.5in"></td><td style="width: 0.25in">·</td><td style="text-align: justify">Expected volatility of award grants made under the Companys plans is measured using the historical daily changes in the market price of the Companys common stock over the expected term of the award and contemplation of future activity;</td></tr></table>   <table cellpadding="0" cellspacing="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top"> <td style="width: 0.5in"></td><td style="width: 0.25in">·</td><td style="text-align: justify">Risk-free interest rate is the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and,</td></tr></table>   <table cellpadding="0" cellspacing="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top"> <td style="width: 0.5in"></td><td style="width: 0.25in">·</td><td style="text-align: justify">Forfeitures are based on the history of cancellations of awards granted by the Company and managements analysis of potential future forfeitures.</td></tr></table>   The Company has several employee stock option and officer and director stock option plans that have been approved by the shareholders of the Company. The plans require that options be granted at a price not less than market on the date of grant and are more fully discussed in our Form 10-K for the year ended June 30, 2014.   The following table summarizes the Companys stock option activity during the first three months of fiscal 2015:       <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 3%"> </td> <td nowrap="nowrap" style="width: 9%"> </td> <td nowrap="nowrap" style="width: 21%"> </td> <td nowrap="nowrap" style="width: 10%"> </td> <td nowrap="nowrap" style="width: 1%"> </td> <td nowrap="nowrap" style="width: 13%"> </td> <td nowrap="nowrap" style="width: 1%"> </td> <td nowrap="nowrap" style="width: 12%">Weighted</td> <td nowrap="nowrap" style="width: 2%"> </td> <td nowrap="nowrap" style="width: 10%"> </td> <td nowrap="nowrap" style="width: 2%"> </td> <td nowrap="nowrap" style="width: 8%"> </td> <td nowrap="nowrap" style="width: 5%"> </td> <td nowrap="nowrap" style="width: 3%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Weighted</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Average</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Average</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Remaining</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Aggregate</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Aggregate</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Exercise Price</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Contractual</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Fair</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Instrinsic</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Shares</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Per Share</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Term (1)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Value (3)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">Value (2)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" colspan="3">Outstanding July 1, 2014</td> <td nowrap="nowrap" style="text-align: center">823,400</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">$0.63</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">3.35</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="text-align: center; text-indent: -10pt">       212,600</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Granted</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center; text-indent: -30pt">                -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">-</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">-</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center; text-indent: -20pt">                 -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Exercised</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center; text-indent: -30pt">                -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">-</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">-</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">                 -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="2">Forfeited or expired</td> <td nowrap="nowrap" style="text-align: center; text-indent: -20pt">         (9,400)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">$1.50</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">-</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: center">(5,800)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" colspan="3">Outstanding September 30, 2014</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: center">814,000</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center">$0.62</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center">3.14</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: center">206,800</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 1pt solid">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" colspan="3">Exercisable September 30, 2014</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; text-align: center">814,000</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">$0.62</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">3.14</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; text-align: center">206,800</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">              -   </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">(1)</td> <td nowrap="nowrap" colspan="5">Remaining contractual term presented in years.</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">(2)</td> <td nowrap="nowrap" colspan="11">The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="11">awards and the closing price of the Company's common stock as of September 30, 2014, for those awards that</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="9">have an exercise price currently below the closing price as of September 30, 2014 of $.43.</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">(3)</td> <td nowrap="nowrap" colspan="12">Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="2">compensation.</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> </table>   As of September 30, 2014, there were no unamortized Black Scholes values related to stock option grants made in prior periods. There were no new grants during the three months ended September 30, 2014

At September30, 2014, the Company had Marketable Securities in the amount of $230,000 representing the market value ($5.75 per share) of 40,000 ORBCOMM Common Shares (NASDAQ: ORBC). The average cost basis of these shares atSeptember30, 2014and June 30, 2014is $5.16 per share.   The shares held are revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period. Based primarily upon the change in market value of $6.59 per share at June 30, 2014 to $5.75 per share at September 30, 2014, the Company recorded an unrealized losson marketable securities held during the three months ended September 30, 2014(presented in the Condensed Consolidated Statements of Comprehensive Income (Loss)), of ($66,800) and an unrealized gain on marketable securities sold during the three months ended September 30, 2014 of $15,800, offset by a $46,700 adjustment for unrealized gains previously recorded related to securities sold during the period.The actual gain on securities sold is reported in the Statement of Operations. At September 30, 2014, the Accumulated Other Comprehensive Income of $23,500 was presented in the Shareholders Equity section of the Condensed Consolidated Balance Sheet.   The Company sold a total of 45,000 shares of ORBCOMM, Inc. Common Stock during the three months ended September 30, 2014 for total proceeds of $279,100, and an average selling price of approximately $6.20 per share, resulting in a net gain of $46,700. The cost of the securities sold for purposes of computing the realized gain is based on the average cost of the securities.   The following table summarizes the activities related to investment in Marketable Securities for the three months ended September 30, 2014:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" colspan="14" style="text-align: center; vertical-align: bottom">Marketable Securities</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="3">Accumulated</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Net</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">Cost Basis</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="3">Market Value</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" colspan="3">Unrealized</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 25%"> </td> <td nowrap="nowrap" style="width: 10%; border-bottom: Black 1pt solid">Shares</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 10%; border-bottom: Black 1pt solid">Per Share</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 13%; border-bottom: Black 1pt solid">Cost Basis</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 9%; border-bottom: Black 1pt solid">Per Share</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 11%; border-bottom: Black 1pt solid">Total Value</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 9%; border-bottom: Black 1pt solid">Gain</td> <td nowrap="nowrap" style="width: 1%; border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap" style="width: 7%; border-bottom: Black 1pt solid">(Loss)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">June 30, 2014</td> <td nowrap="nowrap">85,000</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">         5.16 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap">         439,100 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">6.59 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">      560,100 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">    121,200 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">            -   </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">  Shares sold</td> <td nowrap="nowrap" style="text-align: left">(45,000)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">         5.16 </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap">       (232,600)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">September 30, 2014</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double">40,000</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double">         5.16 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double">         206,500 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">5.75</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">      230,000 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">      23,500 </td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid">            -   </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td></tr> </table>

Note receivable of $369,000 and $409,000 at September 30, 2014 and June 30, 2014, respectively, represents a note due from American Citizenship Center, LLC (ACC), a related party. The $369,000 balance at September 30, 2014 represents the outstanding amount drawn on a $369,000 credit line under modifications made during September 2014 which resulted in a decrease in monthly payments, an increase to the interest rate from 9% to 9.5% effective October 1, 2014, and a $10,000 loan fee that was added to the note balance.   In October 2014, ACC and the Company again modified the loan agreement by revising the loan amount to $388,000 which includes $9,000 of accounting fees for July through September 2014 and a $10,000 loan fee. In addition, the minimum monthly payments from September through December 2014 were reduced to $5,000. The minimum payment required starting in January 2015 returns to $25,000 and the entire loan balance is payable in full by the maturity date of August 31, 2015. Based on the history of the note modifications, the recent modification thereto, and ACCs history of an ability to make a certain level of payments, the Company has classified $245,000 of the note as current and $124,000 of the note as long-term.   ACCs current business plan is designed to capitalize on the significant opportunity that would be created by immigration reform, initially expected to occur in late 2012. Immigration reform has not occurred as expected. In fact, immigration reform has not occurred to date and the most recent news on immigration reform was a commitment by President Obama in early September 2014 that he would act on immigration reform via Executive Action after the United States mid-term elections that occurred during early November 2014. The plan is based upon the assumption that an Executive Action will be issued by December 2014. No provision for collectability has been recorded as of September 30, 2014 as current ACC financial projections indicate the note will be paid under the amended terms by the maturity date of August 31, 2015. ACC is currently in compliance with all terms of the October 2014 amendment.

