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.............................. March 31,1996
Commission file number.....................................0-9347
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
(formerly known as Alanco 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.)
4110 North Scottsdale Road, Suite 200, Scottsdale, Arizona 85251
(Address of principal executive office) (Zipcode)
(602) 874-0448
(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 May 7, 1996 there were 33,146,690 shares of common stock
outstanding.
<PAGE> 2
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Consolidated Balance Sheets
March 31, 1996 (unaudited) and
June 30, 1995 (audited)................ 3-4
Consolidated Statements of Operations
For the three months ended March
31, 1996 and 1995 (unaudited).......... 5
Consolidated Statements of Operations
For the nine months ended March
31, 1996 and 1995 (unaudited).......... 6
Consolidated Statements of Shareholders'
Equity for the nine months ended
March 31, 1996 and 1995 (unaudited).... 7
Consolidated Statements of Cash Flows
For the nine months ended March
31, 1996 and 1995 (unaudited).......... 8-9
Notes to Consolidated Financial
Statements (unaudited)................. 10-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 13-14
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders..................................... 15
Item 6. Exhibits and Reports on Form 8-K............ 15
<PAGE> 3
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996 AND JUNE 30, 1995
March 31, 1996 June 30, 1995
(Unaudited) (Audited)
<S> <C> <C>
-------------- --------------
ASSETS
CURRENT ASSETS
Cash $ 1,360,524 $ 607,411
Accounts receivable -net 631,869 480,838
Notes receivables (note 3) 554,407 144,406
Receivable - other (note 3) 527,132 907,368
Inventories (note 2) 1,573,645 1,011,701
Marketable securities - 148,400
Prepaid expense 107,210 38,435
-------------- --------------
Total current assets 4,754,786 3,338,559
-------------- --------------
PROPERTY, PLANT AND EQUIPMENT
At cost 4,092,163 3,787,744
Less accumulated depreciation (651,164) (394,436)
-------------- --------------
Total property, plant and equipment 3,440,999 3,393,308
-------------- --------------
OTHER ASSETS
Investment in restricted securities 100,000 100,000
Costs in excess of book value on acquisition of
wholly owned subsidiaries less accumulated
amortization of $ 422,430 at March 31, 1996
and $102,419 at June 30, 1995 5,975,774 6,295,784
Installment sale contract receivable 1,225,000 1,240,000
Patents, patents pending and patent
application technology, less accumulated
amortization of $98,769 at March 31, 1996
and $83,678 at June 30, 1995 194,618 121,647
Other 95,469 151,345
-------------- --------------
Total other assets 7,590,861 7,908,776
-------------- --------------
Net mineral properties & related assets
held for sale (note 4) 6,534,114 6,575,209
TOTAL ASSETS $ 22,320,762 $ 21,215,852
============== ==============
See notes to consolidated financial statements
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996 AND JUNE 30, 1995
March 31, 1996 June 30, 1995
(Unaudited) (Audited)
<S> <C> <C>
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, shareholders $ 45,082 $ 53,685
Current maturities of long-term liabilities 94,642 93,987
Accounts payable 345,496 416,356
Accrued payroll taxes 93,292 141,500
Accrued salaries, wages and commissions 103,015 69,173
Accrued liabilities 75,112 112,335
-------------- --------------
Total current liabilities 756,638 887,036
-------------- --------------
LONG-TERM OBLIGATIONS (note 5) 390,013 463,834
-------------- --------------
Total liabilities 1,146,651 1,350,870
-------------- --------------
UNREALIZED INCOME ON INSTALLMENT SALES 887,587 969,104
-------------- --------------
REDEEMABLE PREFERRED STOCK, CLASS A
Preferences established by the Board of Directors
5,000,000 shares at all periods presented, 26 shares,
$20,000 par value, non-cumulative, voting issued and
outstanding at March 31, 1996 and June 30, 1995 321,618 295,062
-------------- --------------
SHAREHOLDERS' EQUITY
Preferred stock, Class B, cumulative, voting
authorized 20,000,000 shares and none issued - -
Common stock, no par value
100,000,000 shares authorized at all periods
presented, issued and outstanding 32,946,802
at March 31, 1996 and 29,924,057 at
June 30, 1995 (note 6) 51,493,165 47,885,245
Accumulated deficit (31,528,259) (29,284,429)
-------------- --------------
