Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2014 | Feb. 06, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | ALANCO TECHNOLOGIES INC | |
Entity Central Index Key | 98618 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -24 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,017,500 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $1,308,300 | $1,215,600 |
Accounts receivable - trade, net | 92,400 | 96,800 |
Other receivables - related party | 3,000 | 9,200 |
Note receivable, current - related party | 60,000 | 300,000 |
Marketable securities | 0 | 560,100 |
Prepaid expenses and other current assets | 255,000 | 212,700 |
Total current assets | 1,718,700 | 2,394,400 |
LAND, PROPERTY AND EQUIPMENT, NET | 4,262,700 | 4,163,000 |
OTHER ASSETS | ||
Note receivable, long-term - related party | 313,000 | 109,000 |
Trust account - asset retirement obligation | 58,000 | 48,700 |
Prepaid royalties, long-term | 0 | 50,000 |
TOTAL ASSETS | 6,352,400 | 6,765,100 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 307,000 | 278,000 |
Contingent payments, current | 50,000 | 50,000 |
Total current liabilities | 357,000 | 328,000 |
LONG-TERM LIABILITIES | ||
Contingent payments, long-term | 1,135,400 | 1,138,300 |
Asset retirement obligation | 423,700 | 423,700 |
TOTAL LIABILITIES | 1,916,100 | 1,890,000 |
SHAREHOLDERS' EQUITY | ||
Preferred Stock - no shares issued or outstanding | 0 | 0 |
Class A - 75,000,000 no par shares authorized, 5,017,500 and 4,962,500 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively | 109,144,100 | 109,106,800 |
Class B - 25,000,000 no par shares authorized, none outstanding | 0 | 0 |
Accumulated Other Comprehensive Income | 0 | 121,200 |
Accumulated Deficit | -104,707,800 | -104,352,900 |
Total shareholders' equity | 4,436,300 | 4,875,100 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $6,352,400 | $6,765,100 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2014 | Jun. 30, 2014 |
Consolidated Balance Sheets | ||
Class A Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Class A Common Stock, Shares Issued | 5,017,500 | 4,962,500 |
Class A Common Stock, Shares Outstanding | 5,017,500 | 4,962,500 |
Class B Common Stock, Shares Authorized | 25,000,000 | 25,000,000 |
Class B Common Stock, Shares Issued | 0 | 0 |
Class B Common Stock, Shares Outstanding | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements Of Operations | ||||
NET REVENUES | $211,100 | $69,600 | $443,500 | $84,400 |
Cost of revenues | 185,100 | 86,700 | 378,500 | 155,500 |
GROSS PROFIT (LOSS) | 26,000 | -17,100 | 65,000 | -71,100 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ||||
Corporate expenses | 30,800 | 78,300 | 106,900 | 155,500 |
Alanco Energy Services | 194,600 | 185,800 | 394,100 | 418,700 |
Amortization of stock-based compensation | 45,400 | 0 | 45,400 | 0 |
Selling general and administrative expenses | 270,800 | 264,100 | 546,400 | 574,200 |
OPERATING LOSS | -244,800 | -281,200 | -481,400 | -645,300 |
OTHER INCOME | ||||
Interest income | 11,600 | 8,300 | 23,100 | 16,100 |
Gain on sale of marketable securities | 56,400 | 403,900 | 103,200 | 608,700 |
Other income | 0 | 1,100 | 200 | 1,300 |
NET INCOME (LOSS) | ($176,800) | $132,100 | ($354,900) | ($19,200) |
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED | ||||
Net income (loss) per share attributable to common shareholders | ($0.04) | $0.03 | ($0.07) | $0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 5,006,800 | 4,941,800 | 4,984,500 | 4,941,800 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | ($176,800) | $132,100 | ($354,900) | ($19,200) |
Reclassification adjustment for gain included in Net Income (Loss) | -56,400 | -403,900 | -103,200 | -608,700 |
Net unrealized gain on marketable securities held at December 31, | 0 | 116,800 | 0 | 196,500 |
Net unrealized gain (loss) on marketable securities sold during the period | 32,900 | 57,700 | -18,000 | 226,600 |
Comprehensive income (loss) | ($200,300) | ($97,300) | ($476,100) | ($204,800) |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | COMMON STOCK | TREASURY STOCK | ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED DEFICIT | Total |
Beginning balance, Amount at Jun. 30, 2014 | $109,106,800 | $121,200 | ($104,352,900) | $4,875,100 | |
Beginning balance, Shares at Jun. 30, 2014 | 4,962,500 | ||||
Shares issued for services, Amount | 31,500 | -31,500 | |||
Shares issued for services, Shares | 75,000 | ||||
Value of stock-based compensation | 13,900 | 13,900 | |||
Shares of Alanco common stock repurchased, Amount | 8,100 | 8,100 | |||
Shares of Alanco common stock repurchased, Shares | 20,000 | ||||
Treasury shares retired, Amount | -8,100 | -8,100 | -16,200 | ||
Treasury shares retired, Shares | -20,000 | -20,000 | |||
Other comprehensive income adjustment | -121,200 | -121,200 | |||
Net loss | -354,900 | -354,900 | |||
Ending balance, Amount at Dec. 31, 2014 | $109,144,100 | ($104,707,800) | $4,436,300 | ||
Ending balance, Shares at Dec. 31, 2014 | 5,017,500 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ($354,900) | ($19,200) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 91,700 | 85,900 |
Accretion of fair value - contingent payments | 16,800 | 16,800 |
Gain on sale of marketable securities | -103,200 | -608,700 |
Stock issued for services | 31,500 | 0 |
Stock-based compensation | 13,900 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 4,400 | -53,300 |
Other receivables - related party | 6,200 | 10,200 |
Prepaid expenses and other current assets | 7,700 | 16,900 |
Trust account - asset retirement obligation | -9,300 | -9,300 |
Accounts payable and accrued expenses | 0 | 29,400 |
Contingent payment liabilities | -19,800 | 0 |
Net cash used in operating activities | -315,000 | -531,300 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Issuance of note receivable to ACC | 0 | -25,000 |
