-----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, RwrcciFv57zwd6P35mmTY/dQ7DNDVXYq83dMGIHy2w7DcWTYqKlHBK9+TYSULiaM oob485HT5TH31XwyanMwIA== 0001004522-98-000043.txt : 19981116 0001004522-98-000043.hdr.sgml : 19981116 ACCESSION NUMBER: 0001004522-98-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98747475 BUSINESS ADDRESS: STREET 1: 15900 N 78TH ST STREET 2: SUITE 101 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6026071010 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 . . . . . . . . . . . . . . . . . . . .September 30, 1998 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 October 17, 1998, there were 5,050,683 shares of common stock outstanding. ALANCO ENVIRONMENTAL RESOURCES CORPORATION INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets September 30, 1998 (unaudited) and June 30, 1998 (audited) . . . . . . . . . . . . . 3 Consolidated Statements of Operations For the three months ended September 30, 1998 and 1997 (unaudited) . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows For the three months ended September 30, 1998 and 1997 (unaudited) . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 8 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 8 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1998 AND JUNE 30, 1998 Sept 30, 1998 June 30, 1998 ASSETS (unaudited) (audited) ------------- -------------- Current Assets: Cash $ 1,060,216 $ 1,116,857 Accounts receivable 1,408,151 1,192,547 Notes receivable 348,845 349,212 Inventories (note 2) 530,369 540,371 Prepaid expenses and other current assets 136,442 64,544 Cost & estimated earnings in excess of billing on uncompleted projects -0- 105,070 ------------- -------------- Total current assets 3,484,023 3,368,601 Property, plant and equipment, net 3,244,245 3,380,124 Intangible assets 219,795 223,381 Other assets 226,558 243,303 Net assets of discontinued operations held for sale 2,443,000 2,443,000 ------------- -------------- Total assets $ 9,617,621 $ 9,658,409 ============= ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Capital lease and notes payable, current portion $ 1,021,527 $ 1,306,672 Accounts payable and accrued expenses 713,323 600,798 Billings in excess of costs and est earnings 309,498 173,248 ------------- -------------- Total current liabilities 2,044,348 2,080,718 Capital lease and notes payable, long-term 254,888 410,671 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; 5,050,683 shares issued and outstanding 53,742,005 53,742,005 Accumulated deficit 46,423,620 46,574,985 ------------- -------------- Total shareholders' equity 7,318,385 7,167,020 ------------- -------------- Total liabilities & shareholders' equity $ 9,617,621 $ 9,658,409 ============= ==============
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 September 30, 1998 and 1997 September 30 1998 1997 ------------- ------------- Net sales $ 2,325,600 $ 2,606,357 ------------- ------------- Operating expenses: Direct service and cost of goods sold 1,101,536 1,294,517 Selling, general and administrative 880,662 1,023,118 Depreciation and amortization 154,956 275,256 ------------- ------------- Total operating expenses 2,137,154 2,592,891 ------------- ------------- Income (Loss) from operations 188,446 13,466 Gain/loss from disposal of asset 7,588 15 Interest expense net of interest income (44,669) (64,564) ------------- ------------- Net income/loss $ 151,365 $ (51,083) ============= ============= Net income/loss per share Net income/loss per common share $ 0.03 $ (0.01) ============= ============= Weighted average common shares outstanding 5,050,683 5,049,504 ============= =============
The accompanying notes are an integral part of these financial statements. 4
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended September 30, 1998 and 1997 September 30 1998 1997 ------------- ------------ Cash flows from operating activities: Net gain/loss from continuing operations $ 151,365 $ (51,083) Adjustments to reconcile net gain/loss to net cash provided by (used in) operating activities: Depreciation and amortization 154,955 275,256 (Increase) decrease in: Accounts receivable (215,604) (242,930) Cost & est earnings in excess of billing 105,070 Inventory 10,002 14,621 Prepaid expenses and other current assets (71,898) 60,465 Other assets 16,744 (4,082) Increase (decrease) in: Accounts payable and accrued expenses 112,526 239,827 Billings in excess of costs and est earnings 136,250 ------------- ------------ Net cash provided by (used in) continuing operations 399,410 292,074 Net cash used in discontinued operations (37,903) ------------- ------------ Net cash provided by (used in) operating activities 399,410 254,171 ------------- ------------ Cash flows from investing activities: Purchase of property, plant and equipment (8,997) (42,026) Other (6,126) 3,510 ------------- ------------ Net cash used in investing activities (15,123) (38,516) ------------- ------------ Cash flows from financing activities: Payments on obligations, net (440,928) (214,661) ------------- ------------ Net cash provided by financing activities (440,928) (214,661) ------------- ------------ Net increase in cash (56,641) 994 Cash, beginning of period 1,116,857 526,851 ------------- ------------ Cash, end of period $ 1,060,216 $ 527,845 ============= ============ Supplemental disclosure of non-cash operating, investing and financing activities: Capital leases entered into during period: -0- $ 156,000 Issuance of capital stock: -0- -0-
