-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PI5exzVvvPWfBux+fLVl5Ra8LktkTxCWTY0NAa/TM/NVbwJu0MMiN+Idu6LSZdh1 Lcj1s/Kg1YNlM/5RPRvMbw== 0001004522-98-000003.txt : 19980217 0001004522-98-000003.hdr.sgml : 19980217 ACCESSION NUMBER: 0001004522-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALANCO ENVIRONMENTAL RESOURCES CORP CENTRAL INDEX KEY: 0000098618 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 860220694 STATE OF INCORPORATION: AZ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09347 FILM NUMBER: 98533486 BUSINESS ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 602-607-1010 MAIL ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO RESOURCES CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALANCO LTD DATE OF NAME CHANGE: 19901004 FORMER COMPANY: FORMER CONFORMED NAME: TOMBSTONE MINERAL RESERVES INC DATE OF NAME CHANGE: 19801106 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of The Securities and Exchange Act of 1934 For the quarter ended . . . . . . . . . . . . . . . . . . . December 31, 1997 Commission file number. . . . . . . . . . . . . . . . . . . . . . . . .0-9347 ALANCO ENVIRONMENTAL RESOURCES CORPORATION ------------------------------------------------------- (Exact name of registrant as specified in its charter) Arizona 86-0220694 ------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 15900 North 78th Street, Suite 101, Scottsdale, Arizona 85260 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (602) 607-1010 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES XX NO ----- ----- As of January 30, 1998, there were 35,346,527 shares of common stock outstanding. ALANCO ENVIRONMENTAL RESOURCES CORPORATION INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets December 31, 1997 (unaudited) and June 30, 1997 (audited). . . . . . . . . . . . . . 3 Consolidated Statements of Operations For the three months ended December 31, 1997 and 1996 (unaudited). . . . . . . . . . . . . 4 Consolidated Statements of Operations For the six months ended December 31, 1997 and 1996 (unaudited). . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows For the six months ended December 31, 1997 and 1996 (unaudited). . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements (unaudited). . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 8-9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 10 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND JUNE 30, 1997 Dec 31, 1997 June 30, 1997 ASSETS (unaudited) (audited) --------------- -------------- Current Assets: Cash $ 490,297 $ 526,851 Accounts receivable, net 1,337,508 1,169,290 Notes receivable, current portion 573,952 586,739 Inventories (note 2) 567,987 527,479 Prepaid expenses and other current assets 148,909 273,158 --------------- -------------- Total current assets 3,118,653 3,083,517 Notes receivable, long-term portion 222,991 223,733 Property, plant and equipment, net 5,159,161 5,049,080 Costs in excess of book value on acquisition of wholly-owned subsidiaries, net 3,812,804 3,967,791 Intangible assets, net 175,217 175,155 Assets held for sale 4,243,000 4,243,000 Other assets 242,307 216,653 --------------- -------------- Total assets $ 16,974,133 $ 16,958,929 =============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Capital lease obligations and notes payable, current portion $ 1,119,552 $ 890,384 Accounts payable and accrued expenses 803,219 882,920 Net liabilities of discontinued operations 189,418 227,321 --------------- -------------- Total current liabilities 2,112,189 2,000,625 Capital lease obligations and notes payable, long-term portion 888,433 1,136,242 Shareholders' equity Preferred Stock, Class B, cumulative voting; 20,000,000 shares authorized and none issued Common Stock, no par value, 100,000,000 shares authorized; 35,346,527 shares issued and outstanding 53,742,005 53,742,005 Accumulated deficit (39,768,494) (39,919,943) --------------- -------------- Total shareholders' equity 13,973,511 13,822,062 --------------- -------------- Total liabilities & shareholders' equity $ 16,974,133 $ 16,958,929 =============== ==============
The accompanying notes are an integral part of these financial statements. 3
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended December 31, 1997 and 1996 December 31 1997 1996 (unaudited) (unaudited) ------------- ------------- Net sales $ 2,613,335 $ 1,592,610 ------------- ------------- Operating expenses: Direct service and cost of goods sold 1,209,965 623,757 Selling, general and administrative 852,400 971,760 Depreciation and amortization 283,078 218,803 ------------- ------------- Total operating expenses 2,345,443 1,814,320 ------------- ------------- Income (loss) from operations 267,892 (221,710) Other expense (65,359) (23,617) ------------- ------------- Income (loss) from continuing operations 202,533 (245,327) Loss from discontinued operations - (105,247) ------------- ------------- Net income (loss) $ 202,533 $ (350,574) ============= ============= Basic earnings (loss) per share Earnings (loss) from continuing operations 0.01 (0.01) Earnings (loss) from discontinued operations - - ------------- ------------- Basic earnings (loss) per common share $ 0.01 $ (0.01) ============= ============= Diluted earnings (loss) per share Earnings (loss) from continuing operations 0.01 (0.01) Earnings (loss) from discontinued operations - - ------------- ------------- Diluted earnings (loss) per common share $ 0.01 $ (0.01) ============= ============= Weighted average common shares outstanding 35,346,527 33,830,716 ============= =============