Proceeds from repayment of ACC note | 65,000 | 0 |
Purchase of land, property, and equipment | -191,400 | -55,500 |
Proceeds from sale of marketable securities | 542,200 | 1,312,500 |
Net cash provided by investing activities | 415,800 | 1,232,000 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Purchase of treasury shares | -8,100 | -26,100 |
Net cash used in financing activities | -8,100 | -26,100 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 92,700 | 674,600 |
CASH AND CASH EQUIVALENTS, beginning of period | 1,215,600 | 696,400 |
CASH AND CASH EQUIVALENTS, end of period | 1,308,300 | 1,371,000 |
Non-cash investing & financing activities: | ||
Unrealized gain (loss) on marketable securities | -121,200 | 185,600 |
Note receivable issued for ACC amendment and accounting fees | ($29,000) | $0 |
1_Basis_of_Presentation_Accoun
1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Basis of Presentation and Recent Accounting Policies and Pronouncements | Nature of Operations | ||||||||||||||||
Alanco Technologies, Inc. (Stock Symbol: ALAN) was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the “Company” or “Alanco” refers to Alanco Technologies, Inc. and its wholly-owned subsidiaries. During the fiscal year ended June 30, 2012, the Company formed Alanco Energy Services, Inc. (“AES”), for the purpose of obtaining property to establish a water disposal facility near Grand Junction, CO to receive produced water generated as a byproduct from oil and natural gas production in Western Colorado. The new facility started to receive produced water in August 2012. | |||||||||||||||||
Background information on the creation of Alanco Energy Services, Inc. | |||||||||||||||||
During fiscal 2012,Alanco Energy Services, Inc. (“AES”), a wholly-owned subsidiary of the Company, executed an agreement with TC Operating, LLC (“TCO”) of Grand Junction, CO to transfer a land lease for approximately 24 acres near Grand Junction, CO (“Deer Creek site”) and all related assets to AES with the intent for AES to construct facilities for the treatment and disposal of large quantities of produced water generated by oil and natural gas producers in Western Colorado. The site was chosen due to its unique ability to meet stringent government requirements for disposal of the high saline water produced as a by-product of oil and gas production, and termed “produced water”. The agreement included the transfer of all related tangible and intangible assets as well as Federal, State and County permits (issued or in process) required to construct and operate the facilities. Subsequent to the TCO agreement, AES renegotiated an amended lease that became effective on May 1, 2012 and include a minimum monthly lease payment of $100 per acre ($2,400 per month) during the initial ten year term of the lease, plus approximately $.25 per barrel of produced water received at the site. | |||||||||||||||||
The design and construction of the Deer Creek water disposal facility required certain changes to the Goodwin Solid Waste facility (“Goodwin”) resulting in extra costs to the landlord, who also owned Goodwin. As incentive for the landlord to approve the facility design, AES agreed to limit landlord construction improvement costs related to the leased land to $200,000. Included in the $200,000 limited amount was $100,000 of landlord improvement costs to be paid by AES and reimbursed through a 50% credit against the $.25 per barrel royalty payments due landlord discussed above. AES recorded the $100,000 payment as prepaid royalties. The remaining prepaid balances atDecember 31, 2014 and June 30, 2014 were $41,600 and $58,700, respectively. | |||||||||||||||||
TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent deferred payment), approximately the initial term of the lease. Under certain circumstances, the acreage covered by the lease may be expanded by up to 50 acres to allow for additional expansion at the site. See Note H - Contingent Payments for additional discussion of the contingent deferred payment. | |||||||||||||||||
During April 2012, AES also entered into a definitive agreement with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre site near Grand Junction, CO, for additional expansion to the proposed watertreatment and disposal facility. As consideration for the land purchase, AES paid $500,000 at the April 13, 2012 closing and assumed a non-interest bearing, secured, $200,000 note due November 15, 2012, which was repaid upon maturity. AES has also agreed to potential additional quarterly earn-out payments to DCD up to a maximum total of $800,000, generally determined as 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter (contingent land payment). See Note H - Contingent Payments for additional discussion ofthe contingent land payment. The land, known as Indian Mesa, is currently undeveloped as the Company is in the permitting process. | |||||||||||||||||
Related to the treatment and disposal facilities, in fiscal year 2012 AES entered into a management agreement with TCO to manage the project for a monthly management fee of $10,000 initially and $20,000 after final permits for the Deer Creek operation were obtained in May 2012. The management agreement expired in January 2013 and is continuing on a month to month basis. During the six months ended December 31, 2014, the Company paid TCO $120,000 under the management agreement. TCO also earned an additional variable fee of approximately $4,000 for December 2014 revenues which was paid in January 2015. | |||||||||||||||||
Basis of Presentation | |||||||||||||||||
The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In our opinion, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such necessary adjustments consist of normal recurring items and the elimination of all significant intercompany balances and transactions. | |||||||||||||||||
