Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
ALAN > SEC Filings for ALAN > Form 10-Q on 15-May-2013All Recent SEC Filings

Show all filings for ALANCO TECHNOLOGIES INC | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for ALANCO TECHNOLOGIES INC


15-May-2013

Quarterly Report


Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements: Except for historical information, the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to the Company are intended to identify forward-looking statements within the meaning of the "safe harbor" provisions of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements are based on the expectations of management when made and are subject to, and are qualified by, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These risks and uncertainties include, but are not limited to, the following factors, among others, that could affect the outcome of the Company's forward-looking statements: general economic and market conditions; the inability to attract, hire and retain key personnel; failure of a future acquired business to further the Company's strategies; the difficulty of integrating an acquired business; unforeseen litigation; unfavorable result of potential litigation; the ability to maintain sufficient liquidity in order to support operations; the ability to maintain satisfactory relationships with lenders; the ability to maintain satisfactory relationships with current and future suppliers; federal and/or state regulatory and legislative action; the ability to implement or adjust to new technologies and the ability to secure and maintain key contracts and relationships. New risk factors emerge from time to time and it is not possible to accurately predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Annual Report or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

Management's discussion and analysis of financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission. The preparation of our financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an ongoing basis, estimates are revalued, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These areas include allowances for doubtful accounts, stock-based compensation, income taxes, ongoing litigation, commitments and contingencies, and marketable securities. Our estimates are based upon historical experience, observance of trends in particular areas, information and/or valuations available from outside sources and on various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual amounts may materially differ from these estimates under different assumptions and conditions.

The SEC suggests that all registrants list their most "critical accounting policies" in Management's Discussion and Analysis. A critical accounting policy is one which is both important to the portrayal of the Company's financial condition and results and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the critical accounting policies as those accounting policies that affect its more significant judgments and estimates in the preparation of its consolidated financial statements. The Company's Audit Committee has reviewed and approved the critical accounting policies identified. These policies include, but are not limited to, the classification and valuation of marketable securities, realization of accounts receivable trade and other, realization of notes receivable, revenue recognition, stock-based compensation, the recorded values of accruals and fair values of assets and liabilities including the Company's contingent liabilities.


ALANCO TECHNOLOGIES, INC.

Results of Operations

Presented below is management's discussion and analysis of financial condition and results of operations for the periods indicated:

(A) Three months ended March 31, 2013 versus three months ended March 31, 2012

Net Revenues
Net revenues reported for the quarter ended March 31, 2013 were $92,100. No revenues were reported for the comparable quarter of the prior fiscal year as the Company had no operating units. Revenues continue to be inconsistent as water disposal operations remain in a startup mode and winter weather restricts water delivery. As additional customers are expected to recognize the savings of using a local water disposal company and improved weather allows additional oil and gas production activity, we expect revenues to increase.

Cost of Sales
Cost of sales for the three months ended March 31, 2013 of $131,400 consist of direct labor costs, equipment costs (including depreciation), land lease costs and other operating costs. Approximately 46% of the cost of goods sold for the quarter consisted of fixed costs such as depreciation, amortization, accretion and lease costs.

Selling, General and Administrative Expenses Selling, general and administrative expenses for the quarter ended March 31, 2013 (consisting of corporate expenses, AES selling, general and administrative expense, amortization of stock-based compensation and depreciation expense) was $373,400, an increase of $102,600, or 37.9%, compared to $270,800 reported for the quarter ended March 31, 2012. Corporate expenses for the current quarter was $152,200 and represented a decrease of $118,600, or 43.8%, compared to corporate expenses of $270,800 reported for the comparable quarter ended March 31, 2012. The decrease resulted from increased allocation of corporate service cost to AES and billings for accounting services provided to ACC which totaled $9,000. AES operating expense of $178,500 for the quarter ended March 31, 2013 relates to the new Deer Creek Water Disposal facility that initiated operations during August 2012 and represented general overhead associated with the operation. Amortization of stock-based compensation increased to $42,700 for the quarter ended March 31, 2013, from none for the comparable quarter of the prior year. The increase relates to options vesting in the current quarter that were granted in the fourth quarter of fiscal year 2012.