The accompanying notes are an integral part of these financial statements. 4
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended December 31, 1997 and 1996 December 31 1997 1996 (unaudited) (unaudited) -------------- --------------- Net sales $ 5,219,692 $ 3,096,467 -------------- --------------- Operating expenses: Direct service and cost of goods sold 2,504,482 1,451,729 Selling, general and administrative 1,875,518 1,791,446 Depreciation and amortization 558,334 416,159 -------------- --------------- Total operating expenses 4,938,334 3,659,334 -------------- --------------- Income (loss) from operations 281,358 (562,867) Other expense (129,908) (33,029) -------------- --------------- Income (loss) from continuing operations 151,450 (595,896) Loss from discontinued operations - (240,486) -------------- --------------- Net income (loss) $ 151,450 $ (836,382) ============== =============== Basic earnings (loss) per share Earnings (loss) from continuing operations 0.00 (0.02) Earnings (loss) from discontinued operations - - -------------- --------------- Basic earnings (loss) per common share $ 0.00 $ (0.02) ============== =============== Diluted earnings (loss) per share Earnings (loss) from continuing operations 0.00 (0.02) Earnings (loss) from discontinued operations - - -------------- --------------- Diluted earnings (loss) per common share $ 0.00 $ (0.02) ============== =============== Weighted average common shares outstanding 35,346,527 33,597,497 ============== ===============
The accompanying notes are an integral part of these financial statements. 5
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended December 31, 1997 and 1996 December 31 1997 1996 (unaudited) (unaudited) -------------- --------------- Cash flows from operating activities: Net income (loss) from continuing operations $ 151,450 $ (595,896) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 559,234 416,159 Other - 19,828 (Increase) decrease in: Accounts receivable (168,218) (420,376) Inventory (40,508) 32,030 Prepaid expenses and other current assets 124,250 (161,895) Other assets (25,654) (63,176) Increase (decrease) in: Accounts payable and accrued expenses (79,702) 116,691 -------------- --------------- Net cash provided by (used in) continuing operations 520,852 (656,635) Net cash used in discontinued operations (37,904) (228,304) -------------- --------------- Net cash provided by (used in) operating activities 482,948 (884,939) -------------- --------------- Cash flows from investing activities: Purchase of property, plant and equipment (67,053) (352,880) Other 6,567 (11,880) -------------- --------------- Net cash used in investing activities (60,486) (364,760) -------------- --------------- Cash flows from financing activities: Proceeds from borrowing - 300,000 Payments on capital lease obligations (459,016) (120,818) Proceeds from the sale of common stock - 381,444 Proceeds from the sale of preferred stock - 1,194,750 -------------- --------------- Net cash provided by (used in) financing activities (459,016) 1,755,376 -------------- --------------- Net increase (decrease) in cash (36,554) 505,677 Cash, beginning of period 526,851 552,010 -------------- --------------- Cash, end of period $ 490,297 $ 1,057,687 ============== =============== Supplemental disclosure of non-cash operating, investing and financing activities: Capital leases entered into during period: $ 440,375 $ 1,034,650 Issuance of capital stock: - 786,350
The accompanying notes are an integral part of these financial statements. 6 ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR SIX MONTHS ENDED DECEMBER 31, 1997 Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been condensed or omitted. These interim consolidated financial statements should be read in conjunction with the Company's June 30, 1997, Annual Report on Form 10-K. In the opinion of management, the accompanying consolidated financial statements include all adjustments consisting of normal recurring accruals necessary to present fairly the financial position, results of operations and cash flows as of December 31, 1997, and for all periods presented. The results of operations for the six months ending December 31, 1997, are not necessarily indicative of the operating results to be expected for an entire year. The Company adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share," for the three and six month periods ended December 31, 1997. Comparable periods for the prior year have been restated to conform with the new computation. This pronouncement modifies the disclosures and computation methodologies required by Accounting Principles Board Opinion No. 15, "Earnings