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John Carlson
Exec VP & CFO
(480) 505-4869
 
 


Alanco Third Quarter Results


Gross Profits Increase 68% - Operating Loss Narrows 69%

(Scottsdale, AZ – May 18, 2010) - Alanco Technologies, Inc., (NASDAQ: ALAN), a leading provider of wireless tracking and asset management solutions, today announced that sales from continuing operations for its third quarter ended March 31, 2010 increased slightly to $3,825,800, versus $3,758,000 for the comparable quarter of the prior year.  Gross profit for the quarter increased to $1,637,400, a 68% increase over the prior year third quarter.  Gross margins in the third quarter improved from 26% in the prior year period to 42%.  The significant gross margin improvement was due primarily to reduced warranty costs and the prior year completion of low margin hardware shipments required to convert several major customers from analog to digital communication networks.  Alanco’s EBITDA (Loss) for the three months ended March 31, 2010 was reduced to ($100,400), an 85% improvement compared to the loss of ($698,100) reported for the three months ended March 31, 2009.

The Operating Loss (continuing operations) for the third quarter ended March 31, 2010 narrowed to ($232,600), a decrease of 69% compared to ($759,700) in the prior year third quarter.  Loss from continuing operations for the quarter ended March 31, 2010 decreased $440,000, or 46.3%, to ($510,800) compared to ($950,800) for the prior year quarter.   

The Company’s Loss from Discontinued Operations for the third quarter increased to ($510,000) compared to the prior year’s third quarter Loss from Discontinued Operations of ($56,900).  The increase in loss was attributable primarily to a reduction in revenues of the Company’s RFID Technology segment and a loss on sale of Data Storage assets. 

Robert R. Kauffman, Alanco Chairman and CEO, commented, “We believe that our fiscal third quarter’s significant improvement will mark the final transition towards our goal of a complete and sustained profitability turnaround for the Company’s continuing operations.  As we are beginning to experience the transportation industry responding to the national economic recovery, increasing demand for our refrigeration transport monitoring services is resulting in strong pipeline sales activity and an increasing shipment backlog indicating that we can achieve record sales and profitability results in our current fourth quarter, ending June 30, 2010.”  

Comparisons of operating results for the nine-months ended March 31, 2010 and 2009 are presented below as Schedule I.  For additional discussion of the Company’s current financial results, please see the Form 10-Q the Company filed with the Securities and Exchange Commission on May 17, 2010.

Alanco Technologies, Inc. provides wireless monitoring and asset management solutions through its StarTrak Systems subsidiary.  StarTrak Systems is the dominant provider of tracking, monitoring and control services to the refrigerated or “Reefer” segment of the transportation marketplace, enabling customers to increase efficiency and reduce costs of the refrigerated supply chain.  For more information, visit the Alanco website at www.alanco.com or StarTrak Systems at www.startrak.com.

Except for historical information, the statements contained in this press release are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  All such forward-looking statements 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, reduced demand for information technology equipment; competitive pricing and difficulty managing product costs; development of new technologies that make the Company’s products obsolete; rapid industry changes; failure of an acquired business to further the Company’s strategies; the ability to maintain satisfactory relationships with lenders and remain in compliance with financial loan covenants and other requirements under current banking agreements; and the ability to secure and maintain key contracts and relationships. 

                 
SCHEDULE I
Alanco Technologies, Inc.
Condensed Consolidated Financial Information
(Unaudited)
                 
Three months ended March 31,   Nine months ended March 31,
  2010   2009     2010   2009
NET SALES $ 3,825,800 $ 3,758,000   $ 10,430,000 $ 10,460,300
    Cost of Sales   2,188,400   2,784,100     5,935,500   7,739,500
Gross Profit   1,637,400   973,900     4,494,500   2,720,800
Operating Expenses                  
    Selling, General & Administrative Expense   1,437,400   1,182,000     4,122,400   3,843,800
    Corporate Expense   227,100   309,100     657,700   616,100
    Amortization of stock-based Compensation   72,500   113,100     311,400   339,400
    Depreciation and Amortization   133,000   129,400     403,100   365,800
          Total Operating Expenses   1,870,000   1,733,600     5,494,600   5,165,100
                 
Operating Loss   (232,600)   (759,700)     (1,000,100)   (2,444,300)
                 
     Interest Expense, net   (277,400)   (190,600)     (657,300)   (702,700)
     Other Income (expense), net   (800)   (500)     (2,700)   (185,300)
Loss from Continuing Operations   (510,800)   (950,800)     (1,660,100)   (3,332,300)
                 
Loss from Discontinued Operations   (510,000)   (56,900)     (1,616,400) (1) (157,800)
Net Loss   (1,020,800)   (1,007,700)     (3,276,500)   (3,490,100)
                 
     Preferred Stock Dividends   (43,600)   (127,200)     (301,800)   (347,300)
Net Loss Attributable to Common Shareholders $ (1,064,400) $ (1,134,900)   $ (3,578,300) $ (3,837,400)
                 
                 
(1) Includes a $325,000 impairment charge the Company recorded to reflect the anticipated reduced sales value of the    
      Data Storage segment.                  

 

SCHEDULE II
Alanco Technologies, Inc.
EBITDA Reconciliation to Net Income (Loss) from Continuing Operations
                       
        3 months ended   3 months ended     9 months
ended
  9 months
ended
         March 31    March 31      March 31    March 31
        2010   2009     2010   2009
EBITDA before Stock-based compensation                
and Corporate Expense   $           199,200 $          (208,600)   $             369,400 $          (1,308,300)
                       
Corporate Expense     (227,100)   (309,100)     (657,700)   (616,100)
Stock-based compensation     (72,500)   (180,400)     (311,400)   (339,400)
                       
EBITDA                (100,400)            (698,100)               (599,700)            (2,263,800)
                       
Net interest expense              (277,400)            (190,600)               (657,300)               (702,700)
Depreciation and amortization            (133,000)              (62,100)               (403,100)               (365,800)
                       
NET LOSS FROM                    
CONTINUING OPERATIONS $          (510,800) $          (950,800)   $        (1,660,100) $          (3,332,300)

 

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