Total Shareholders' Equity 19,964,906 18,600,816
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 22,320,762 $ 21,215,852
============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
Three Months Ended March 31
1996 1995
<S> <C> <C>
-------------- -------------
REVENUES
Operating revenues $ 974,085 $ 727,166
-------------- -------------
Total revenues 974,085 727,166
-------------- -------------
OPERATING EXPENSES
Cost of sales & direct service 818,003 618,177
General and administrative 985,859 608,010
Depreciation and amortization 216,437 96,021
-------------- -------------
Total operating expense 2,020,299 1,322,208
-------------- -------------
LOSS FROM OPERATIONS (1,046,214) (595,042)
OTHER INCOME AND (EXPENSE)
Other income (expense) (2,374) (2,197)
-------------- -------------
(2,374) (2,197)
-------------- -------------
NET LOSS BEFORE EXTRAORDINARY ITEM (1,048,588) (597,239)
EXTRAORDINARY ITEM
Write-down of assets to reflect market value - (216,940)
-------------- -------------
LOSS INCLUDING EXTRAORDINARY ITEM $ (1,048,588) $ (814,179)
============== =============
NET LOSS PER SHARE OF COMMON STOCK:
Before extraordinary item $ (0.03) $ (0.03)
Extraordinary item - (0.01)
-------------- -------------
NET LOSS PER SHARE OF COMMON STOCK
INCLUDING EXTRAORDINARY ITEM $ (0.03) $ (0.04)
============== =============
Weighted average number of shares
outstanding during period 32,403,029 22,845,687
-------------- -------------
See notes to consolidated financial statements
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
March 31
1996 1995
<S> <C> <C>
------------- -------------
REVENUES
Operating revenues $ 3,855,256 $ 2,376,819
------------- -------------
Total revenues 3,855,256 2,376,819
------------- -------------
OPERATING EXPENSES
Cost of sales & direct service 2,636,859 2,147,477
General and administrative 2,705,657 1,597,910
Depreciation and amortization 676,107 282,682
------------- -------------
Total operating expense 6,018,623 4,028,069
------------- -------------
LOSS FROM OPERATIONS (2,163,368) (1,651,250)
------------- -------------
OTHER INCOME AND (EXPENSE)
Interest Income 35,834 58,473
Interest Expense (77,022) (4,424)
Other income (expense) (11,265) 57,985
Loss on disposal of security (28,010) -
------------- -------------
(80,462) 112,034
------------- -------------
LOSS BEFORE EXTRAORDINARY ITEM (2,243,830) (1,539,216)
EXTRAORDINARY ITEM
Write-down of assets to reflect market value - (1,239,368)
------------- -------------
LOSS INCLUDING EXTRAORDINARY ITEM $ (2,243,830) $ (2,778,584)
============= =============
LOSS PER SHARE OF COMMON STOCK
Before extraordinary item $ (0.07) $ (0.07)
Extraordinary item - (0.06)
------------- -------------
NET LOSS PER SHARE OF COMMON STOCK
INCLUDING EXTRAORDINARY ITEM $ (0.07) $ (0.13)
============= =============
Weighted average number of shares
outstanding during period 31,334,310 22,793,759
See notes to consolidated financial statements
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
Common Stock Subscriptions Accumulated
Shares Amount Receivable Deficit TOTAL
<S> <C> <C> <C> <C> <C>
---------- ------------ ------------ -------------- --------------
Balances, June 30, 1994 22,687,487 $ 40,958,846 $ (100,000) $ (24,531,050) $ 16,327,796
Issued for the following:
Cash 50,200 35,938 35,938
Asset acquisition 5,000 5,000 5,000
Services 165,000 125,000 125,000
Settlement of dispute 50,000 37,500 37,500
Write off subscription receivable (100,000) 100,000
Net loss (2,778,584) (2,778,584)
---------- ------------ ------------ -------------- --------------
Balances, March 31, 1995 22,957,687 $ 41,062,284 $ - $ (27,309,634) $ 13,752,650
========== ============ ============ ============== ==============
Common Stock Subscriptions Accumulated
Shares Amount Receivable Deficit TOTAL
---------- ------------ ------------ -------------- --------------
Balances, June 30, 1995 29,924,057 $ 47,885,246 $ - $ (29,284,429) $ 18,600,817
Issued for the following:
Cash 2,668,333 3,189,988 3,189,988
Stock options 319,500 365,416 365,416
Services 3,362 3,500 3,500
Settlement of dispute 12,800 8,000 8,000
Acquisition of intellectual property 18,750 41,015 41,015
Net loss (2,243,830) (2,243,830)
---------- ------------ ------------ -------------- --------------
Balances, March 31, 1996 32,946,802 $ 51,493,165 $ - $ (31,528,259) $ 19,964,906
========== ============ ============ ============== ==============
</TABLE>
See notes to consolidated financial statements
<PAGE> 8