Per Share," for Net Income Per Share such that two amounts must be disclosed. The first is Basic Earnings (Loss) Per Share, which is computed by dividing income available to common shareholders by the weighted average number of common shares available. The second is Diluted Earnings (Loss) Per Share. This computation is similar to that for Basic Earnings Per Share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. All significant intercompany balances, transactions and stock holdings have been eliminated from the accompanying interim financial statements. Note 2 - Inventories Inventories have been recorded at the lower of cost or market. The composition of inventories as of December 31, 1997, and June 30, 1997, is listed below: December 31, 1997 June 30, 1997 ----------------- ------------- Finished goods $ 208,050 $ 238,828 Work-in-process 26,287 10,919 Raw material 333,650 277,732 ---------- ------------ $ 567,987 $ 527,479 ========== ============ 7 Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources As of December 31, 1997, the Company's current assets exceeded current liabilities by $1,006,000, a ratio of 1.5 to 1. During the current six months, increased revenues, especially in the food service, caused an increase of $168,000 in accounts receivable. An increase of $112,000 in current liabilities resulted mainly from additional fry machine leases and long-term liabilities becoming current. The conversion of long-term liabilities to current results from the relative short length of the fry machine leases. Property, plant and equipment, other than fry machine leases, have remained relatively level since the beginning of the fiscal year. A larger backlog in the manufacturing division, compared to December 31, 1996, warranted an increase in raw material purchases during the current quarter resulting in an increase in accounts payable. Cash generated from continuing operations was $521,000 for the six months ended December 31, 1997 compared to a cash usage of $657,000 for the six months ended December 31, 1996. 2. Results of Operations (a.) Three months ended 12/31/97 versus 12/31/96 Consolidated net sales for the quarter ended December 31, 1997 were $2,613,000, an increase of 64% over the comparable period in 1996. Sales from the food service and the manufacturing divisions increased 66% and 47%, respectively, in the current period compared to the comparable period last year. The food service segment benefited from holiday season shopping and accounted for over $600,000 of the current quarter sales increase over the comparable quarter last year. Whereas, the manufacturing division had more commercial jobs than the same period last year and is continuing its efforts to shift away from the seasonal agricultural business. Consolidated operating expenses for the quarter ended December 31, 1997 were $2,345,000, an increase of 29% over the prior comparable period. Direct service expenses were higher during the current quarter due to increased sales in the food service and manufacturing divisions and costs related to installation of pollution control equipment in China. These expenses were partially offset by a decrease in general and administrative expenses resulting from cost containment measures. Consolidated income from continuing operations for the current quarter was $203,000 compared to a loss of $245,000 for the quarter ended December 31, 1996. (b.) Six months ended 12/31/97 versus 12/31/96 Consolidated sales for the six months ended December 31, 1997 were $5,220,000 compared to $3,096,000 or a 69% increase over the prior comparable period. Sales from the food service division increased 115% compared with the same period last year due to additional fry machines being placed with both Wal-Mart and independent distributors. Manufacturing sales increased 36% due to the Company's successful efforts in maintaining a stronger backlog of orders than in the comparable period last year. 8 Consolidated operating expenses for the six months ended December 31, 1997 were $4,938,000, an increase of 35% over the prior comparable period. This increase is the result of an increase of 73% in direct service expense, which was primarily due to the food service's higher sales and increased marketing costs related to independent distributors. Selling, general and administrative costs increased 5% compared to the same period last year. Consolidated income from continuing operations was $151,000 for the current six months. This compares to a loss of $596,000 for the six months ended December 31, 1996. 9 PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K None 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. ALANCO ENVIRONMENTAL RESOURCES CORPORATION (Registrant) /s/ Joseph T. Connelly ------------------------- Joseph T. Connelly Chief Financial Officer Date: February 11, 1998 11 EX-27 2
5 6-MOS JUN-30-1998 DEC-31-1997 490297 0 1939225 27765 567987 3118653 6782742 1623581 16974133 2112189 888433 0 0 53742005 (39768494) 16974133 2523253 5219692 1654040 4938334 (18083) 0 147990 151450 0 151450 0 0 0 151450 0 0
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