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 . . . . . . . . . . . . . . . . . . . .September 30, 2000
Commission file number. . . . . . . . . . . . . . . . . . . . . . . . . .0-9347
ALANCO TECHNOLOGIES, INC.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
(Formerly reporting as Alanco Environmental Resources, Inc.)
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 November 12, 2000 there were 6,777,944 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
September 30, 2000 and June 30, 2000 . . . . . . 3
Consolidated Statements of Operations
For the three months ended September 30,
2000 and 1999 . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
For the three months ended September 30,
2000 and 1999 . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . 7
Note A - Basis of Presentation
Note B - Inventories
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 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . .10
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2
<TABLE>
<CAPTION>
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND JUNE 30, 2000
<S> <C> <C>
ASSETS
Sept 30, 2000 June 30, 2000
----------------- ------------------
CURRENT ASSETS
Cash $ 822,100 $ 176,700
Accounts receivable, net 1,644,700 1,078,300
Notes receivable, current 122,000 3,019,000
Inventories 1,053,200 1,112,700
Prepaid expenses and other current assets 128,100 38,300
----------------- ------------------
Total current assets 3,770,100 5,425,000
----------------- ------------------
PROPERTY, PLANT AND EQUIPMENT, net 677,100 628,600
OTHER ASSETS
Intangible assets, net of accumulated amortization 1,528,200 1,558,000
Notes Receivable, due beyond one year 557,100 560,000
Investment at cost 2,465,700 2,465,700
Net assets held for sale 811,000 770,900
Other assets 17,500 26,000
----------------- ------------------
TOTAL ASSETS $ 9,826,700 $ 11,434,200
----------------- ------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES $ $
Accounts payable & accrued expenses 968,100 1,095,400
Capital lease obligations, current portion -- 1,400
Notes payable, current 102,900 868,100
Bank line -- 498,500
----------------- ------------------
Total Liabilities 1,071,000 2,463,400
----------------- ------------------
SHAREHOLDERS' EQUITY
Preferred Stock:
Class A, cumulative convertible preferred stock;
5,000,000 shares authorized, of which 500,000
have been classified as Series B. Series B
issued and outstanding of 270,000 at 9/30/00 1,080,000 1,040,000
Class B, cumulative preferred stock: 2,000,000
authorized and none outstanding -- --
Comon Stock, no par value, 100,000,000 shares
6,777,944 and 6,762,300 shares issued,
respectively 55,750,600 55,738,300
Accumulated deficit (48,074,900) (47,807,500)
----------------- ------------------
Total shareholders' equity 8,755,700 8,970,800
----------------- ------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 9,826,700 $ 11,434,200
================= ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<TABLE>
<CAPTION>
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 3 MONTHS ENDED
SEPTEMBER 30,
<S> <C> <C>
2000 1999
------------------ ----------------
NET SALES $ 2,746,400 $ --
OPERATING EXPENSES
Direct service and cost of goods sold 1,575,800 --
------------------ ----------------
Gross margin 1,170,600 --
------------------ ----------------
Selling, general and administrative 1,467,300 151,200
------------------ ----------------
Loss from continuing operations (296,700) (151,200)
Other income (expense) (7,700) (6,200)
------------------ ----------------
LOSS FROM CONTINUING OPERATIONS (304,400) (157,400)
INCOME FROM DISCONTINUED OPERATIONS 37,000 37,600
------------------ ----------------
NET LOSS $ (267,400) $ (119,800)
================== ================
INCOME (LOSS) PER SHARE
Loss from continuing operations $ (0.05) $ (0.03)
Income from discontinued operations 0.01 0.01
------------------ ----------------
Net income (loss) per basic common share $ (0.04) $ (0.02)
================== ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,766,973 5,049,225
================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<TABLE>
<CAPTION>
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Quarters ended Sept. 30,
<S> <C> <C>
2000 1999
----------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (304,400) $ (157,400)
Adjustments to reconcile net income to net
Cash provided by (used in) operating activities:
Depreciation and amortization 82,000 54,300
Other 7,300 (200)
(Increase) decrease in:
Accounts receivable (566,500) 5,700
Inventory 59,600 60,400
Net assets of disposed operations (40,100) --
Prepaid expenses and other assets (89,800) 40,900
(Increase ) decrease in:
Accounts payable and accrued expenses (127,200) 164,500
Billings and excess of costs and estimated earnings -- (31,200)
----------------- ----------------
Net cash provided by (used in) operations (979,100) 137,000
----------------- ----------------
Income from discontinued operations 37,000 37,600
----------------- ----------------
Net cash provided by (used in) operating activities (942,100) 174,600
----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Collection of notes receivable 2,900,000 --
Purchase of property, plant and equipment (96,400) (2,800)
Other -- (31,200)
----------------- ----------------
Net cash provided by (used in) investing activities 2,803,600 (34,000)
----------------- ----------------
</TABLE>
5
<TABLE>
<CAPTION>
ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Quarters ended Sept. 30,
<S> <C> <C>
2000 1999
----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment on borrowings $ (1,263,700) $ (155,900)
Repayment of capital leases (1,400) --
Proceeds from sale of preferred stock 40,000 --
Proceeds from exercise of options 9,000 307,500
----------------- ----------------
Net cash provided by (used in) financing activities (1,216,100) 151,600
----------------- ----------------
NET INCREASE IN CASH $ 645,400 $ 292,200
CASH AND CASH EQUIVALENTS, beginning of quarter $ 176,700 $ 661,700
----------------- ----------------
CASH AND CASH EQUIVALENTS, end of quarter $ 822,100 $ 953,900
================= ================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ 20,199 $ 156,800
================= ================
Value of stock issued for services $ 3,307 $ 28,200
================= ================
</TABLE>
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 SEPTEMBER 30, 2000
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, 2000, 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 September 30, 2000, and for all periods presented. The results of
operations for the three months ending September 30, 2000, 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 September 30, 2000, and June 30, 2000, is
listed below:
September 30, 2000 June 30, 2000
------------------ ---------------
Finished goods $ 703,600 $1,008,100
Work-in-process 88,700 87,100
Raw material 260,900 17,500
------------------ ---------------
$1,053,200 $1,112,700
================== ===============
Fryer equipment held for sale $ 631,500 $ 675,000
================== ===============
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
1. Results of Operations - Three months ended 9/30/2000 versus 9/30/1999
In accordance with Generally Accepted Accounting Principles, the Company
has limited its reported consolidated revenues for fiscal quarter ended
September 30, 2000 to revenues from its Computer Data Storage segment, the only
operation classified currently as a continuing operation. To maintain
comparability, certain balances from the Consolidated Statement of Operations
and Consolidated Statement of Cash Flow for the quarter ended September 30,
1999 have been restated.