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
<S> <C> <C>
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,243,830) $ (2,778,584)
-------------- --------------
Adjustments to reconcile net loss
to net cash (used in) operating activities:
Depreciation & amortization 675,974 282,682
Extraordinary item - 1,239,368
Net loss on sale of assets 50,482 884
Imputed expense preferred 26,556 -
Deferred settlement 63,387 -
Other 38,674 66,848
Cash effects of changes in:
Accounts receivable (151,031) (2,881)
Notes and other receivables 5,236 62,799
Inventory (561,944) 184,398
Accounts payable (70,860) (102,600)
Other working capital items (128,967) (97,437)
-------------- --------------
Total adjustments (52,493) 1,634,061
-------------- --------------
Net cash (used in) operating activities (2,296,323) (1,144,523)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (383,911) (112,600)
Additions to patent value (47,047) (18,925)
Proceeds from sale of securities 120,390 -
Advances on note receivable (410,000) -
Investment in PMM - (365,220)
Collection on receivable-other 375,000 -
Other (48,543) 3,453
-------------- --------------
Net cash provided by (used in)
investing activities $ (394,111) $ (493,292)
-------------- --------------
See notes to consolidated financial statements
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
1996 1995
<S> <C> <C>
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing $ - $ 39,220
Proceeds from exercise of stock options 326,725 -
Payments on long term obligations (73,166) (14,908)
Proceeds from sale of stock 3,189,988 35,938
-------------- --------------
Net cash provided by financing activities 3,443,547 60,250
-------------- --------------
(DECREASE) INCREASE IN CASH 753,113 (1,577,565)
CASH AT BEGINNING OF PERIOD 607,411 1,935,915
-------------- --------------
CASH AT END OF PERIOD $ 1,360,524 $ 358,350
============== ==============
Supplemental disclosure of non-cash operating,
investing and financing activities:
Issuance of capital stock :
Addition to manufacturing facility $ - $ 5,000
For services 42,191 -
Acquisition of intellectual property 41,015 -
Settlement of dispute 8,000 37,500
Cash paid during the period for interest $ 60,778 $ 4,424
See notes to consolidated financial statements
</TABLE>
<PAGE> 10
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with Generally Accepted Accounting Principles for interim financial
information and in accordance with the instructions to Form 10Q. 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 financial statements should be
read in conjunction with the Company's June 30, 1995 Annual Report on Form 10K.
In the opinion of management, the accompanying financial statements include all
adjustments consisting of normal recurring accruals necessary to present fairly
the financial position, results of operations, changes in shareholders equity
and statements of cashflows as of March 31, 1996, and for all periods
presented. The results of operations for the period ending March 31, 1996, 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 March 31, 1996 and June 30, 1995 is listed
below:
March 31, 1996 June 30, 1995
------------- -------------
Raw materials $ 622,937 $ 583,164
Work in process 190,879 186,571
Finished goods 759,829 241,966
------------- -------------
Total Inventories $ 1,573,645 $ 1,011,701
============= =============
<PAGE> 11
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Note 3 - Contingencies
During the year ended June 30, 1995, the Company sold 86% of its interest
in Phoenix Medical Management(PMM) to Amarante Financial S.A., an unrelated
third party. The terms of the sale provided for total payments of $870,000
beginning July 15, 1995, at the rate of $75,000 per month with a balloon
payment of $495,000 due on December 15, 1995. As part of the negotiated
acquisition of 70% of the outstanding stock of PMM, the Company agreed to
indemnify certain unrelated third parties against loss on their continuing
guarantees on leased facilities and equipment valued at $1,021,631 and on a
Note Payable to a prior PMM shareholder which was due and payable no later than
December 31, 1995, in the principal amount of $100,000. As part of the
Company's sale of the majority of its interest in PMM, the purchaser agreed to
indemnify the Company against loss from these commitments and assumed the
commitments under the contract sale agreement. As of December 31, 1995, the
Company had collected $375,000 of the total outstanding amount of $870,000.