These interim condensed consolidated financial statements should be read in conjunction with the Company’s June 30, 2014 Annual Report filed on Form 10-K. Interim results are not necessarily indicative of results for a full year. | |||||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. | |||||||||||||||||
Fair Value of Assets and Liabilities – The estimated fair value for assets and liabilities are determined at discrete points in time based on relevant information. The Accounting Standards Codification (“ASC”) prioritizes inputs used in measuring fair value into a hierarchy of three levels: Level 1 – unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 – observable inputs other than quoted pricesincluded within Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are notactive or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 – unobservable inputs in which little or no market activity exists that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. These estimates involve uncertainties and cannot be determined with precision. The Company’s policy is to recognize transfers into and out of Level 1, 2 and 3 categories as of the date of the event or change in circumstances occurs. The carrying amounts of receivables, prepaid expenses, accounts payable, and accrued liabilitiesapproximate fair value given their short-term nature or their effective interest rates, which represent Level 3 input levels. | |||||||||||||||||
The following are the classes of assets and liabilities measured at fair value on a recurring basis at December 31, 2014, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3): | |||||||||||||||||
Level 1: | |||||||||||||||||
Quoted Prices | Level 2: | ||||||||||||||||
in active | Significant | Level 3: | Total | ||||||||||||||
Markets | Other | Significant | at | ||||||||||||||
for Identical | Observable | Unobservable | December 31, | ||||||||||||||
Assets | Inputs | Inputs | 2014 | ||||||||||||||
Asset Retirement Obligation | $ | - | $ | - | $ | 423,700 | $ | 423,700 | |||||||||
Contigent Land Payment | - | - | 649,800 | 649,800 | |||||||||||||
Contingent Purchase Price | - | - | 535,600 | 535,600 | |||||||||||||
$ | - | $ | - | $ | 1,609,100 | $ | 1,609,100 | ||||||||||
Fair Value of Asset Retirement Obligation – The Deer Creek asset retirement obligation is the estimated cost to close the Deer Creek facility under terms of the lease, meeting environmental and State of Colorado regulatory requirements. The estimate is determined at discrete points in time based upon significant unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Management’s estimate of the asset retirement obligation is based upon a cost estimate developed by a consultant knowledgeable of government closure requirements and costs incurred at similar water disposal facility operations. The process used was to identify each activity in the closure process, obtaining vendor estimated costs, in current dollars, to perform the closure activity and accumulating the various vendor estimates to determine the asset retirement obligation. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. The lack of an active market to validate the estimated asset retirement obligation results in the fair value of the asset retirement obligation to be a Level 3 fair value measurement. ASC Topic 410-20: Asset Retirement Obligations requires the Company to review the asset retirement obligation on a recurring basis and record changes in the period incurred. | |||||||||||||||||
Fair Value of Contingent Payments – The contingent land payment and contingent purchase price liabilities are also determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. In calculating the estimate of fair value for both of the contingent payments, management completed an estimate of the present value of each identified contingent liability based upon projected income, cash flows and capital expenditures for the Deer Creek facility developed under plans currently approved by the Company’s board of directors. Different assumptions relative to the expansion or alternative uses of the Deer Creek and Indian Mesa facilities could result in significantly different valuations. The projected payments have been discounted at a rate of 3% per annum to determine net present value. The lack of an active market tovalidate the estimated contingent land and purchase price liabilities results in the fair value of the contingent land and purchase price liabilities to be a Level 3 fair value measurement. ASC Topic 820: Fair Value Measurement requires the Company to review the contingent land and purchase price liabilities on a recurring basis and record changes in the period incurred. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In May 2014, the FASB issued guidance regarding revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period and early adoption is not permitted. The Company is currently assessing the impact on its financial position and results of operations. | |||||||||||||||||
In November 2014, the FASB issued guidance regarding derivatives and hedging in a hybrid financial instrument. The guidance is effective for annual reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company has adopted the guidance, which had no material impact on its financial position and results of operations. | |||||||||||||||||
In November 2014, the FASB issued guidance regarding business combinations and thresholds under which an acquired entity can reflect the acquirer’s accounting and reporting basis in its separate financial statements. The guidance is effective November 18, 2014 and the Company has adopted the guidance, which had no material impact on its financial position and results of operations. | |||||||||||||||||