Land, Property and Equipment at September 30, 2014 and June 30, 2014 consist of the following:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 38%; text-align: justify"> </td> <td nowrap="nowrap" style="width: 2%; text-align: justify"> </td> <td nowrap="nowrap" style="width: 19%; text-align: right"> </td> <td nowrap="nowrap" style="width: 2%; text-align: justify"> </td> <td nowrap="nowrap" style="width: 15%; text-align: right"> </td> <td nowrap="nowrap" style="width: 3%; text-align: justify"> </td> <td nowrap="nowrap" style="width: 21%; text-align: right"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">June 30, 2014</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">Additions</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">September 30, 2014</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">Office furniture and equipment</td> <td nowrap="nowrap" style="text-align: justify">$</td> <td nowrap="nowrap" style="text-align: right; padding-left: -0.125in; text-indent: 0in">                   51,300 </td> <td nowrap="nowrap" style="text-align: justify"> $ </td> <td nowrap="nowrap" style="text-align: right">                     -   </td> <td nowrap="nowrap" style="text-align: justify"> $ </td> <td nowrap="nowrap" style="text-align: right">                      51,300 </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">Water disposal facility</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">              2,714,600 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">               2,100 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">                 2,716,700 </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">Production equipment</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">                 232,000 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">           106,100 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">                    338,100 </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">              2,997,900 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">           108,200 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">                 3,106,100 </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">Less accumulation depreciation</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">                (371,800)</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">            (45,100)</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">                   (416,900)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">Land and improvements</td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">              1,536,900 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">             55,100 </td> <td nowrap="nowrap" style="text-align: justify"> </td> <td nowrap="nowrap" style="text-align: right">                 1,592,000 </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="text-align: justify">  Net book value</td> <td nowrap="nowrap" style="text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: right">              4,163,000 </td> <td nowrap="nowrap" style="text-align: justify"> $ </td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: right">           118,200 </td> <td nowrap="nowrap" style="text-align: justify"> $ </td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: right">                 4,281,200 </td></tr> </table>

Basic and diluted loss per share of common stock was computed by dividing net income(loss) by the weighted average number of shares of common stock outstanding.   Diluted earnings per share are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period using the treasury stock method. Dilutive securities are options, warrants, convertible debt, and preferred stock that are freely exercisable into common stock at less than the prevailing market price. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the earnings per share or decrease the loss per share. For the three months endedSeptember 30, 2014 and 2013, there wereno dilutive securities included in the loss per share calculation as the effect would be antidilutive.Considering all holders rights, total common stock equivalents issuable under these potentially dilutive securities are approximately 814,000 and 1,076,600 at September 30, 2014 and 2013, respectively.

The Company did not issue any shares of Common Stock during the three months ended September 30, 2014.   During the three months ended September 30, 2014, the Company recognized a comprehensive income adjustment in the amount of ($97,700), reported in the Condensed Consolidated Statement of Changes in Shareholders Equity.   In December 2011, the Company announced that its board of directors had authorized a stock repurchase program whereby the Company could repurchase up to 2 million shares of its outstanding common stock over the next 12 months. The stock repurchase program was extended, under the same limitation, through December 31,2013. For the six months ended December 31, 2013, the Company had repurchases under the program for a total of 56,800 shares at a cost of approximately $26,100, or $.46 per share. During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program,extending it through December 31, 2014 and establishing an aggregate future amount of shares that may be purchased under the program to 2 million shares. There were no shares repurchased under the program in the current quarter.   The Company has authorized 25,000,000 shares of Preferred Stock of which 5,000,000 shares have been allocated to Series A, 500,000 have been allocated to Series B, 400,000 have been allocated to Series C Junior Participating, 500,000 have been allocated to Series D, and 750,000 have been allocated to Series E. At September 30, 2014 and June 30, 2014, no Preferred Stock of any series was issued or outstanding.

Contingent payments at September 30, 2014 and June 30, 2014 relate to AES asset purchase transactions completed in conjunction with the construction of water disposal facilities for the treatment and disposal of produced water generated by oil and natural gas producers in Western Colorado. Details of the contingent payments are as follows:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 57%"> </td> <td nowrap="nowrap" style="width: 2%"> </td> <td nowrap="nowrap" style="width: 20%; text-align: center">September 30,</td> <td nowrap="nowrap" style="width: 2%"> </td> <td nowrap="nowrap" style="width: 17%; text-align: center"> June 30,</td> <td nowrap="nowrap" style="width: 2%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">2014</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: center">2014</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Contingent land payment</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="text-align: right">            648,400</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="text-align: right">        660,200</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Contingent purchase price</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">            531,900</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">        528,100</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: right">         1,180,300</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: right">      1,188,300</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">         Less current portion</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">            (50,000)</td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right">        (50,000)</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap">Contingent payments, long-term</td> <td nowrap="nowrap">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; text-align: right">         1,130,300</td> <td nowrap="nowrap"> $</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; text-align: right">      1,138,300</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap" style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> </table>   Contingent land payment of $648,400 at September 30, 2014 represents the net present value of $800,000 of estimated contingent land payments due under an agreement whereby Alanco Energy Services, Inc. (AES) acquired 160 acres of land known as Indian Mesa. The maximum total of $800,000 of contingent land payments is based upon 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter for activity at both the Deer Creek and the Indian Mesa locations. The payments were projected considering current operating plans as approved by the Alanco Board of Directors, with the payments discounted at a rate of 3% per annum. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the three months ended September 30, 2014 by $4,700. During the three months ended September 30, 2014, approximately $16,500 was earned and payable under the contingency formula.   Contingent purchase price of $531,900 at September 30, 2014 represents the net present value of projected payments to be made to TC Operating, LLC (TCO) pursuant to an Asset Purchase Agreement under which TC Operating transferred a land lease for approximately 24 acres of land known as Deer Creek and all related tangible and intangible assets. Per the agreement, the contingent payments are determined as 28% of the Cumulative EBITDA in excess of all of AESs capital investment for the ten (10) year period commencing on January 1, 2014. AESs Capital investment shall mean the aggregate amount incurred by AES in acquiring the Assets, the Indian Mesa Facility, and or improving either the Deer Creek Facility or the Indian Mesa Facility. Payments of said Contingent Purchase Price shall be payable quarterly. The projected payments consider current operating plans as approved by the Alanco Board of Directors, with payments discounted at a rate of 3% per annum to determine net present value. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent purchase price during the three months ended September 30, 2014 by $3,700.

