-----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, ElXqoo7wytQV+lIkRBEDVv5uMKLrUYkKIdB6/cqsDj/3jgo3BcH2+cjN+DKBZxLX zaYJf/9bGXRAmnF5XNxCHg== 0001004522-00-000003.txt : 20000216 0001004522-00-000003.hdr.sgml : 20000216 ACCESSION NUMBER: 0001004522-00-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000215 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-09347 FILM NUMBER: 546033 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 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of The Securities and Exchange Act of 1934 For the quarter ended . . . . . . . . . . . . . . . . . . . December 31, 1999 Commission file number. . . . . . . . . . . . . . . . . . . . . . . . .0-9347 ALANCO TECHNOLOGIES, INC. ------------------------------------------------------------ (Formerly reporting as Alanco Environmental Resources, Inc.) (Exact name of registrant as specified in its charter) Arizona 86-0220694 -------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 15900 North 78th Street, Suite 101, Scottsdale, Arizona 85260 ------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (408) 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 February 11, 2000 there were 6,210,351 shares, excluding 157,200 treasury shares, of common stock outstanding. Forward-Looking Statements: Some of the statements in this Form 10-QSB Quarterly Report, as well as statements by the Company in periodic press releases, oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words or phrases denoting the anticipated results of future events such as "anticipate," "believe," "estimate," "will likely," "are expected to," "will continue," "project," "trends" and similar expressions that denote uncertainty are intended to identify such forward- looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (i) general economic and business conditions; (ii) changes in industries in which the Company does business; (iii) the loss of market share and increased competition in certain markets; (iv) governmental regulation including environmental laws; and (v) other factors over which the Company has little or no control. ALANCO TECHNOLOGIES, INC. INDEX Page Number PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets December 31, 1999 and June 30, 1999 . . . . . . .3 Consolidated Statements of Operations For the three months ended December 31 1999 and 1998 . . . . . . . . . . . . . . . . . .4 Consolidated Statements of Operations For the six months ended December 31 1999 and 1998 . . . . . . . . . . . . . . . . . .5 Consolidated Statements of Cash Flows For the six months ended December 31 1999 and 1998 . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . . .7 Note A - Basis of Presentation Note B - Inventories Note C - Acquisition of Arraid, Inc. Note D - Sale of C.O.D. mine Note E - Segment Information Note F - Year 2000 Issue Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . . .8 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 9 Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . 9 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . .10 2
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND JUNE 30, 1999 Dec 31, 1999 June 30, 1999 ASSETS ---------------- --------------- Current Assets: Cash $ 533,994 $ 661,696 Accounts receivable, net 953,142 714,107 Notes receivable 126,590 178,692 Inventories (See Note B) 2,270,283 2,069,707 Prepaid expenses and other current assets 93,431 68,805 ---------------- --------------- Total current assets 3,977,440 3,693,007 Property, plant and equipment, net 1,782,985 1,696,949 Intangible assets, net of accumulated amortization 733,610 199,579 Investments at cost (See Note D) 2,465,674 -- Net assets of discontinued operations held for sale -- 2,443,000 Other assets 63,180 123,517 ---------------- --------------- Total assets $ 9,022,889 $ 8,156,052 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Capital lease obligations and notes payable, current portion $ 144,296 $ 416,461 Bank line 11,000 -- Accounts payable and accrued expenses 789,166 392,610 Billings in excess of cost and est earnings 98,153 173,395 ---------------- --------------- Total current liabilities 1,042,615 982,466 Long-term capital leases and notes payable -- 9,394 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; 6,367,565 shares issued and outstanding 54,961,147 53,790,219 Treasury stock, at cost; 157,214 shares in 1999 (172,323) (172,323) Accumulated deficit (46,808,550) (46,453,704) ---------------- --------------- Total shareholders' equity 7,980,274 7,164,192 ---------------- --------------- Total liabilities & shareholders' equity $ 9,022,889 $ 8,156,052 ================ ===============
The accompanying notes are an integral part of these financial statements. 3
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended December 31, 1999 and 1998 December 31 1999 1998 --------------- ------------- Net sales $ 2,171,624 $ 1,837,567 --------------- ------------- Operating expenses: Direct service and cost of goods sold 1,309,676 906,318 Selling, general and administrative 1,009,555 721,680 Depreciation and amortization 89,234 135,375 --------------- ------------- Total operating expenses 2,408,465 1,763,373 --------------- ------------- Income (loss) from operations (236,841) 74,194 Other expense 1,855 (27,637) --------------- ------------- Net income (loss) $ (234,986) $ 46,557 =============== ============= Earnings (loss) per common share - Basic and diluted $ ($0.04) $ 0.01 =============== ============= Weighted average common shares and equivalents outstanding during period -Basic 5,616,711 5,050,683 =============== ============= -Diluted 5,616,711 5,375,054 =============== =============