There have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended December 31, 2014, that are of significance, or potential significance, to us. |
2_StockBased_Compensation
2. Stock-Based Compensation | 6 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||
Stock-Based Compensation | The Company has stock-based compensation plans and reports stock-based compensation expense for all stock-based compensation awards based on the estimated grant date fair value. The value of the compensation cost is amortizedon a straight-line basis over the requisite service periods of the award (generally the option vesting term). | ||||||||||||||||||||
The Company estimates fair value using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows: | |||||||||||||||||||||
• | Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available; | ||||||||||||||||||||
• | Expected volatility of award grants made under the Company’s plans is estimated using the historical daily changes in the market price of the Company’s common stock over the expected term of the award and contemplation of future activity; | ||||||||||||||||||||
• | Risk-free interest rate is the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and, | ||||||||||||||||||||
• | Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures. | ||||||||||||||||||||
The Company has several employee stock option and officer and director stock option plans that have been approved by the shareholders of the Company. The plans require that options be granted at a price not less than market on the date of grant and are more fully discussed in our Form 10-K for the year ended June 30, 2014. | |||||||||||||||||||||
The following table summarizes the Company’s stock option activity during the first six months of fiscal 2015: | |||||||||||||||||||||
Weighted | |||||||||||||||||||||
Weighted | Average | ||||||||||||||||||||
Average | Remaining | Aggregate | Aggregate | ||||||||||||||||||
Exercise Price | Contractual | Fair | Instrinsic | ||||||||||||||||||
Shares | Per Share | Term (1) | Value (3) | Value (2) | |||||||||||||||||
Outstanding July 1, 2014 | 823,400 | $ | 0.63 | 3.35 | $ | 212,600 | $ | - | |||||||||||||
Granted | 390,000 | $ | 0.5 | 4.85 | 69,500 | - | |||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited or expired | (9,400 | ) | $ | 1.5 | - | (5,800 | ) | - | |||||||||||||
Outstanding December 31, 2014 | 1,204,000 | $ | 0.58 | 3.52 | $ | 276,300 | $ | - | |||||||||||||
Exercisable December 31, 2014 | 892,000 | $ | 0.61 | 3.06 | $ | 220,900 | $ | - | |||||||||||||
-1 | Remaining contractual term presented in years. | ||||||||||||||||||||
-2 | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company's common stock as of December 31, 2014, for those awards that have an exercise price currently below the closing price as of December 31, 2014 of $.35. | ||||||||||||||||||||
-3 | Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based compensation. | ||||||||||||||||||||
During the current quarter, the Company’s Board of Directors approved the 2014 Stock Incentive Plan (“2014 Plan”) which authorized 500,000 shares of the Company’s common stock for the grant of stock options or stock awards. During the quarter ended December 31, 2014, the Company issued 115,000 stock options under the 2014 Plan and 275,000 stock options under previously approved plans to the Company’s officers and directors for a total of 390,000 stock option grants. | |||||||||||||||||||||
As of December 31, 2014, the Company had approximately $55,600 of unamortized Black Scholes value related to stock option grants made in the current quarter. The unamortized amount is scheduled to be expensed during the next four quarters. |
3_Marketable_Securities
3. Marketable Securities | 6 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||
Marketable Securities | At December 31, 2014, the Company had sold all of its Marketable Securities previously held. At June 30, 2014, the Company had $560,100 representing the market value ($6.59 per share) of 85,000 ORBCOMM Common Shares (NASDAQ: ORBC) with an average cost basis of $5.16 per share. | ||||||||||||||||||||||||||||
The shares held are revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive Income (Loss) for the period. The Company did not record an unrealized loss on marketable securities held during the six months ended December 31, 2014 as all shares had been sold. The Company recorded an unrealized loss on marketable securities sold during the six months ended December 31, 2014 of ($18,000), plus an adjustment of ($103,200) for unrealized gains previously recorded related to securities sold during the period. The actual gain on securities sold is reported in the Statement of Operations. At December 31, 2014, all shares were sold and the Accumulated Other Comprehensive Income is zero andwas presented in the Shareholders’ Equity section of the Condensed Consolidated Balance Sheet. | |||||||||||||||||||||||||||||
The Company sold a total of 85,000 shares of ORBCOMM, Inc. Common Stock during the sixmonths ended December 31, 2014 for total proceeds of $542,200, and an average selling price of approximately $6.38 per share, resulting in a net gain of $103,200. The cost of the securities sold for purposes of computing the realized gain is based on the average cost of the securities. | |||||||||||||||||||||||||||||
The following table summarizes the activities related to investment in Marketable Securities for the six months ended December 31, 2014: | |||||||||||||||||||||||||||||
Marketable Securities | |||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||
Net | Cost Basis | Market Value | Unrealized | ||||||||||||||||||||||||||