The Company has recognized estimated asset retirement obligations (closure cost) of $423,700 to remove leasehold improvements, remediate any pollution issues and return the Deer Creek water disposal property to its natural state at the conclusion of the Companys lease. The closure process is a requirement of both the Deer Creek lease and the State of Colorado, a permitting authority for such facilities. The closure cost estimate, in current dollars, was completed by an approved independent consultant experienced in estimating closure costs for water disposal operations and the estimated amount was approved by the State of Colorado. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility.   The Company reviews the asset retirement obligation quarterly and performs a formal annual assessment of its estimates to determine if an adjustment to the value of the asset retirement obligation is required.   The laws of the State of Colorado require companies to meet environmental and asset retirement obligations by selecting an approved payment method. The Company has elected to meet its obligation by making quarterly payments of approximately $4,700 into a trust that, over the expected lease period, will build liquid assets to meet the asset retirement obligation. During the three months ended September 30, 2014, the Company made the required quarterly payments. The balances in the trust account for the asset retirement obligation as of September 30, 2014 and June 30, 2014 were $53,400 and $48,700, respectively.

Employment Agreements   On June 30, 2014, the Company entered into employment agreements, effective July 1, 2014 with the Companys newly elected Chief Executive and Chief Financial Officers. The elections resulted due to the March 2014 death of Robert Kauffman, past President and CEO of the Company. The employment agreements provide for levels of compensation and continuation of benefit under Company benefit plans. The agreements have severance provisions and are effective until 18 months after notice of termination is given by either party. Copies of the employment agreements were attached as exhibits to the Form 8-K filed on July 1, 2014.   Legal Proceedings   The Company is a defendant and counter claimant in litigation involving its subsidiary, TSI Dissolution Corp. (formerly known as Alanco/TSI Prism Inc. (TSI)) and the purchaser of TSIs assets, Black Creek Integrated Systems Corp. Black Creek filed a complaint in the Maricopa County Superior Court against TSI and the Company, being Civil Case NO. CV2011-014175, claiming various offsets from the purchase price, primarily concerning inventory adjustments, and TSI counterclaimed for monies due from Black Creek under the purchase agreement. Following a trial during fiscal 2014, the court awarded a net judgment in favor of Black Creek in the amount of $16,800, plus attorneys fees and accrued interest, resulting in a total judgment in the amount of $128,300. At September 30, 2014 and June 30, 2014, the Company recorded an accrued liability of $128,300 for the judgment. The Company believes the net judgment amount fails to address, among other matters, inventory reserves established for the specific items of inventory which were the subject of Black Creeks concerns, which if properly addressed would result in a net judgment in favor of the Company, with an attendant award of attorneys fees in favor of the Company. The Company has filed its Appeal and intends to vigorously pursue the appeal of the judgment. As required under the appeal process, the Company posted a bond with the court for $128,300, which is included in prepaid expenses and other current assets at September 30, 2014 and June 30, 2014.   The Company may from time to time be involved in litigation arising from the normal course of business.  As of September 30, 2014, there was no such litigation pending deemed material by the Company.

At September 30, 2014 and June 30, 2014 the Company had a note due from American Citizenship Center, LLC (ACC), a related party, with balances of $369,000 and $409,000, respectively. Refer to Note D Note Receivable for further discussion. During the three months ended September 30, 2014 the Company billed ACC a total of approximately $10,200, which includes amounts for accounting services, legal services related to note modifications, and interest on the note. At September 30, 2014, the Company had unpaid receivables from ACC in the amount of $4,200, consisting of $2,700 representing one quarter of interest and $1,500 of legal fees. All required payments have been subsequently paid.   At September 30, 2014 and June 30, 2014 the Company had accrued $15,000 and $15,000 (a total of $30,000), respectively, in recognition of the estimated value of stock awards anticipated to be granted to directors, or some other form of compensation, to compensate the directors for the lack of stock options granted during fiscal year 2014. Refer to Note L Subsequent Events for an update.

In October 2014, ACC and the Company amended the loan agreement increasing the loan amount to $388,000 by adding $9,000 of accounting fees for July through September 2014 and a $10,000 loan fee. In addition, minimum monthly payments for September through December 2014 were reduced to $5,000. The minimum payment required starting in January 2015 returns to $25,000 and the entire loan balance is payable in full by the maturity date of August 31, 2015. Subsequent to September 30, 2014 and through the date of this report, ACC paid $10,000 on its loan and brought all fee amounts due current.   In November 2014, the Companys Board of Directors approved the Alanco Technologies, Inc. 2014 Stock Incentive Plan (2014 Plan) authorizing 500,000 shares of common stock available for issuance under the 2014 Plan. The Company issued 390,000 stock options at a strike price of $0.50 per share, which was above market price on the date of grant. 115,000 of these stock options were issued under the 2014 Plan and 275,000 options were issued under existing plans which were previously approved.   In November 2014, the Company issued each of the Companys three independent members of the Board of Directors 25,000 stock grants for a total of 75,000 shares. The Company has accrued $30,000 of expense associated with the grants as of the quarter ended September 30, 2014 which is also discussed in Note K Related Party Transactions.

During the three months ended September 30, 2014, the Company reported a net loss of ($178,200) and for fiscal year ended June 30, 2014, the Company reported a net loss of ($106,200). For the next year, the Company expects to meet its working capital and other cash requirements with its current operations, cash reserves and sales of marketable securities as required. However, if for any reason, the Company does require additional working capital to complete its business plan, there can be no assurance that the Companys efforts to acquire the required additional working capital will be successful. The Companys continued existence is dependent upon its ability to achieve and maintain profitable operations, identify profitable acquisition/merger candidates and/or successfully invest its capital.

Alanco Technologies, Inc. (Stock Symbol: ALAN) was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the Company or Alanco refers to Alanco Technologies, Inc. and its wholly-owned subsidiaries. During the fiscal year ended June 30, 2012, the Company formed Alanco Energy Services, Inc. (AES), for the purpose of obtaining property to establish a water disposal facility near Grand Junction, CO to receive produced water generated as a byproduct from oil and natural gas production in Western Colorado. The new facility started to receive produced water in August 2012.

During fiscal 2012,Alanco Energy Services, Inc. (AES), a wholly-owned subsidiary of the Company, executed an agreement with TC Operating, LLC (TCO) of Grand Junction, CO to transfer a land lease for approximately 24 acres near Grand Junction, CO (Deer Creek site) and all related assets to AES with the intent for AES to construct facilities for the treatment and disposal of large quantities of produced water generated by oil and natural gas producers in Western Colorado. The site was chosen due to its unique ability to meet stringent government requirements for disposal of the high saline water produced as a by-product of oil and gas production, and termed produced water. The agreement included the transfer of all related tangible and intangible assets as well as Federal, State and County permits (issued or in process) required to construct and operate the facilities. Subsequent to the TCO agreement, AES renegotiated an amended lease that became effective on May 1, 2012 and include a minimum monthly lease payment of $100 per acre ($2,400 per month) during the initial ten year term of the lease, plus approximately $.25 per barrel of produced water received at the site.   The design and construction of the Deer Creek water disposal facility required certain changes to the Goodwin Solid Waste facility (Goodwin) resulting in extra costs to the landlord, who also owned Goodwin. As incentive for the landlord to approve the facility design, AES agreed to limit landlord construction improvement costs related to the leased land to $200,000. Included in the $200,000 limited amount was $100,000 of landlord improvement costs to be paid by AES and reimbursed through a 50% credit against the $.25 per barrel royalty payments due landlord discussed above. AES recorded the $100,000 payment as prepaid royalties. The remaining prepaid balances at September 30, 2014 and June 30, 2014 were $51,300 and $58,700, respectively.   TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent deferred payment), approximately the initial term of the lease. Under certain circumstances, the acreage covered by the lease may be expanded by up to 50 acres to allow for additional expansion at the site. See Note H - Contingent Payments for additional discussion of the contingent deferred payment.   During April 2012, AES also entered into a definitive agreement with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre site near Grand Junction, CO, for additional expansion to the proposed water treatment and disposal facility. As consideration for the land purchase, AES paid $500,000 at the April 13, 2012 closing and assumed a non-interest bearing, secured, $200,000 note due November 15, 2012, which was repaid upon maturity. AES has also agreed to potential additional quarterly earn-out payments to DCD up to a maximum total of $800,000, generally determined as 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter (contingent land payment). See Note H - Contingent Payments for additional discussion of the contingent land payment. The land, known as Indian Mesa, is currently undeveloped as the Company is in the permitting process.   Related to the treatment and disposal facilities, in fiscal year 2012 AES entered into a management agreement with TCO to manage the project for a monthly management fee of $10,000 initially and $20,000 after final permits for the Deer Creek operation were obtained in May 2012. The management agreement expired in January 2013 and is continuing on a month to month basis. During the three months ended September 30, 2014, the Company paid TCO $60,000 under the management agreement. TCO also earned an additional variable fee of approximately $4,000 for September 2014 revenues which was paid in October 2014.