Operating Loss
Operating Loss for the quarter ended March 31, 2013 was ($412,700), an increase of $141,900, or 52.4%, compared to an Operating Loss of ($270,800) reported for the same quarter of the prior year. The increased operating loss resulted from increased costs associated with the completion of additional water disposal capacity at Deer Creek operation and additional selling, general and administrative expenses.

Other Income and Expense
Net interest income for the quarter ended March 31, 2013 was $5,100, a reduction of $1,200 when compared to interest income of $6,300 for the quarter ended March 31, 2012. The reduction in interest income related to a reduction in the average ACC note balance outstanding.

During the quarter ended March 31, 2013, the Company recorded net gains on sale of marketable securities of $260,500, resulting from the sale of 144,958 shares of its ORBCOMM Common Stock at an average selling price of $4.71 per share, compared to net gains on sale of marketable securities in the comparable quarter of the prior year of $321,700, resulting from the sale of 539,809 shares of ORBCOMM Common Stock at an average selling price of $3.51.


ALANCO TECHNOLOGIES, INC.

Net Income (Loss)
Net Income (Loss) Attributable to Common Shareholders for the quarter ended March 31, 2013 amounted to ($146,900), or ($.03) per share, compared to net income of $59,900, or $.01 per share, in the comparable quarter of the prior year for reasons previously discussed.

Comprehensive Income
Comprehensive Income for the current quarter represents the unrealized change in market value of the Company's Marketable Securities held at March 31, 2013 compared to prior periods. Comprehensive income for the quarter ended March 31, 2013 consisted of the net value of three items: 1) the quarter ending market value reclassification adjustment for gain included in Net Income of $260,500, an Unrealized Gain (Loss) on Marketable Securities, net of tax, of $353,300 resulting from an increase in the market value of the shares held at March 31, 2013 compared to the value at December 31, 2012, and; 3) the net unrealized gain on marketable securities sold during the period of $209,800. At March 31, 2013 the Company valued 348,011 shares (net of escrow shares) of ORBCOMM, Inc. Common Stock at $5.21 per share for a total value of $1,813,100.

(B) Nine months ended March 31, 2013 versus nine months ended March 31, 2012

Net Revenues
Net revenues reported for the nine months ended March 31, 2013 were $237,400. No revenues were reported for the comparable period of the prior fiscal year as the Company had no operating units and was effectively a holding company. Revenues continue to fluctuate as water disposal operations remain in a startup mode and winter weather restricts water delivery. As additional customers are expected to recognize the savings of using a local water disposal company and improved weather allows additional oil and gas production activity, we expect revenues to increase.

Cost of Sales
Cost of sales for the nine months ended March 31, 2013 of $289,900 consist of direct labor costs, equipment costs (including depreciation), land lease costs and other operating costs. Approximately 45% of the cost of goods sold for the quarter consisted of fixed costs such as depreciation, amortization, and lease costs.

Selling, General and Administrative Expenses Selling, general and administrative expenses for the nine months ended March 31, 2013 (consisting of corporate expenses, AES selling, general and administrative expense, amortization of stock-based compensation and depreciation expense) was $1,039,700, an increase of $227,500, or 28%, compared to $812,200 reported for the nine months ended March 31, 2012. Corporate expenses for the nine month period was $482,500 and represented a decrease of $321,900, or 40.0%, compared to corporate expenses of $804,400 reported for the comparable period ended March 31, 2012. The decrease resulted from increased allocation of corporate service cost to AES and billings for services provided to ACC which totaled $27,000. AES operating expense of $446,200 for the nine months ended March 31, 2013 relates to the new Deer Creek Water Disposal facility that initiated operation during August 2012 and represented general overhead associated with the water disposal operation. Amortization of stock-based compensation increased to $111,000 for the nine months ended March 31, 2013, compared to $7,800 for the comparable period of the prior year. The increase relates to options vesting in the current period that were granted in fiscal year 2012.

Operating Loss
Operating Loss for the nine months ended March 31, 2013 was ($1,092,200), an increase of $280,000, or 34.5%, compared to an Operating Loss of ($812,200) reported for the same period of the prior year. The increased operating loss resulted from increased costs associated with the completion of additional water disposal capacity at Deer Creek operation and additional selling, general and administrative expenses.


ALANCO TECHNOLOGIES, INC.

Other Income and Expense
Net interest income for the nine months ended March 31, 2013 was $17,000, an improvement of $9,900 when compared to interest income of $7,100 for the same period ended March 31, 2012. The increase in interest income related to the ACC note outstanding and the Symbius investment.