Shares | Per Share | Cost Basis | Per Share | Total Value | Gain | (Loss) | |||||||||||||||||||||||
30-Jun-14 | 85,000 | $ | 5.16 | $ | 439,100 | $ | 6.59 | $ | 560,100 | $ | 121,200 | $ | - | ||||||||||||||||
Shares sold | (45,000 | ) | 5.16 | (232,600 | ) | ||||||||||||||||||||||||
30-Sep-14 | 40,000 | $ | 5.16 | $ | 206,500 | $ | 5.75 | $ | 230,000 | $ | 23,500 | $ | - | ||||||||||||||||
Shares sold | (40,000 | ) | 5.16 | (206,500 | ) | ||||||||||||||||||||||||
31-Dec-14 | - | $ | - | $ | - | $ | 0 | $ | - | $ | - | $ | - |
4_Note_Receivable
4. Note Receivable | 6 Months Ended |
Dec. 31, 2014 | |
Receivables [Abstract] | |
Note Receivable | Note receivable of $373,000 and $409,000 at December 31, 2014 and June 30, 2014 respectively, represents a note due from American Citizenship Center, LLC (“ACC”),a related party. Under modifications made during October 2014, ACC and the Company amended the loan agreement to increase the loan amount to $388,000. The $373,000 balance at December 31, 2014 represents the outstanding amount drawn on the $388,000 loan amountwhich includes $9,000 of accounting fees for July through September 2014 and a $10,000 loan fee. In addition, the minimum monthly payments from September through December 2014 were reduced to $5,000. The minimum payment required starting in January 2015 returns to $25,000 and the entire loan balance is payable in full by the maturity date of August 31, 2015. |
In January 2015, ACC and the Company again modified the loan agreement by revising the payment terms to require minimum monthly payments starting in January 2015to the greater of $5,000 or ten percent (10%) of the gross monthly revenue for such month. Based on the history of the note modifications, the recent modification hereto, and ACC’s history of an ability to make a certain level of payments, the Company has classified $60,000 of the note as current and $313,000 of the note as long-term.ACC is currently in compliance with all terms of the January 2015 amendment. | |
In early September 2014, President Obama made a commitment that he would act on immigration reform via “Executive Action” after the United States mid-term elections that occurred during early November 2014. In November 2014, the President made an announcement that expanded the previously established (2012) deferred action plan. ACC’s current business plan is designed to capitalize on the significant opportunity due to the expanded deferred action plan. No provision for collectability has been recorded as of December 31, 2014 as current ACC financial projections indicate the note will be paid under the amended terms by the maturity date of August 31, 2015. |
5_Land_Property_and_Equipment
5. Land, Property and Equipment | 6 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||
Land, Property and Equipment | Land, Property and Equipment at December 31, 2014 and June 30, 2014 consist of the following: | ||||||||||||
30-Jun-14 | Additions | 31-Dec-14 | |||||||||||
Office furniture and equipment | $ | 51,300 | $ | - | $ | 51,300 | |||||||
Water disposal facility | 2,714,600 | 3,600 | 2,718,200 | ||||||||||
Production equipment | 232,000 | 114,300 | 346,300 | ||||||||||
2,997,900 | 117,900 | 3,115,800 | |||||||||||
Less accumulation depreciation | (371,800 | ) | (91,700 | ) | (463,500 | ) | |||||||
Land and improvements | 1,536,900 | 73,500 | 1,610,400 | ||||||||||
Net book value | $ | 4,163,000 | $ | 99,700 | $ | 4,262,700 |
6_Earnings_Per_Share
6. Earnings Per Share | 6 Months Ended |
Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Basic and diluted loss per share of common stock was computed by dividing net loss by the weighted average number of shares of common stock outstanding. |
Diluted earnings per share are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are options, warrants, convertible debt, and preferred stock that are freely exercisable into common stock at less than the prevailing market price. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the earnings per share or decrease the loss per share. For the six months endedDecember 31, 2014 and 2013, there wereno dilutive securities included in the loss per share calculation as the effect would be antidilutive.Considering all holders’ rights, total common stock equivalents issuable under these potentially dilutive securities are approximately 1,204,000 and 1,076,600 at December 31, 2014 and 2013, respectively. |
7_Equity
7. Equity | 6 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Shareholders' equity | During the six months ended December 31, 2014, the Company issued each of the Company’s three independent members of the Board of Directors 25,000 stock grants for a total of 75,000 shares valued at $31,500. The Company recorded $16,500 of expense related to the stock grants during the current fiscal year and had accrued $15,000 at June 30, 2014. The value of stock-based compensation (stock options) recognized for the six months ended December 31, 2014 was $13,900. |
During the six months ended December 31, 2014, the Company recognized a comprehensive income adjustment in the amount of ($121,200), reported in the Condensed Consolidated Statement of Changes in Shareholders’ Equity. | |
In December 2011, the Company announced that its board of directors had authorized a stock repurchase program whereby the Company could repurchase up to 2 million shares of its outstanding common stock over the next 12 months. The stock repurchase program was extended, under the same limitation, through December 31, 2013. For the six months ended December 31, 2013, the Company had repurchases under the program for a total of 56,800 shares at a cost of approximately $26,100, or $.46 per share. During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program, extending it through December 31, 2014 and establishing an aggregate future amount of shares that may be purchased under the program to 2 million shares. During the quarter ended December 31, 2014, the board of directors again renewed the stock purchase program, extending it through December 31, 2015. For the six months ended December 31, 2014, the Company had repurchases under the program for a total of 20,000 shares at a cost of approximately $8,100, or $0.41 per share. | |