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. In our opinion, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such necessary adjustments consist of normal recurring items and the elimination of all significant intercompany balances and transactions.   These interim condensed consolidated financial statements should be read in conjunction with the Companys June 30, 2014 Annual Report filed on Form 10-K. Interim results are not necessarily indicative of results for a full year.   The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The estimated fair values for assets and liabilities are determined at discrete points in time based on relevant information. The Accounting Standards Codification (ASC) prioritizes inputs used in measuring fair value into a hierarchy of three levels: Level 1 unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 observable inputs other than quoted prices included within Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 unobservable inputs in which little or no market activity exists that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. These estimates involve uncertainties and cannot be determined with precision. The Companys policy is to recognize transfers into and out of Level 1, 2 and 3 categories as of the date of the event or change in circumstances occurs. The carrying amounts of receivables, prepaid expenses, accounts payable, and accrued liabilities approximate fair value given their short-term nature or their effective interest rates, which represent Level 3 input levels.    The following are the classes of assets and liabilities measured at fair value on a recurring basis at September 30, 2014, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 1:</td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 12%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 12%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Quoted Prices</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 2:</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">in active</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Significant</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 3:</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Total</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Markets</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Other </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Significant </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">at</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">for Identical</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Observable</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Unobservable</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">September 30,</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Assets</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Inputs</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Inputs</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">2014</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Marketable Securities</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Asset Retirement Obligation</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             423,700</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          423,700</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Contigent Land Payment</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             648,400</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          648,400</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Contingent Purchase Price</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             531,900</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          531,900</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          1,604,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">       1,834,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> </table>

The estimated fair values of Marketable Securities are determined at discrete points in time based on relevant market information. The Marketable Securities are comprised entirely of ORBCOMM Inc. (ORBCOMM) common shares (NASDAQ: ORBC) registered under a currently effective ORBCOMM Form S-3 registration statement. The fair value measurement at September 30, 2014 is based on unadjusted quoted prices for identical assets in active markets and thus represents a Level 1 fair value measurement. The remaining shares will be revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period.

The Deer Creek asset retirement obligation is the estimated cost to close the Deer Creek facility under terms of the lease, meeting environmental and State of Colorado regulatory requirements. The estimate is determined at discrete points in time based upon significant unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Managements estimate of the asset retirement obligation is based upon a cost estimate developed by a consultant knowledgeable of government closure requirements and costs incurred at similar water disposal facility operations. The process used was to identify each activity in the closure process, obtaining vendor estimated costs, in current dollars, to perform the closure activity and accumulating the various vendor estimates to determine the asset retirement obligation. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. The lack of an active market to validate the estimated asset retirement obligation results in the fair value of the asset retirement obligation to be a Level 3 fair value measurement. ASC Topic 410-20: Asset Retirement Obligations requires the Company to review the asset retirement obligation on a recurring basis and record changes in the period incurred.

The contingent land payment and contingent purchase price liabilities are also determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. In calculating the estimate of fair value for both of the contingent payments, management completed an estimate of the present value of each identified contingent liability based upon projected income, cash flows and capital expenditures for the Deer Creek facility developed under plans currently approved by the Companys board of directors. Different assumptions relative to the expansion or alternative uses of the Deer Creek and Indian Mesa facilities could result in significantly different valuations. The projected payments have been discounted at a rate of 3% per annum to determine net present value. The lack of an active market to validate the estimated contingent land and purchase price liabilities results in the fair value of the contingent land and purchase price liabilities to be a Level 3 fair value measurement. ASC Topic 820: Fair Value Measurement requires the Company to review the contingent land and purchase price liabilities on a recurring basis and record changes in the period incurred.

In May 2014, the FASB issued guidance regarding revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period and early adoption is not permitted. The Company is currently assessing the impact on its financial position and results of operations.   There have been no other recent accounting pronouncements or changes in accounting pronouncements during the threemonths ended September 30, 2014, that are of significance, or potential significance, to us.