Currently the debtor is in default on the $495,000 due December 15, 1995, and
the above $100,000 Note Payable. Although negotiations are currently under way
to remedy the default, there are no assurances that the Company will be
successful in these negotiations. The Company has reached an agreement with
the holder of the Note Payable. There remains $ 50,000 outstanding on that
note as of May 6, 1996. In connection with the above guarantees, the company
has loaned PMM $410,000 as of March 31, 1996 using PMM's accounts receivable as
collateral.
Note 4 - Net Assets Held For Sale
The Company has classified its mineral properties as assets held for sale
since it is actively seeking a sale or joint venture agreement for operations
of these assets. The properties are recorded on the Company records for $ 6.5
million well under the latest appraisal value of approximately $ 10 million.
No loss is anticipated should a sale be consummated.
Note 5 - Long Term Obligations
As of March 31, 1996, long term obligations, net of current maturities,
included $ 375,268 of capitalized long term equipment leases. The balance
consisted of a bank note payable of $ 14,745.
Note 6 - Shareholders' Equity and Loss Per Share
During the nine months ended March 31, 1996, the Company issued common
stock for cash in the amount of $3,555,404. The restricted common shares were
issued, pursuant to an exemption available under Section 4 of the Securities
Act, for a negotiated price on private placement agreements to several
unrelated qualified investors. Under terms of those agreements, for each two
shares purchased the buyer will receive one warrant for the purchase of an
additional share of restricted common stock for $3 exercisable for a period of
three years from the date of the subscription. As of April 30, 1996, there
were 1,304,166 of such warrants outstanding.
<PAGE> 12
ALANCO ENVIRONMENTAL RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Note 6 - Shareholders' Equity and Loss Per Share (cont.)
The Company currently has two stock option plans in effect. Under the
Officers and Directors Stock Option Plan, 1,000,000 shares have been
authorized. The price of these options is to be determined by the Board of
Directors at the time the option is granted. To date, all options
(225,000) granted under this plan have been exercised at an option price of
$0.10 per share.
During the quarter ended March 31, 1996, the Company registered 1,000,000
common shares of the 1995 Incentive Stock Option Plan for key employees thru a
Form S-8 Registration Statement. The number of shares subject to options
granted to any one key employee shall not exceed 100,000 shares. The exercise
price for options shall be set by the Administrative Committee of the Board of
Directors but shall not be less than the fair market value of the shares on the
date the option is granted. Under the plan, options have been granted for
742,000 shares. As of May 6, 1996, options have been exercised for a total of
94,500 shares.
The net loss per share has been calculated based on net losses for the
periods divided by the weighted average number of shares of common stock
outstanding during the periods presented. The potential issuance of additional
shares through the exercise of stock warrants or options was not included in
the calculations of average shares outstanding since the effect would be anti-
dilutive.
<PAGE> 13
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
1. Liquidity and Capital Resources.
As of March 31, 1996, the Company's current assets exceeded current
liabilities by $3,998,148, a ratio of six to one. The available cash of
$1,360,524 represents 29% of total current assets. The cash balance increased
by $ 753,113 from the last fiscal year end of June 30, 1995. This increase was
accomplished thru the issuance of common stock. Refer to Note 3 for changes in
the receivable balances.
Inventories increased by $561,944 since fiscal year end June 30, 1995.
The majority of this increase or $438,470 was the build up in restaurant
equipment needed to begin planned growth in this business segment. Deployment
of this equipment is anticipated to begin during the last quarter of this
fiscal year. In addition, the Company is actively pursuing, from several
sources, the required outside equipment financing needed to complete its
planned objectives. Although there are no guarantees, the company believes
funds are available considering the vendor agreements now in place and the
value of unsecured equipment currently on hand.
The insurance adjustment segment has completed its planned expansion in
Arizona and Florida using internal funds. During the quarter ended March 31,
1996, the company discontinued doing business with a major client that
represented approximately 34% of its current revenue. It is anticipated this
revenue will be replaced and surpassed as growth from the new locations
develop. In the interim, any cash required to finance this growth will be
funded through existing cash reserves. The amount involved is not anticipated
to be significant.
The company is expecting to generate revenue from the sale of pollution
control equipment in China and Europe during the quarter ended June 30, 1996.
The costs associated with this revenue have been expensed or are being carried
in inventory. World wide concerns over air quality have increased both overall
product demand and the availability of sources to finance overseas sales of the
company's pollution control technology.
The manufacturing business segment has the necessary cash reserves to
operate effectively as it enters its most active business season. Management
expects the manufacturing segment to have a very positive cash flow for the
next six months and internally generate its own cash requirements for
operations. If expansion of the manufacturing facilities is required,
management has determined construction funds are available for this purpose.