The Company has authorized 25,000,000 shares of Preferred Stock of which 5,000,000 shares have been allocated to Series A, 500,000 have been allocated to Series B, 400,000 have been allocated to Series C Junior Participating, 500,000 have been allocated to Series D, and 750,000 have been allocated to Series E. At December 31, 2014 and June 30, 2014, no Preferred Stock of any series was issued or outstanding. |
8_Contingent_Payments
8. Contingent Payments | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Contingent Payments | Contingent payments at December 31, 2014 and June 30, 2014 relate to AES asset purchase transactions completed in conjunction with the construction of water disposal facilities for the treatmentanddisposal of produced water generated by oil and natural gas producers in Western Colorado. Details of the contingent payments are as follows: | ||||||||
December 31, | June 30, | ||||||||
2014 | 2014 | ||||||||
Contingent land payment | $ | 649,800 | $ | 660,200 | |||||
Contingent purchase price | 535,600 | 528,100 | |||||||
1,185,400 | 1,188,300 | ||||||||
Less current portion | (50,000 | ) | (50,000 | ) | |||||
Contingent payments, long-term | $ | 1,135,400 | $ | 1,138,300 | |||||
Contingent land payment of $649,800 at December 31, 2014 represents the net present value of $800,000 of estimated contingent land payments due under an agreement whereby Alanco Energy Services, Inc. (“AES”) acquired 160 acres of land known as Indian Mesa. The payment is based upon 10% of any quarterly income (defined as gross revenues less operating expenses up to a maximum of $200,000 per quarter and $800,000 annually) for activity at both the Deer Creek and the Indian Mesa locations. The payments were projected considering current operating plans as approved by the Alanco Board of Directors, with the payments discounted at a rate of 3% per annum. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the six months ended December 31, 2014 by $9,300. During the six months ended December 31, 2014, approximately $19,800 was earned and payable under the contingency formula. | |||||||||
Contingent purchase priceof $535,600at December 31, 2014represents the net present value of projected payments to be made to TC Operating, LLC (“TCO”) pursuant to an Asset Purchase Agreement under which TC Operating transferred a land lease for approximately 24 acres of land known as Deer Creek and all related tangible and intangible assets. Per the agreement, the contingent payments are determined as 28% of the Cumulative EBITDA in excess of all of AES’s capital investment for the ten (10) year period commencing on January 1, 2014. AES’s Capital investment shall mean the aggregate amount incurred by AES in acquiring the Assets, the Indian Mesa Facility, and or improving either the Deer Creek Facility or the Indian Mesa Facility. Payments of said Contingent Purchase Price shall be payable quarterly. The projected payments consider current operating plans as approved by the Alanco Board of Directors, with payments discounted at a rate of 3% per annum to determine net present value. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the sixmonths ended December 31, 2014 by $7,500. |
9_Asset_Retirement_Obligation
9. Asset Retirement Obligation | 6 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Asset Retirement Obligation | The Company has recognized estimated asset retirement obligations (closure cost) of $423,700 to remove leasehold improvements, remediate any pollution issues and return the Deer Creek water disposal property to itsnatural state at the conclusion of the Company’s lease. The closure process is a requirement of both the Deer Creek lease and the State of Colorado, a permitting authority for such facilities. The closure cost estimate, in current dollars, was completed by an approved independent consultant experienced in estimating closure costs for water disposal operations and the estimated amount was approved by the State of Colorado. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. |
The Company reviews the asset retirement obligation quarterly and performs a formal annual assessment of its estimates to determine if an adjustment to the value of the asset retirement obligation is required. | |
The laws of the State of Colorado require companies to meet environmental and asset retirement obligations by selecting an approved payment method. The Company has elected to meet its obligation by making quarterly payments of approximately $4,700 into a trust that over the expected lease period will build liquid assets to meet the asset retirement obligation. During the six months ended December 31, 2014, the Company made the required quarterly payments. The balances in the trust account for the asset retirement obligation as of December 31, 2014 and June 30, 2014 were $58,000 and $48,700, respectively. |
10_Commitments_and_Contingenci
10. Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal Proceedings |