<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 1:</td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 12%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 14%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 3%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 12%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="width: 2%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Quoted Prices</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 2:</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">in active</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Significant</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Level 3:</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Total</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Markets</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Other </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Significant </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">at</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">for Identical</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Observable</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Unobservable</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">September 30,</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Assets</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Inputs</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Inputs</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">2014</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Marketable Securities</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Asset Retirement Obligation</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             423,700</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          423,700</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Contigent Land Payment</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             648,400</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          648,400</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">Contingent Purchase Price</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                       -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             531,900</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          531,900</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">             230,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">                    -   </td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">          1,604,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">$</td> <td nowrap="nowrap" style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">       1,834,000</td> <td nowrap="nowrap" style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top; background-color: white"> <td style="width: 3%; text-align: justify"> </td> <td style="width: 9%; text-align: justify"> </td> <td style="width: 21%; text-align: justify"> </td> <td style="width: 9%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 14%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: justify">Weighted</td> <td style="width: 2%; text-align: justify"> </td> <td style="width: 10%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 9%; text-align: justify"> </td> <td style="width: 5%; text-align: justify"> </td> <td style="width: 3%; text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">Weighted</td> <td style="text-align: justify"> </td> <td style="text-align: justify">Average</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">Average</td> <td style="text-align: justify"> </td> <td style="text-align: justify">Remaining</td> <td style="text-align: justify"> </td> <td style="text-align: justify">Aggregate</td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">Aggregate</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">Exercise Price</td> <td style="text-align: justify">Contractual</td> <td style="text-align: justify"> </td> <td style="text-align: justify">Fair</td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">Instrinsic</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">Shares</td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">Per Share</td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">Term (1)</td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">Value (3)</td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; text-align: justify">Value (2)</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td colspan="3" style="text-align: justify">Outstanding July 1, 2014</td> <td style="text-align: justify">823,400</td> <td style="text-align: justify"> </td> <td style="text-align: justify">$0.63</td> <td style="text-align: justify"> </td> <td style="text-align: justify">3.35</td> <td style="text-align: justify">$</td> <td style="text-align: left; text-indent: -10pt">     212,600</td> <td style="text-align: justify">$</td> <td style="text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify">Granted</td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -30pt">               -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify">-</td> <td style="text-align: justify"> </td> <td style="text-align: justify">-</td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -30pt">                -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">Exercised</td> <td style="text-align: justify; text-indent: -30pt">               -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify">-</td> <td style="text-align: justify"> </td> <td style="text-align: justify">-</td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -30pt">                -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">Forfeited or expired</td> <td style="text-align: justify; text-indent: -10pt">       (9,400)</td> <td style="text-align: justify"> </td> <td style="text-align: justify">$1.50</td> <td style="text-align: justify"> </td> <td style="text-align: justify">-</td> <td style="text-align: justify"> </td> <td style="text-align: justify">(5,800)</td> <td style="text-align: justify"> </td> <td style="text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td colspan="3" style="text-align: justify">Outstanding September 30, 2014</td> <td style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: justify">814,000</td> <td style="text-align: justify"> </td> <td style="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: justify">$0.62</td> <td style="text-align: justify"> </td> <td style="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: justify">3.14</td> <td style="text-align: justify">$</td> <td style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double; text-align: justify">206,800</td> <td style="text-align: justify">$</td> <td style="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td colspan="3" style="text-align: justify">Exercisable September 30, 2014</td> <td style="border-bottom: Black 2.25pt double; text-align: justify">814,000</td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">$0.62</td> <td style="text-align: justify"> </td> <td style="border-bottom: Black 1pt solid; text-align: justify">3.14</td> <td style="text-align: justify">$</td> <td style="border-bottom: Black 2.25pt double; text-align: justify">206,800</td> <td style="text-align: justify">$</td> <td style="border-bottom: Black 1pt solid; text-align: justify; text-indent: -20pt">             -   </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify">(1)</td> <td colspan="5" style="text-align: justify">Remaining contractual term presented in years.</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify">(2)</td> <td colspan="13" style="text-align: justify">The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying</td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td colspan="13" style="text-align: justify">awards and the closing price of the Company's common stock as of September 30, 2014, for those awards that</td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td colspan="12" style="text-align: justify">have an exercise price currently below the closing price as of September 30, 2014 of $.43.</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify">(3)</td> <td colspan="13" style="text-align: justify">Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based</td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: justify">compensation.</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top; background-color: white"> <td style="width: 39%"> </td> <td style="width: 2%"> </td> <td style="width: 18%"> </td> <td style="width: 2%"> </td> <td style="width: 16%"> </td> <td style="width: 2%"> </td> <td style="width: 21%"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td> </td> <td> </td> <td style="border-bottom: Black 1pt solid">June 30, 2014</td> <td> </td> <td style="border-bottom: Black 1pt solid">Additions</td> <td> </td> <td style="border-bottom: Black 1pt solid">September 30, 2014</td></tr> <tr style="vertical-align: top; background-color: white"> <td>Office furniture and equipment</td> <td>$</td> <td>                 51,300</td> <td> $</td> <td>                    -   </td> <td> $</td> <td>                    51,300</td></tr> <tr style="vertical-align: top; background-color: white"> <td>Water disposal facility</td> <td> </td> <td>            2,714,600</td> <td> </td> <td>              2,100</td> <td> </td> <td>               2,716,700</td></tr> <tr style="vertical-align: top; background-color: white"> <td>Production equipment</td> <td> </td> <td style="border-bottom: Black 1pt solid">               232,000</td> <td> </td> <td style="border-bottom: Black 1pt solid">         106,100</td> <td> </td> <td style="border-bottom: Black 1pt solid">                  338,100</td></tr> <tr style="vertical-align: top; background-color: white"> <td> </td> <td> </td> <td>            2,997,900</td> <td> </td> <td>         108,200</td> <td> </td> <td>               3,106,100</td></tr> <tr style="vertical-align: top; background-color: white"> <td colspan="2">Less accumulation depreciation</td> <td>             (371,800)</td> <td> </td> <td>         (45,100)</td> <td> </td> <td>                (416,900)</td></tr> <tr style="vertical-align: top; background-color: white"> <td>Land and improvements</td> <td> </td> <td>            1,536,900</td> <td> </td> <td>           55,100</td> <td> </td> <td>               1,592,000</td></tr> <tr style="vertical-align: top; background-color: white"> <td>  Net book value</td> <td>$</td> <td style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">            4,163,000</td> <td> $</td> <td style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">         118,200</td> <td> $</td> <td style="border-top: Black 1pt solid; border-bottom: Black 2.25pt double">               4,281,200</td></tr> </table>

<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif; border-collapse: collapse"> <tr style="vertical-align: top; background-color: white"> <td style="width: 57%; padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="width: 2%; padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="width: 20%; padding-right: 1.5pt; padding-left: 1.5pt">September 30,</td> <td style="width: 2%; padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="width: 17%; padding-right: 1.5pt; padding-left: 1.5pt"> June 30,</td> <td style="width: 2%; padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">2014</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">2014</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt">Contingent land payment</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">$</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">            648,400</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">$</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">        660,200</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt">Contingent purchase price</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">            531,900</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">        528,100</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">         1,180,300</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">     1,188,300</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt">         Less current portion</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">             (50,000)</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td> <td style="border-bottom: Black 1pt solid; padding-right: 1.5pt; padding-left: 1.5pt">         (50,000)</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="padding-right: 1.5pt; padding-left: 1.5pt">Contingent payments, long-term</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt">$</td> <td style="border-bottom: Black 2.25pt double; padding-right: 1.5pt; padding-left: 1.5pt">         1,130,300</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> $</td> <td style="border-bottom: Black 2.25pt double; padding-right: 1.5pt; padding-left: 1.5pt">     1,138,300</td> <td style="padding-right: 1.5pt; padding-left: 1.5pt"> </td></tr> </table>

2700

369000

409000

1500

4200 15000 15000 30000 4700 3700

During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program,extending it through December 31, 2014 andestablishing anaggregate future amount of shares that may be purchased under the program to 2 million shares. There were no shares repurchased under the program in the current quarter.

124000

109000

275600

310000

-97700

<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" colspan="14" style="text-align: center; line-height: 115%; vertical-align: bottom">Marketable Securities</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" colspan="3" style="text-align: center; line-height: 115%">Accumulated</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">Net</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">Cost Basis</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" colspan="3" style="text-align: center; line-height: 115%">Market Value</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" colspan="3" style="text-align: center; line-height: 115%">Unrealized</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="width: 20%; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 9%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Shares</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 9%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Per Share</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 11%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Cost Basis</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 8%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Per Share</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 10%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Total Value</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 8%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">Gain</td> <td nowrap="nowrap" style="width: 3%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%"> </td> <td nowrap="nowrap" style="width: 7%; border-bottom: Black 1pt solid; text-align: center; line-height: 115%">(Loss)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%">June 30, 2014</td> <td nowrap="nowrap" style="text-align: right; line-height: 115%">85,000</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="line-height: 115%">         5.16 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="line-height: 115%">         439,100 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right; line-height: 115%">6.59 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">      560,100 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">    121,200 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">            -   </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%">  Shares sold</td> <td nowrap="nowrap" style="line-height: 115%">     (45,000)</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%">         5.16 </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%">       (232,600)</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td nowrap="nowrap" style="line-height: 115%">September 30, 2014</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; text-align: right; line-height: 115%">40,000</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; line-height: 115%">         5.16 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 2.25pt double; line-height: 115%">         206,500 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; text-align: right; line-height: 115%">5.75</td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">      230,000 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">      23,500 </td> <td nowrap="nowrap" style="text-align: center; line-height: 115%">$</td> <td nowrap="nowrap" style="border-bottom: Black 1pt solid; line-height: 115%">            -   </td></tr> </table>