The accompanying notes are an integral part of these financial statements. 5 ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THREE MONTHS ENDED SEPTEMBER 30, 1998 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, 1998, 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 statements of cash flows as of September 30, 1998, and for all periods presented. The results of operations for the three months ending September 30, 1998, are not necessarily indicative of the operating results to be expected for an entire year. All significant intercompany balances, transactions and stock holdings have been eliminated from the accompanying interim financial statements. Note 2 - Inventories Inventories have been recorded at the lower of cost or market. The composition of inventories as of September 30, 1998, and June 30, 1998, is listed below: September 30, 1998 June 30, 1998 ------------------- ---------------- Finished goods $ 184,297 $ 226,116 Work-in-process 13,138 24,835 Raw material 332,934 289,420 ----------- ----------- $ 530,369 $ 540,371 =========== =========== 6 Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources As of September 30, 1998, the Company's current assets exceeded current liabilities by $1,440,000, or a ratio of 1.7 to 1 compared to $1,288,000 or a ratio of 1.6 to 1 as of June 30, 1998. The increase in the current ratio resulted from an increase in accounts receivable and prepaid expenses, without a corresponding increase in accounts payable. Cash provided from continuing operations was $399,000 for the quarter versus $254,000 for the comparable quarter ended September 30, 1997. During fiscal year 1998, Wal-Mart, which accounted for approximately 45% of the Company's consolidated revenue, terminated its contract with the Fry Guy food service operations and is returning over 1,500 fryers to the Company. Although there has been continued Fry Guy sales to Wal-Mart through the first 1999 fiscal quarter, the Company anticipates the Wal-mart revenues to cease in the second quarter. Wal-Mart elected to purchase new fryer equipment for its stores and self-manage its food program. To respond to the contract loss, the Company is revitalizing its sales program to replace declining revenues and is attempting to reduce operating expenses. The loss of the Wal-Mart account is projected to result in a shortfall in working capital and impair the ability of the company to meet its short-term capital lease obligations. The Company believes this working capital shortfall will be resolved by additional borrowing, placement of the fryers in new locations, and the sale or lease of the fryer units. 2. Results of Operations - Three months ended 9/30/98 versus 9/30/97 Consolidated revenue for the quarter ended September 30, 1998, was $2,326,000 compared to $2,606,000 for the quarter ended September 30, 1997. This represents a decrease of $280,000 or 10.7%. The decrease in food service revenue accounted for $255,000 of the decrease with the balance resulting from a revenue decrease in the Company's pollution control segment. Net income increased to $151,000, or $.03 per share, compared to a loss of ($51,000), or ($.01) per share, for the comparable quarter ended September 30, 1997. Income from operations was $188,000 compared to $13,000 for the comparable quarter in the prior fiscal year. The increase in income resulted from a decrease in selling, general and administrative expenses,and a decrease in depreciation and amortization expense related primarily to the Wal-Mart contract. Direct service and cost of goods sold decreased by $193,000 or 14.9%, compared to the first quarter of last year. Selling, general and administrative expenses for the quarter decreased by $142,000 or 13.9% compared to the quarter ended September 30, 1997. The decrease in direct service and cost of goods sold related to a corresponding decrease in net sales. The decrease in selling, general and administrative expenses was due to reduced sales commissions and a planned overall reduction in overhead expenses. 7 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On October 13, 1998 the case of Norman E. Meyer v. Alanco Environmental Resources Corporation was settled. Item 6. EXHIBITS (A) (27) Financial Data Schedule (B) Reports on Form 8-K None (C) Reports on Form S-8: 1 filed 10/22/98 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. ALANCO ENVIRONMENTAL RESOURCES CORPORATION (Registrant) /s/John Carlson ----------------------- John Carlson Chief Financial Officer Date: November 12, 1998 9 EX-27 2
5 3-MOS JUN-30-1999 SEP-30-1998 1060216 0 2446621 689625 530369 3484023 5400953 2156708 9617621 2044348 254888 0 0 53742005 (46423620) 9617621 2325600 2325600 1101536 2137154 (16183) 0 60852 151365 0 151365 0 0 0 151365 .03 .03
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