The Company is a defendant and counterclaimant in litigation involving its subsidiary, TSI Dissolution Corp. (formerly known as Alanco/TSI Prism Inc. (“TSI”)) and the purchaser of TSI’s assets, Black Creek Integrated Systems Corp. Black Creek filed a complaint in the Maricopa County Superior Court against TSI and the Company, being Civil Case NO. CV2011-014175, claiming various offsets from the purchase price, primarily concerning inventory adjustments, and TSI counterclaimed for monies due from Black Creek under the purchase agreement. Following a trial during fiscal 2014, the court awarded a net judgment in favor of Black Creek in the amount of $16,800, plus attorney’s fees and accrued interest, resulting in a total judgment in the amount of $128,300. At December 31, 2014 and June 30, 2014, the Company recorded an accrued liability of $128,300 for the judgment. The Company believes the net judgment amount fails to address, among other matters, inventory reserves established for the specific items of inventory which were the subject of Black Creek’s concerns, which if properly addressed would result in a net judgment in favor of the Company, with an attendant award of attorney’s fees in favor of the Company. The Company has filed its Appeal and intends to vigorously pursue the appeal of the judgment. As required under the appeal process, the Company posted a bond with the court for $128,300, which is included in prepaid expenses and other current assets at December 31, 2014 and June 30, 2014.Appeals typically take four to six months and the Company estimates a ruling will follow in another three to four months. | |
The Company may from time to time be involved in litigation arising from the normal course of business. As of December 31, 2014, there was no such litigation pending deemed material by the Company. |
11_Related_Party_Transactions
11. Related Party Transactions | 6 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | At December 31, 2014 and June 30, 2014 the Company held a note due from American Citizenship Center, LLC (“ACC”), a related party, with balances of $373,000 and $409,000, respectively. Refer to Note D – Note Receivable for further discussion. During the six months ended December 31, 2014 the Company billed ACC a total of approximately $19,400, which includes amounts for legal services related to note modifications and interest on the note. At December 31, 2014, the Company had unpaid receivables from ACC in the amount of $3,000 which represents one quarter of interest. All required payments have been subsequently paid. |
During the six months ended December 31, 2014, the Company issued each of the Company’s three independent members of the Board of Directors 25,000 stock grants for a total of 75,000 shares valued at $31,500. The Company recorded $16,500 of expense related to the stock grants during the current fiscal year and had accrued $15,000 at June 30, 2014. | |
In November 2014, the Company’s Board of Directors approved a change to the independent director compensation. Effective January 1, 2015, the three independent directors will be paid cash compensation of $1,000 each per month. |
12_Subsequent_Events
12. Subsequent Events | 6 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | In January 2015, ACC and the Company modified the loan agreement by revising the payment terms to require minimum monthly payments starting in January 2015 to the greater of $5,000 or ten percent (10%) of the gross monthly revenue for such month. Based on the history of the note modifications, the recent modification hereto, and ACC’s history of an ability to make a certain level of payments, the Company has classified $60,000 of the note as current and $313,000 of the note as long-term. ACC is currently in compliance with all terms of the January 2015 amendment. |
13_Liquidity
13. Liquidity | 6 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | During the six months ended December 31, 2014, the Company reported a net loss of ($354,900) and for fiscal year ended June 30, 2014, the Company reported a net loss of ($106,200). For the next year, theCompany expects to meet its working capital and other cash requirements with its current operations, cash reserves and sales of marketable securities as required. However, if for any reason, the Company does require additional working capital to complete its business plan, there can be no assurance that the Company’s efforts toacquire the required additional working capital 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. |
1_Basis_of_Presentation_Accoun1
1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements (Policies) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Nature of Operations | Alanco Technologies, Inc. (Stock Symbol: ALAN) was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the “Company” or “Alanco” refers to Alanco Technologies, Inc. and its wholly-owned subsidiaries. During the fiscal year ended June 30, 2012, the Company formed Alanco Energy Services, Inc. (“AES”), for the purpose of obtaining property to establish a water disposal facility near Grand Junction, CO to receive produced water generated as a byproduct from oil and natural gas production in Western Colorado. The new facility started to receive produced water in August 2012. | ||||||||||||||||
Background information on the creation of Alanco Energy Services, Inc. | During fiscal 2012,Alanco Energy Services, Inc. (“AES”), a wholly-owned subsidiary of the Company, executed an agreement with TC Operating, LLC (“TCO”) of Grand Junction, CO to transfer a land lease for approximately 24 acres near Grand Junction, CO (“Deer Creek site”) and all related assets to AES with the intent for AES to construct facilities for the treatment and disposal of large quantities of produced water generated by oil and natural gas producers in Western Colorado. The site was chosen due to its unique ability to meet stringent government requirements for disposal of the high saline water produced as a by-product of oil and gas production, and termed “produced water”. The agreement included the transfer of all related tangible and intangible assets as well as Federal, State and County permits (issued or in process) required to construct and operate the facilities. Subsequent to the TCO agreement, AES renegotiated an amended lease that became effective on May 1, 2012 and include a minimum monthly lease payment of $100 per acre ($2,400 per month) during the initial ten year term of the lease, plus approximately $.25 per barrel of produced water received at the site. | ||||||||||||||||