10200

EX-101.SCH 6 alan-20140930.xsd XBRL TAXONOMY EXTENSION SCHEMA 00000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - CONSOLIDATED BALANCE SHEETS link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - CONSOLIDATED BALANCE SHEETS (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - CONSOLIDATED STATEMENTS OF OPERATIONS link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) link:presentationLink link:calculationLink link:definitionLink 00000006 - Statement - CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY link:presentationLink link:calculationLink link:definitionLink 00000007 - Statement - CONSOLIDATED STATEMENTS OF CASH FLOWS link:presentationLink link:calculationLink link:definitionLink 00000008 - Statement - CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000009 - Disclosure - 1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements link:presentationLink link:calculationLink link:definitionLink 00000010 - Disclosure - 2. Stock-Based Compensation link:presentationLink link:calculationLink link:definitionLink 00000011 - Disclosure - 3. Marketable Securities link:presentationLink link:calculationLink link:definitionLink 00000012 - Disclosure - 4. Note Receivable link:presentationLink link:calculationLink link:definitionLink 00000013 - Disclosure - 5. Land, Property and Equipment link:presentationLink link:calculationLink link:definitionLink 00000014 - Disclosure - 6. Earnings Per Share link:presentationLink link:calculationLink link:definitionLink 00000015 - Disclosure - 7. Equity link:presentationLink link:calculationLink link:definitionLink 00000016 - Disclosure - 8. Contingent Payments link:presentationLink link:calculationLink link:definitionLink 00000017 - Disclosure - 9. Asset Retirement Obligation link:presentationLink link:calculationLink link:definitionLink 00000018 - Disclosure - 10. Commitments and Contingencies link:presentationLink link:calculationLink link:definitionLink 00000019 - Disclosure - 11. Related Party Transactions link:presentationLink link:calculationLink link:definitionLink 00000020 - Disclosure - 12. Subsequent Events link:presentationLink link:calculationLink link:definitionLink 00000021 - Disclosure - 13. Liquidity link:presentationLink link:calculationLink link:definitionLink 00000022 - Disclosure - 1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements (Policies) link:presentationLink link:calculationLink link:definitionLink 00000023 - Disclosure - 1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements (Tables) link:presentationLink link:calculationLink link:definitionLink 00000024 - Disclosure - 2. Stock-Based Compensation (Tables) link:presentationLink link:calculationLink link:definitionLink 00000025 - Disclosure - 3. Marketable Securities (Tables) link:presentationLink link:calculationLink link:definitionLink 00000026 - Disclosure - 5. Land, Property and Equipment (Tables) link:presentationLink link:calculationLink link:definitionLink 00000027 - Disclosure - 8. CONTINGENT PAYMENTS (Tables) link:presentationLink link:calculationLink link:definitionLink 00000028 - Disclosure - 1. Basis of Presentation and Recent Accounting Policies and Pronouncements (Details) link:presentationLink link:calculationLink link:definitionLink 00000029 - Disclosure - 1. Basis of Presentation and Recent Accounting Policies and Pronouncements (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000030 - Disclosure - 2. Stock-Based Compensation (Details) link:presentationLink link:calculationLink link:definitionLink 00000031 - Disclosure - 3. Marketable Securities (Details) link:presentationLink link:calculationLink link:definitionLink 00000032 - Disclosure - 3. Marketable Securities (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000033 - Disclosure - 4. Note Receivable (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000034 - Disclosure - 5. Land, Property and Equipment (Details) link:presentationLink link:calculationLink link:definitionLink 00000035 - Disclosure - 6. Earnings Per Share (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000036 - Disclosure - 7. Equity (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000037 - Disclosure - 8. Contingent Payments (Details) link:presentationLink link:calculationLink link:definitionLink 00000038 - Disclosure - 8. Contingent Payments (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000039 - Disclosure - 9. Asset Retirement Obligation (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000040 - Disclosure - 10. Commitments and Contingencies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000041 - Disclosure - 11. Related Party Transactions (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000042 - Disclosure - 13. Liquidity (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 7 alan-20140930_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.LAB 8 alan-20140930_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE COMMON STOCK Equity Components [Axis] Convertible Preferred Stock Series D Convertible Preferred Stock Series E Accumulated Other Comprehensive Income (Loss) ACCUMULATED DEFICIT Level 1: Quoted Prices Quoted Prices in active Markets for Identical Assets Fair Value, Hierarchy [Axis] Level 2: Significant Other Observable Inputs Level 3: Significant Unobservable Inputs Number of Shares Option Indexed to Issuer's Equity [Axis] Weighted Average Exercise Price Per Share Weighted&amp;amp;amp;amp;amp;amp;#160;&amp;amp;amp;amp;amp;amp;#160;Average Remaining Contractual Term Aggregate Fair Value Aggregate Instrinsic Value Weighted Average Exercise Price Land and improvements Property, Plant and Equipment, Type [Axis] Office furniture and equipment Water disposal facility Production equipment Construction in progress Net Shares Security Owned Not Readily Marketable [Axis] Cost Basis Per Share Cost Basis Total Cost Market Value Per Share Market Value Total Value Accumulated Unrealized Gain Accumulated Unrealized Loss Treasury Stock ACCUMULATED OTHER COMPREHENSIVE INCOME Land Property and Equipment Net book value American Citizenship Center, LLC Related Party Transaction [Axis] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Consolidated Balance Sheets ASSETS CURRENT ASSETS Cash and cash equivalents Accounts receivable - trade, net Other receivables - related party Note receivable, current - related party Marketable securities Prepaid expenses and other current assets Total current assets LAND, PROPERTY AND EQUIPMENT, NET OTHER ASSETS Note receivable, long-term - related party Trust account - asset retirement obligation Prepaid royalties, long-term TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses Contingent payments, current Total current liabilities LONG-TERM LIABILITIES Contingent payments, long-term Asset retirement obligation, long-term TOTAL LIABILITIES COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred Stock - no shares issued or outstanding Class A - 75,000,000 no par shares authorized, 4,962,500 shares issued and outstanding at September 30, 2014 and June 30, 2014 Common Stock Class B - 25,000,000 no par shares authorized, none issued or outstanding Accumulated Other Comprehensive Income Accumulated Deficit Total shareholders' equity TOTAL LIABILITIES & SHAREHOLDERS' EQUITY Consolidated Balance Sheets Parenthetical Class A Common Stock, Shares Authorized Class A Common Stock, Shares Issued Class A Common Stock, Shares Outstanding Class B Common Stock, Shares Authorized Class B Common Stock, Shares Issued Class B Common Stock, Shares Outstanding Consolidated Statements Of Operations NET REVENUES Cost of revenues GROSS PROFIT (LOSS) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Corporate expenses Alanco Energy Services Selling general and administrative expenses OPERATING LOSS OTHER INCOME Interest income Gain on sale of Symbius investment Gain on sale of marketable securities Other income NET LOSS NET LOSS PER SHARE - BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Consolidated Statements Of Comprehensive Income Loss CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Net loss Reclassification adjustment for realized gains included in net loss Net unrealized gain (loss) on marketable securities held at September 30, Net unrealized gain (loss) on marketable securities sold during the period Comprehensive loss Statement [Table] Statement [Line Items] Beginning balance, Amount Beginning balance, Shares Other comprehensive income adjustment Ending balance, Amount Ending balance, Shares Consolidated Statements Of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Accretion of fair value - contingent payments Gain on sale of marketable securities Changes in operating assets and liabilities: Accounts receivable Other receivables - related party Prepaid expenses and other current assets Trust account - asset retirement obligation Accounts payable and accrued expenses Contingent payments liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Issuance of note receivable to ACC Proceeds from repayment of ACC note Purchase of land, property, and equipment Proceeds from sale of marketable securities Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury shares Net cash used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of period CASH AND CASH EQUIVALENTS, end of period SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Non-cash investing & financing activities: Unrealized gain (loss) on marketable securities Note receivable issued for ACC amendment fee Consolidated Statements Of Cash Flows Parenthetical Shares for services value Organization, Consolidation and Presentation of Financial Statements [Abstract] Basis of Presentation and Recent Accounting Policies and Pronouncements Equity [Abstract] Stock-Based Compensation Investments, Debt and Equity Securities [Abstract] Marketable Securities Receivables [Abstract] Note Receivable Property, Plant and Equipment [Abstract] Land, Property and Equipment Earnings Per Share [Abstract] Earnings Per Share Shareholders' equity Commitments and Contingencies Disclosure [Abstract] Contingent Payments Accounting Policies [Abstract] Asset Retirement Obligation Commitments and Contingencies Related Party Transactions [Abstract] Related Party Transactions Subsequent Events [Abstract] Subsequent Events Liquidity Nature of Operations Background information on the creation of Alanco Energy Services, Inc. Basis of Presentation Fair Value of Assets and Liabilities Fair Value of Marketable Securities Asset Retirement Obligation Fair Value of Contingent Payments Recent Accounting Pronouncements Assets and liabilities measured at fair value on a recurring basis Stock option activity Warrant activity Marketable Securities Land Property And Equipment Tables Land, Property and Equipment Contingent payments Marketable securities Asset retirement obligation EX-101.PRE 9 alan-20140930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-101.DEF 10 alan-20140930_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE XML 11 R39.htm IDEA: XBRL DOCUMENT