The accompanying notes are an integral part of these financial statements. 4
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended December 31, 1999 and 1998 December 31, 1999 1998 ------------- ------------ Net sales $ 3,853,966 $ 4,163,167 ------------- ------------ Operating expenses: Direct service and cost of goods sold 2,390,918 2,007,855 Selling, general and administrative 1,647,720 1,602,342 Depreciation and amortization 160,052 290,330 ------------- ------------ Total operating expenses 4,198,690 3,900,527 ------------- ------------ Income (loss) from operations (344,724) 262,640 Other expense (10,121) (64,718) ------------- ------------ Net income(loss) $ (354,845) $ 197,922 ============= ============ Earnings (loss) per common share - Basic & Diluted $ (0.06) 0.04 ============= ============ Weighted average common shares and equivalents outstanding during period - Basic 5,616,711 5,050,683 ============= ============ - Diluted 5,616,711 5,375,054 ============= ============
The accompanying notes are an integral part of these financial statements. 5
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended December 31, 1999 and 1998 December 31, 1999 1998 ------------- ------------- Cash flows from operating activities: Net income (loss) from continuing operations $ (354,846) $ 197,922 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 160,052 246,679 (Increase) decrease in: Accounts receivable and notes receivable (186,933) 151,790 Cost & est earnings in excess of billing -- 105,070 Inventory (200,576) (43,326) Prepaid expenses and other current assets (24,626) (28,481) Other assets 60,337 20,344 Increase (decrease) in: Accounts payable and accrued expenses 396,556 (56,591) Billings in excess of costs and est earnings (75,242) 109,225 ------------- ------------- Net cash provided by (used in) continuing operations (225,278) 702,632 Cash flows from investing activities: Purchase of property, plant and equipment (228,484) (12,715) Intangible assets, primarily related to the acquisition of Arraid, Inc. (551,635) -- Other (22,674) 25,143 ------------- ------------- Net cash provided by (used in) investing activities (802,793) 12,428 ------------- ------------- Cash flows from financing activities: Payments on capital lease obligations (281,559) (628,633) Bank line 11,000 -- Issuance of stock 845,929 -- Exercise of stock options 325,000 -- ------------- ------------- Net cash provided by (used in) financing activities 900,370 (628,633) ------------- ------------- Net increase (decrease) in cash $ (127,701) $ 86,427 Cash, beginning of period 661,696 1,116,857 ------------- ------------- Cash, end of period $ 533,994 $ 1,203,284 ============= ============= Supplemental disclosures: Transfer of equipment to inventory, net of $ -- 1,096,200 accumulated depreciation of 897,280
The accompanying notes are an integral part of these financial statements. 6 ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THREE MONTHS ENDED DECEMBER 31 1999 Note A - 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-QSB. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been condensed or omitted. These interim consolidated financial statements should be read in conjunction with the Company's June 30, 1999, Annual Report on Form 10-KSB. In the opinion of management, the accompanying consolidated financial statements include all adjustments consisting of normal recurring accruals necessary to present fairly the financial position, results of operations and statements of cash flows as of December 31, 1999, and for all periods presented. The results of operations for the six months ending December 31, 1999, are not necessarily indicative of the operating results to be expected for an entire year. All significant intercompany balances, transactions and stock holdings have been eliminated from the accompanying interim financial statements. Note B - Inventories Inventories have been recorded at the lower of cost or market. The composition of inventories as of December 31, 1999, and June 30, 1999, is listed below: December 31,1999 June 30, 1999 ---------------- ----------------- Finished goods $1,389,528 $1,445,800 Work-in-process 181,747 243,100 Raw material 699,008 380,800 ------------ ------------ $2,270,283 $2,069,700 ============ ============ Note C - Acquisition of Arraid, Inc. During the quarter ended December 31, 1999, the Company completed the purchase of Arraid, Inc. ("Arraid"), a provider of data storage solutions for mid-range and mainframe computer systems. Operations of Arraid, Inc. will be reported under the Computer Data Storage segment. The Company intends to utilize Arraid's technological expertise and customer base to expand into the Storage Area Networks (SAN) market, a growing segment of the computer industry. Arraid, established in 1993, is located in Phoenix, Arizona. The purchase price consisted of the assumption of certain specified liabilities and an initial payment of 800,000 shares of the Company's common stock, with additional share payment dependent upon Arraid achieving specified financial objectives for the year period beginning November 1, 1999. The assets and assumed liabilities and the results of operations of Arraid for the quarter ending December 31, 1999, are included in the consolidated financial results of the Company. 7 Note D - Sale of C.O.D. Mine During the quarter ended September 30, 1999, the Company sold its principal mining property, the C.O.D. Mine located near Kingman, Arizona, to Gold & Minerals, Inc.