Consolidated revenue for the quarter ended September 30, 2000 was
$2,746,400 compared to zero for the comparable quarter of the previous year.
All revenues that were reported in the previous fiscal year were generated from
business segments that had been classified as "Discontinued Operations" at
September 30, 2000 and therefore omitted for comparable reporting purposes.
Consolidated revenue for the quarter ended September 30, 2000 include revenues
7
from Excel/Meridian Data, Inc. ("Excel/Meridian"), an material acquisition that
was effective in June of 2000. If the acquisition had been effective during
the quarter ended September 30, 1999, the reported consolidated revenues
related to Excel/Meridian would have been approximately $1,793,300.
The Company reported a net loss from continuing operations for the current
quarter of $304,400, or $.05 per share, compared to a net loss of $157,400, or
$.03 per share, for the comparable quarter in 1999. The net loss from
continuing operations for the quarter ended September 30, 2000 was attributable
primarily to planned operating investment related to the implementation of the
SanOne Storage Area Network (SAN) market development initiative. The
consolidated loss from continuing operations for fiscal quarter ended September
30, 1999 represented principally unallocated corporate costs incurred, since
all prior year operating segments had been reclassified to "Discontinued
Operations" and appropriately segregated on the Consolidated Statement of
Operations.
The Consolidated Statement of Operations for the quarter ended September
30, 2000 reflected income from discontinued operations of $37,000, or $.01 per
share, compared to income from discontinued operations of $37,600, or $.01 per
share, for the comparable quarter in 1999.
Selling, general and administrative expenses for the current quarter
increased to $1,467,300, compared to $151,200 incurred in the comparable
quarter of 1999. The increase was attributable primarily to planned operating
investment related to the implementation of the SanOne Storage Area Network
(SAN) market development initiative.
2. Liquidity and Capital Resources
The Company's current assets at September 30, 2000 exceeded current
liabilities by $2.7 million, or a current ratio of 3.4 to 1, compared to a
current ratio of 2.2 to 1 at Fiscal Year End June 30, 2000. The increase in
current ratio resulted primarily from the reductions in notes receivable
related to the sale of the Company's Pollution Control Products subsidiary and
the repayment of a note payable related to the acquisition of Excel/Meridian
Data, Inc., which was effective on June 1, 2000.
Cash used in continuing operations was approximately $979,100 for the
quarter, an increase of $1,116,100 when compared to cash provided from
continuing operations of $137,000 for the comparable quarter ended September
30, 1999. The increase in cash used in continuing operations was due primarily
to increases in losses from continuing operations, increases in accounts
receivable and decreases in accounts payable and accrued expenses.
8
During the quarter the Company collected $2,900,000 in notes receivable
associated with the sale of the Company's subsidiary mentioned above, and
repaid $1,263,700 in borrowings.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - none
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of Alanco Technologies, Inc. was held on November 10,
2000. During the meeting, the nominees for members of the Board of Directors
were elected (Proposal #1), with all directors receiving at least 5,559,184
votes, or 76% of the shares outstanding as of the record date.
The following additional proposals were voted upon with the indicated
results:
Proposal #2 Authorize the Board of Directors to declare,
only if necessary, a reverse split of up to
3 to 1.
Shares
------
For 5,455,565
Against 345,118
Abstain 37,655
9
Proposal #3 Approval of the Alanco 2000 Stock Option Plan
Shares
------
For 2,330,453
Against 122,519
Abstain 4,756
Broker not voted 3,380,610
Proposal #4 Approval of the Alanco 2000 Directors and Officers
Stock Option Plan.
Shares
------
For 2,072,370
Against 131,836
Abstain 251,380
Broker not voted 3,382,752
Item 6. EXHIBITS
(A) (27)Financial Data Schedule
(B) Reports on Form 8-K - none
(C) Reports on Form S-8 - none
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: November 17, 2000
10