Refer to note 4 relating to assets held for sale.
2. Results of Operations.
Nine Months 1996 vs 1995
Revenues for the nine months ended March 31, 1996 increased to $
3,855,256 or 62% over comparable revenues of $ 2,376,819 for the period ended
March 31, 1995. The insurance adjusting and restaurant equipment business
segments accounted for 66% and 27% of the increase respectively. These
businesses were acquired May 1, 1995 and were therefore not part of prior
period consolidated revenues or expenses. Sales in the manufacturing segment,
representing 64% of total revenues, increased 10% or $227,098 over the prior
period. A change in the focus toward the production of industrial equipment
enhanced sales growth.
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS(Continued)
Nine Months 1996 vs 1995 (continued)
Cost of sales and direct service costs increased by $ 489,382. Direct
costs associated with the insurance and equipment business segments acquired
May 1, 1995 were $ 711,563. This amount was offset by efficiencies gained in
the manufacturing segment where direct costs were reduced by $ 267,176 in spite
of increased sales. General and administrative expense increased by $1,107,747
over the prior period. The insurance adjusting and restaurant equipment
businesses accounted for 51% and 38% of the increase, respectively.
Loss from operations increased by $ 512,118 from the comparable period.
On a consolidated basis, additional depreciation and amortization represented
77% of the increase in the operating loss.
Three Months 1996 vs 1995
Revenues for the three months ended March 31, 1996 increased to $ 974,085
or 25% over the comparable revenues of $727,166 for the three months ended
March 31, 1995. The insurance adjusting segment reported lower than expected
revenue of $374,828 due to very mild weather conditions in Arizona during the
period. Revenue generated by the restaurant equipment segment were $87,222
which was lower than anticipated due to the discontinuance of direct equipment
sales in favor of concentration in the development of food sales thru the use
of the equipment. Manufacturing revenues, although higher for the nine months,
decreased $ 209,243 from the comparable period. This decrease is primarily
due to severe weather conditions which hampered work normally performed
outside.
Operating expenses for the quarter increased by $ 698,091 from the quarter
ended March 31, 1995. The majority of this increase is due to additional
depreciation and amortization expense of $120,416 and the inclusion of the new
business segments for the current quarter only. Increased efforts to market
both the restaurant equipment and pollution control products have added to
operating expenses. The benefits from these expenditures are expected to be
seen in the near future.
<PAGE> 15
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of the Shareholders was held February 17, 1996 for the
purpose of electing a slate of either five(5) members to the Board of Directors
or a slate consisting of seven(7) members. At the Meeting 21,226,685 shares
were present including 636,821 present in person, 7,371,651 represented by
proxy tendered to the Registrant and 13,218,213 shares were reported by broker-
dealers and banks holding the registrant's securities for beneficial owners.
Such shares represented a quorum pursuant to the Registrants bylaws and Arizona
law and NASDAQ bylaws.
Management's proposal for a five member board of directors received the
affirmative vote of 11,287,162 shares while the proposal for a seven member
board of directors received the affirmative vote of 1,172,223 shares.
8,855,555 shares represented by broker-dealer and bank proxies did not receive
voting instructions from the beneficial owners and were treated as abstentions.
Pursuant to Arizona law, Managements proposal for a five member board was
approved. As a result, the newly elected members to the Board of Directors
were Harold S. Carpenter, Steven H. Davis, Bradley Gordon and Dennis Schlegel.
Norman E. Meyer continues to serve as a director of the Company.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit (27) FINANCIAL DATA SCHEDULE
(b) Reports on Form 8-K
Report dated February 23, 1996, request for a Special Meeting of the
Shareholders for the proposal of election of a Board of either five
or seven directors.
Report dated April 16, 1996, change in registrant's certifying
accountant.
<PAGE> 16
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)
John E. Haggar
----------------------------------
JOHN E. HAGGAR
Chief Financial Officer
Date: 5/9/96
--------------<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 1360524
<SECURITIES> 0
<RECEIVABLES> 1713408
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<INVENTORY> 1573645
<CURRENT-ASSETS> 4754786
<PP&E> 11818147
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<BONDS> 390013
321618
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<COMMON> 51493165
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<CGS> 1910700
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<OTHER-EXPENSES> 39275
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<INCOME-PRETAX> (2243830)
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<NET-INCOME> (2243830)
<EPS-PRIMARY> (.07)
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