(G&M) for $4.5 million of G&M Series A, 10% Cumulative, Convertible Preferred Stock. Although management of the Company believes the value of the underlying convertible preferred stock equals or exceeds the carrying value of the mining property of approximately $2.5 million, the Company is deferring recognition of any potential gain until such time as there exists an active public market for G&M common stock. Furthermore, based on preliminary G&M unaudited financial information the Company has received, G&M will require additional debt/equity financing to increase its mining production to achieve planned production levels on its existing operating mine. There is no assurance G&M will receive the required additional debt/equity financing. If G&M is unable to sufficiently develop the property or if ore reserves prove to be inadequate, the Company's preferred stock could ultimately have minimal value. Note E - Segment Information Operating Net Sales Income(Loss) For Quarter Ended December 31, 1999 1998 1999 1998 ----------- ------------ ---------- ----------- Computer Data Storage $ 645,400 $ -- $ (90,478) $ -- Pollution Control Products 1,454,422 1,353,745 110,839 (5,495) Food/Machinery Distribution 71,844 483,822 (25,730) 308,193 Mining -- -- (4,439) ( 16,250) Corporate -- -- (227,033) (212,255) ----------- ------------ ---------- ---------- $ 2,171,666 $ 1,837,567 $(236,841) $ 74,193 Note F - Year 2000 Issues The Year 2000 Issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs that have date sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000, possibly causing computer miscalculations and temporary downtime. The Company has monitored its computer systems and has communicated with its customers and suppliers through February 13, 2000 without noting significant Y2K problems. 8 Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. Liquidity and Capital Resources The Company's current assets at December 31, 1999 exceeded current liabilities by $2.9 million, or a current ratio of 3.7 to 1, compared to a current ratio of 3.8 to 1 at Fiscal Year End June 30, 1999. The decrease in the current ratio resulted from the acquisition of Arraid, Inc., which increased Accounts Receivable and Inventory, as well as increasing accounts payable and accrued expenses. In addition, the Company reduced the current portion of capital leases and notes payable during the period by approximately $280,000, reducing that obligation to approximately $144,000 at December 31, 1999. Cash balances at December 31, 1999 were $534,000 compared to $661,700 at June 30, 1999. 2. Results of Operations (A) Three months ended 12/31/99 versus 12/31/98 Consolidated revenue for the quarter ended December 31, 1999 was $2,171,700, compared to $1,837,600 for the comparable quarter of the previous year, an increase of $334,100, or 18%. The increase resulted from $645,400 in additional revenues from the Computer Data Storage segment (related to the acquisition of Arraid, Inc.) and an increase of $100,700 in revenues from Pollution Control Products. The revenue increases were offset by a decrease of $412,000 in the Food Services segment relating to the termination of the Wal- Mart contract. The Wal-Mart contract accounted for 45% and 18% of the Company's consolidated revenues in fiscal years ended June 30, 1998 and 1999, respectively, and represented substantially all the revenues of the Food/Machinery Distribution segment. No revenue was recorded during the quarter ended December 31, 1999 under the Wal-Mart contract, since the contract has been terminated. The Company reported a net loss of $235,000, or $.04 per share for the current quarter, compared to net income of $46,600, or $.01 per share, for the comparable quarter ended December 31, 1998. The decrease in income for the quarter resulted primarily from the loss of income ($330,000) associated with the Wal-Mart contract and operating losses ($90,000) in the Company's Computer Data Storage segment, offset by an increase in profitability ($115,000) of the Company's Pollution Control segment. (B) Six months ended 12/31/99 versus 12/31/98 Consolidated Revenues for the six month period ended December 31,1999 were $3,854,000 compared to $4,163,200, or a 7.4% decrease from the prior comparable period. The decrease resulted from a reduction in the Company's Food/Machinery Distribution Segment of $1,269,100, or 90% of the segment's revenue, primarily due to the loss of the Wal-Mart contract. The revenue loss was partially offset by the $645,000 of revenue reported by the Company's new Computer Data Storage segment. The consolidated net loss for the period was $354,800, or $.06 per share, compared to net income of $197,900, or $.04 per share reported for the same 9 period in the prior fiscal year. The decrease in income for the six months resulted from the loss of margin associated with the Wal-Mart contract and losses generated by the Computer Data Storage segment, offset by improved profitability of the Company's Pollution Control segment. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS - none Item 6. EXHIBITS (A) (27)Financial Data Schedule (B) Reports on Form 8-K - none (C) Reports on Form S-8 -1 filed 11/29/99 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/ John A. Carlson --------------------- John A. Carlson Chief Financial Officer Date: February 14, 2000 10 EX-27 2
5 6-MOS JUN-30-2000 DEC-31-1999 533994 0 1083680 28366 2270283 3977440 3384742 1601757 9022890 1042615 155296 0 0 54961147 (46808550) 7980274 3853966 3853966 2390918 4198690 10121 31170 21031 (354845) 0 (354845) 0 0 0 (354845) (.06) (.06)
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