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Articles 

ALANCO TECHNOLOGIES INC. Reports Operating Results (10-K)

October 13, 2011 | About:

ALANCO TECHNOLOGIES INC. (ALAN) filed Annual Report for the period ended 2011-10-12.

Alanco Technologies Inc. has a market cap of $4.01 million; its shares were traded at around $2 with and P/S ratio of 0.27.

Highlight of Business Operations:

Total Consolidated Income from Discontinued Operations for the twelve months ended June 30, 2011 was $1,781,700 compared to a loss of ($7,206,000) for the twelve months ended June 30, 2010, an improvement of $8,987,700. $6,320,900 of the improvement resulted from reduced losses in discontinued operations, reporting a consolidated loss of ($885,100) in the current fiscal year compared to a loss of ($7,206,000), including ($4,873,700) of goodwill impairment charges, reported for the prior fiscal year ended June 30, 2010; $1,294,000 of the improvement was due to a gain on sale of Assets Held for Sale reported for year ended June 30, 2011, compared to zero reported on Sale of Assets Held for Sale in the prior year; and finally, $1,372,800 of the improvement resulted from the income recognized on dissolution of Alanco/TSI PRISM, Inc. (“TSI”), previously classified as discontinued operations. The assets of TSI were sold in a transaction discussed in the attached audited financial statements with proceeds of the sale going to secured lenders; therefore, TSI does not have assets available to satisfy the $1,372,800 in recorded liabilities at time of dissolution of the subsidiary. The stock of the subsidiary was sold in June 2011 to an independent third party for an immaterial amount. Given these facts and circumstances and discussion with legal counsel, Alanco believes that it has no exposure to these liabilities. See Note 5 – Sale of Operating Segments for additional discussion of the sale of segment operations.

Operating expense for the twelve months ended June 30, 2011 was $1,179,800, an increase of $233,500, or 24.7%, compared to the $946,300 reported for the twelve months ended June 30, 2010. The increase was due to increases in salary compensation and increases in stock based compensation related to the repricing in fiscal year 2011 of certain stock options. The Company had reduced executive salary levels during fiscal year 2010 to conserve cash and had reinstated the original compensation levels on July 1, 2010 under the agreement that the salary increases would be deferred until Company shareholders had an opportunity to approve the 2011 Stock Incentive Plan. That plan would allow the deferred amounts to be paid in Class A Common Stock of the Company. The 2011 Stock Incentive Plan was approved by the shareholders at the Annual Meeting of Shareholders on May 10, 2011 with the stock payments completed by June 30, 2011. Amortization of stock-based compensation (Black Scholes value of granted and repriced stock options) increased $91,600, or 84.4%, to $200,100, compared to $108,500 reported for the previous year due to the re-pricing of certain stock options in September 2010. Depreciation expense was $1,000 in fiscal 2011 compared to $800 in fiscal 2010.

Net sales reported by the Wireless Asset Management segment through May 16, 2011 of $13,740,800, represented most of the consolidated reported sales for fiscal year ended June 30, 2011 for discontinued operations. The $13,740,800 reported sales for the ten and one half months ended May 16, 2011 was a decrease of $891,600, or 6.1%, when compared to Wireless Asset Management segment sales reported for the entire twelve months ended June 30, 2010 of $14,632,400; however, comparing the average monthly net sales in fiscal 2011 to fiscal 2010, average monthly net sales actually increased by approximately $90,000, or 7.4%, over the average monthly sales for fiscal year ended June 30, 2010. The Data Storage segment was sold in March of fiscal 2010 and therefore had no reported revenues for fiscal 2011. The RFID Technology segment was sold in August 2010 and for fiscal year ended June 30, 2011 reported only $38,700 in sales compared to $829,400 reported in the comparable twelve months of the prior fiscal year.

Consolidated gross profit from discontinued operations for the year ended June 30, 2011 amounted to $5,580,000, a decrease of $170,900, or 3.0%, compared to $5,750,900 in gross profit reported for fiscal year 2010. The Wireless Asset Management portion of the gross profit amounted to $5,566,500, representing an increase of $209,700, or 3.9%, compared to $5,356,800 reported for the year ended June 30, 2010. The increase in Wireless Asset Management portion of gross profit reflects improved gross margins realized during the ten and one half months reporting period in fiscal 2011 compared to gross margins realized for the twelve month reporting period in the prior fiscal year. The net decrease in gross profit was due to the sale of the RFID Technology segment in early fiscal year 2011 and the Data Storage segment in fiscal year 2010 as previously discussed.

Net cash used in financing activities during fiscal year ended June 30, 2011 amounted to ($1,257,400), a decrease of $4,906,800 compared to net cash provided by financing activities of $3,649,400 for the fiscal year ended June 30, 2010. During fiscal year 2010, the Company raised over $3.1 million through the sale of preferred stock. During the current fiscal year ended June 30, 2011, the Company repaid net borrowings by $2,427,900 compared to increase in net borrowing for the year ended June 30, 2010 of $264,400.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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