During the nine months ended March 31, 2013, the Company recorded net gains on the sale of its Symbius investment of $86,800, and a gain of $751,500 on the sale of 747,873 shares of its ORBCOMM Common Stock at an average selling price of $3.91 per share. During the same period of the prior year the Company reported the sale of 914,329 shares of ORBCOMM Common Stock at an average selling price of $3.30 per share resulting in a gain on sale of $360,400.

Dividends and Redemption
The Company had zero dividend expense for the nine months ended March 31, 2013 compared to $30,500 in dividend expense for the comparable period of the prior year. The decrease resulted from the repurchase of all the Series B Convertible Preferred Stock in December 2011 resulting in a gain on redemption of $443,200 reported in the prior year. See Note 16 - Shareholders' Equity in Form 10-K for the year ended June 30, 2012 for additional discussion relative to the redemption of the Series B Convertible Preferred Stock.

Net Loss Attributable to Common Shareholders Net Loss Attributable to Common Shareholders for the nine months ended March 31, 2013 amounted to ($236,600), or ($.05) per share, compared to a net loss of ($29,300), or ($.01) per share, in the comparable period of the prior year for reasons discussed above.

Comprehensive Income
Comprehensive Income for the nine months ended March 31, 2013 represents the unrealized change in market value of the Company's Marketable Securities held at March 31, 2013 compared to June 30, 2012. Comprehensive income for the nine months ended March 31, 2013 consisted of the net value of three items: 1) the quarter ending market value reclassification adjustment for gain included in Net Income of $751,500; 2) an Unrealized Gain (Loss) on Marketable Securities, net of tax, of $678,600 resulting from an increase in the market value of the shares held at March 31, 2013 compared to the market value at June 30, 2012, and; 3) the net unrealized gain on marketable securities sold during the period of $489,800. At March 31, 2013 the Company valued 348,011 shares (net of escrow shares) of ORBCOMM, Inc. Common Stock at $5.21 per share for a total value of $1,813,100.

Liquidity and Capital Resources

The Company's current assets at March 31, 2013 exceeded current liabilities by $3,079,700, resulting in a current ratio of 9.9 to 1. At June 30, 2012, current assets exceeded current liabilities by $3,473,900 reflecting a current ratio of 4.8 to 1. The reduction in net current assets at March 31, 2013 versus June 30, 2012 was due primarily to current assets used to purchase Land, Property and Equipment.

Accounts receivable of $56,500 represents the outstanding billings at March 31, 2013 of the AES water disposal operation that initiated operations during August 2012. Other receivables totaling $41,200 represents billings for accounting services and interest of $26,200 and a $15,000 vendor advance.

Cash used in operations for the nine months ended March 31, 2013 was
($1,350,300), an increase of ($343,800), or 34.2% compared to the ($1,006,500)
reported for the same quarter of the prior year. The increase in net cash used in operations for the nine months ended March 31, 2013 was due primarily to increases in operating losses compared to the same period of the prior year and reductions in accounts payable and accruals.

Cash provided by investing activities for the nine months ended March 31, 2013 was $2,367,300, a decrease of $352,200 or 13.0% compared to the $2,719,500 provided for the same period of the prior year. The decrease was primarily due to increases in the purchase of land, property, and equipment.


ALANCO TECHNOLOGIES, INC.

Cash used in financing activities for the nine months ended March 31, 2013 was ($200,000) compared to cash used in financing activities of ($474,100) for the same period of the prior year, a reduction of $274,100, or 57.8%. The reduction was due primarily to a reduction in debt repayments of $400,000 offset by $151,200 of cash provided by exercise of stock options for the nine months ended March 31, 2012.

During the remainder of fiscal year ending June 30, 2013 and fiscal year ending June 30, 2014, the Company expects to meet its working capital and other cash requirements with its operations, current cash reserves and sales of marketable securities as required. However, the Company may require additional working capital for future operations. While the Company believes that it will succeed in attracting additional required capital and will generate capital from future operations, there can be no assurance that the Company's efforts will be successful. The Company's continued existence is dependent upon its ability to achieve and maintain profitable operations, identify profitable acquisition/merger candidates and/or successfully invest its capital.

  Add ALAN to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for ALAN - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.