11. Related Party Transactions (Details Narrative) (USD $)	3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014
Accrued stock awards amount	$ 15,000	$ 15,000
Stock awards granted to directors, amount	30,000
American Citizenship Center, LLC
Due from related party	369,000	409,000
Legal services, accounting services, and interest	10,200
Unpaid receivables	4,200
Interest expense	2,700
legal fees	$ 1,500

- Definition

The aggregate amount of receivables to be collected from related parties where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth, at the financial statement date. which are usually due within one year (or one business cycle).

+ References+ Details

5. Land, Property and Equipment (Details) (USD $)	3 Months Ended
Sep. 30, 2014	Jun. 30, 2014
Land, property and equipment	$ 3,106,100	$ 2,997,900
Additions	108,200
Less accumulation depreciation	(416,900)	(371,800)
Net book value	4,281,200	4,163,000
Depreciation and amortization	(45,100)
Office furniture and equipment
Land, property and equipment	51,300	51,300
Additions	0
Water disposal facility
Land, property and equipment	2,716,700	2,714,600
Additions	2,100
Production equipment
Land, property and equipment	338,100	232,000
Additions	106,100
Land and improvements
Land, property and equipment	1,592,000	1,536,900
Additions	55,100
Net book value
Additions	$ 118,200

8. Contingent Payments (Details Narrative) (USD $)	3 Months Ended
8. Contingent Payments (Details Narrative) (USD $)	Sep. 30, 2014
Contingent Payments Details Narrative
Fair value of the contingent land payment	$ 648,400
Accretion expense per annum	3.00%
Increase in fair value of contingent land payment	4,700
Increase in fair value of contingent purchase price	3,700
Amount earned under contingecy formula	16,500
Net present value of contingent purchase price	$ 531,900

2. Stock-Based Compensation (Details) (USD $)	3 Months Ended
2. Stock-Based Compensation (Details) (USD $)	Sep. 30, 2014
Stock-Based Compensation Details
Shares Outstanding July 1, 2014	823,400
Shares Granted
Shares Exercised
Shares Forfeited or expired	(9,400)
Shares Outstanding September 30, 2014	814,000
Shares Exercisable September 30, 2014	814,000
Weighted average exercise price per share outstanding July 1, 2014	$ 0.63
Weighted average exercise price per share Granted
Weighted average exercise price per share Exercised
Weighted average exercise price per share Forfeited or expired	$ 1.5
Weighted average exercise price per share Outstanding September 30, 2014	$ 0.62
Weighted average exercise price per share Exercisable September 30, 2014	$ 0.62
Weighted average remaining contractual term Outstanding July 1, 2014	3 years 4 months 6 days
Weighted average remaining contractual term Granted	0 years
Weighted average remaining contractual term Exercised	0 years
Weighted average remaining contractual term Forfeited or expired	0 years
Weighted average remaining contractual term Outstanding September 30, 2014	3 years 1 month 21 days
Weighted average remaining contractual term Exercisable September 30, 2014	3 years 1 month 21 days
Aggregate fair value outstanding July 1, 2014	$ 212,600
Aggregate fair value Granted
Aggregate fair value Exercised
Aggregate fair value Forfeited or expired	(5,800)
Aggregate fair value Outstanding September 30, 2014	206,800
Aggregate fair value Exercisable September 30, 2014	206,800
Aggregate Intrinsic Value Outstanding July 1, 2014
Aggregate Intrinsic Value Granted
Aggregate Intrinsic Value Exercised
Aggregate Intrinsic Value Forfeited or expired
Aggregate Intrinsic Value Outstanding September 30, 2014
Aggregate Intrinsic Value Exercisable September 30, 2014

1. Basis of Presentation and Recent Accounting Policies and Pronouncements (Details Narrative) (USD $)	3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Company paid under management agreement	$ 60,000
Remaining prepaid royalties	$ 51,300	$ 58,700

3. Marketable Securities (Details)	3 Months Ended
3. Marketable Securities (Details)	Sep. 30, 2014
Net Shares
Beginning balance	85000
Shares sold	-45000
Ending balance	40000
Cost Basis Per Share
Beginning balance	5.16
Shares sold	5.16
Ending balance	5.16
Cost Basis Total Cost
Beginning balance	439100
Shares sold	-232600
Ending balance	206500
Market Value Per Share
Beginning balance	6.59
Ending balance	5.75
Market Value Total Value
Beginning balance	560100
Ending balance	230000
Accumulated Unrealized Gain
Beginning balance	121200
Ending balance	23500
Accumulated Unrealized Loss
Beginning balance	-
Ending balance	-

3. Marketable Securities (Details Narrative) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Marketable Securities - Amount	$ 230,000
Marketable Securities - Per Share	$ 5.75	$ 6.59

4. Note Receivable (Details Narrative) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Receivables [Abstract]
Outstanding amount drawn on credit line	$ 369,000	$ 409,000

13. Liquidity (Details Narrative) (USD $)	3 Months Ended		12 Months Ended
13. Liquidity (Details Narrative) (USD $)	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NET INCOME (LOSS)	$ (178,200)	$ (151,200)	$ (106,200)

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Jun. 30, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 1,354,800	$ 1,215,600
Accounts receivable - trade, net	87,300	96,800
Other receivables - related party	4,200	9,200
Note receivable, current - related party	245,000	300,000
Marketable securities	230,000	560,100
Prepaid expenses and other current assets	240,100	212,700
Total current assets	2,161,400	2,394,400
LAND, PROPERTY AND EQUIPMENT, NET	4,281,200	4,163,000
OTHER ASSETS
Note receivable, long-term - related party	124,000	109,000
Trust account - asset retirement obligation	53,400	48,700
Prepaid royalties, long-term		50,000
TOTAL ASSETS	6,620,000	6,765,100
CURRENT LIABILITIES
Accounts payable and accrued expenses	416,800	278,000
Contingent payments, current	50,000	50,000
Total current liabilities	466,800	328,000
LONG-TERM LIABILITIES
Contingent payments, long-term	1,130,300	1,138,300
Asset retirement obligation, long-term	423,700	423,700
TOTAL LIABILITIES	2,020,800	1,890,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock - no shares issued or outstanding
Class A - 75,000,000 no par shares authorized, 4,962,500 shares issued and outstanding at September 30, 2014 and June 30, 2014	109,106,800	109,106,800
Common Stock Class B - 25,000,000 no par shares authorized, none issued or outstanding
Accumulated Other Comprehensive Income	23,500	121,200
Accumulated Deficit	(104,531,100)	(104,352,900)
Total shareholders' equity	4,599,200	4,875,100
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$ 6,620,000	$ 6,765,100

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)	COMMON STOCK	ACCUMULATED OTHER COMPREHENSIVE INCOME	ACCUMULATED DEFICIT	Total
Beginning balance, Amount at Jun. 30, 2014	$ 109,106,800	$ 121,200	$ (104,352,900)	$ 4,875,100
Beginning balance, Shares at Jun. 30, 2014	4,962,500
Other comprehensive income adjustment		(97,700)		(97,700)
Net loss			(178,200)	(178,200)
Ending balance, Amount at Sep. 30, 2014	$ 109,106,800	$ 23,500	$ (104,531,100)	$ 4,599,200
Ending balance, Shares at Sep. 30, 2014	4,962,500

7. Equity (Details Narrative) (USD $)	6 Months Ended
7. Equity (Details Narrative) (USD $)	Dec. 31, 2013
Equity Details Narrative
Repurchase of common stock, amount	$ 26,100
Repurchase of common stock, per share	$ 0.46
Repurchase of common stock, shares	56,800
Repurchase stock program	During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program,extending it through December 31, 2014 andestablishing anaggregate future amount of shares that may be purchased under the program to 2 million shares. There were no shares repurchased under the program in the current quarter.

8. Contingent Payments (Details) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Contingent Payments Details
Contingent land payment	$ 648,400	$ 660,200
Contingent purchase price	531,900	528,100
Contingent payment	1,180,300	1,188,300
Less current portion	(50,000)	(50,000)
Contingent payments, long-term	$ 1,130,300	$ 1,138,300

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (178,200)	$ (151,200)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	45,100	42,900
Accretion of fair value - contingent payments	8,400	8,400
Gain on sale of marketable securities	(46,700)	(204,800)
Changes in operating assets and liabilities:
Accounts receivable	9,500	(4,000)
Other receivables - related party	5,000	19,400
Prepaid expenses and other current assets	22,600	13,000
Trust account - asset retirement obligation	(4,700)	(4,700)
Accounts payable and accrued expenses	128,800	11,600
Contingent payments liabilities	(16,400)
Net cash used in operating activities	(26,600)	(269,400)
CASH FLOWS FROM INVESTING ACTIVITIES
Issuance of note receivable to ACC		(25,000)
Proceeds from repayment of ACC note	50,000
Purchase of land, property, and equipment	(163,300)	(14,900)
Proceeds from sale of marketable securities	279,100	499,100
Net cash provided by investing activities	165,800	459,200
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury shares		(22,900)
Net cash used in financing activities		(22,900)
NET INCREASE IN CASH AND CASH EQUIVALENTS	139,200	166,900
CASH AND CASH EQUIVALENTS, beginning of period	1,215,600	696,400
CASH AND CASH EQUIVALENTS, end of period	1,354,800	863,300
Non-cash investing & financing activities:
Unrealized gain (loss) on marketable securities	(97,700)	25,400
Note receivable issued for ACC amendment fee	$ (10,000)

CONSOLIDATED BALANCE SHEETS (Parenthetical)	Sep. 30, 2014	Jun. 30, 2014
Consolidated Balance Sheets
Class A Common Stock, Shares Authorized	75,000,000	75,000,000
Class A Common Stock, Shares Issued	4,962,500	4,962,500
Class A Common Stock, Shares Outstanding	4,962,500	4,962,500
Class B Common Stock, Shares Authorized	25,000,000	25,000,000
Class B Common Stock, Shares Issued	0	0
Class B Common Stock, Shares Outstanding	0	0

Document and Entity Information	3 Months Ended
Document and Entity Information	Sep. 30, 2014	Nov. 07, 2014
Document And Entity Information
Entity Registrant Name	ALANCO TECHNOLOGIES INC
Entity Central Index Key	0000098618
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,037,500
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	Sep. 30, 2014	Sep. 30, 2013
Consolidated Statements Of Operations
NET REVENUES	$ 232,400	$ 14,800
Cost of revenues	193,400	68,800
GROSS PROFIT (LOSS)	39,000	(54,000)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Corporate expenses	76,100	77,100
Alanco Energy Services	199,500	232,900
Selling general and administrative expenses	275,600	310,000
OPERATING LOSS	(236,600)	(364,000)
OTHER INCOME
Interest income	11,500	7,800
Gain on sale of marketable securities	46,700	204,800
Other income	200	200
NET LOSS	$ (178,200)	$ (151,200)
NET LOSS PER SHARE - BASIC AND DILUTED	$ (0.04)	$ (0.03)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	4,962,500	4,944,300

6. Earnings Per Share (Details Narrative)	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]
Dilutive securities	814,000	1,076,600

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net loss	$ (178,200)	$ (151,200)
Reclassification adjustment for realized gains included in net loss	(46,700)	(204,800)
Net unrealized gain (loss) on marketable securities held at September 30,	(66,800)	185,200
Net unrealized gain (loss) on marketable securities sold during the period	15,800	45,000
Comprehensive loss	$ (275,900)	$ (125,800)

9. Asset Retirement Obligation (Details Narrative) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Accounting Policies [Abstract]
Asset Retirement Obligation	$ 423,700	$ 423,700
Payment made for asset retirement obligation	4,700
Balance at trust account for asset retirement obligation	$ 53,400	$ 48,700

13. Liquidity	3 Months Ended
13. Liquidity	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity	During the three months ended September 30, 2014, the Company reported a net loss of ($178,200) and for fiscal year ended June 30, 2014, the Company reported a net loss of ($106,200). For the next year, the Company expects to meet its working capital and other cash requirements with its current operations, cash reserves and sales of marketable securities as required. However, if for any reason, the Company does require additional working capital to complete its business plan, there can be no assurance that the Company’s efforts to acquire the required additional working capital will be successful. The Company’s continued existence is dependent upon its ability to achieve and maintain profitable operations, identify profitable acquisition/merger candidates and/or successfully invest its capital.