The design and construction of the Deer Creek water disposal facility required certain changes to the Goodwin Solid Waste facility (“Goodwin”) resulting in extra costs to the landlord, who also owned Goodwin. As incentive for the landlord to approve the facility design, AES agreed to limit landlord construction improvement costs related to the leased land to $200,000. Included in the $200,000 limited amount was $100,000 of landlord improvement costs to be paid by AES and reimbursed through a 50% credit against the $.25 per barrel royalty payments due landlord discussed above. AES recorded the $100,000 payment as prepaid royalties. The remaining prepaid balances atDecember 31, 2014 and June 30, 2014 were $41,600 and $58,700, respectively. | |||||||||||||||||
TCO can also earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent deferred payment), approximately the initial term of the lease. Under certain circumstances, the acreage covered by the lease may be expanded by up to 50 acres to allow for additional expansion at the site. See Note H - Contingent Payments for additional discussion of the contingent deferred payment. | |||||||||||||||||
During April 2012, AES also entered into a definitive agreement with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre site near Grand Junction, CO, for additional expansion to the proposed watertreatment and disposal facility. As consideration for the land purchase, AES paid $500,000 at the April 13, 2012 closing and assumed a non-interest bearing, secured, $200,000 note due November 15, 2012, which was repaid upon maturity. AES has also agreed to potential additional quarterly earn-out payments to DCD up to a maximum total of $800,000, generally determined as 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter (contingent land payment). See Note H - Contingent Payments for additional discussion ofthe contingent land payment. The land, known as Indian Mesa, is currently undeveloped as the Company is in the permitting process. | |||||||||||||||||
Related to the treatment and disposal facilities, in fiscal year 2012 AES entered into a management agreement with TCO to manage the project for a monthly management fee of $10,000 initially and $20,000 after final permits for the Deer Creek operation were obtained in May 2012. The management agreement expired in January 2013 and is continuing on a month to month basis. During the six months ended December 31, 2014, the Company paid TCO $120,000 under the management agreement. TCO also earned an additional variable fee of approximately $4,000 for December 2014 revenues which was paid in January 2015. | |||||||||||||||||
Basis of Presentation | The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In our opinion, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of such condensed consolidated financial statements. Such necessary adjustments consist of normal recurring items and the elimination of all significant intercompany balances and transactions. | ||||||||||||||||
These interim condensed consolidated financial statements should be read in conjunction with the Company’s June 30, 2014 Annual Report filed on Form 10-K. Interim results are not necessarily indicative of results for a full year. | |||||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. | |||||||||||||||||
Fair Value of Assets and Liabilities | The estimated fair value for assets and liabilities are determined at discrete points in time based on relevant information. The Accounting Standards Codification (“ASC”) prioritizes inputs used in measuring fair value into a hierarchy of three levels: Level 1 – unadjusted quoted prices for identical assets or liabilities traded in active markets, Level 2 – observable inputs other than quoted pricesincluded within Level 1 such as quoted prices for similar assets or liabilities, quoted prices in markets that are notactive or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 – unobservable inputs in which little or no market activity exists that are significant to the fair value of the assets or liabilities, therefore requiring an entity to develop its own assumptions that market participants would use in pricing. These estimates involve uncertainties and cannot be determined with precision. The Company’s policy is to recognize transfers into and out of Level 1, 2 and 3 categories as of the date of the event or change in circumstances occurs. The carrying amounts of receivables, prepaid expenses, accounts payable, and accrued liabilitiesapproximate fair value given their short-term nature or their effective interest rates, which represent Level 3 input levels. | ||||||||||||||||
The following are the classes of assets and liabilities measured at fair value on a recurring basis at December 31, 2014, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3): | |||||||||||||||||
Level 1: | |||||||||||||||||
Quoted Prices | Level 2: | ||||||||||||||||
in active | Significant | Level 3: | Total | ||||||||||||||
Markets | Other | Significant | at | ||||||||||||||
for Identical | Observable | Unobservable | December 31, | ||||||||||||||
Assets | Inputs | Inputs | 2014 | ||||||||||||||
Asset Retirement Obligation | $ | - | $ | - | $ | 423,700 | $ | 423,700 | |||||||||
Contigent Land Payment | - | - | 649,800 | 649,800 | |||||||||||||
Contingent Purchase Price | - | - | 535,600 | 535,600 | |||||||||||||
$ | - | $ | - | $ | 1,609,100 | $ | 1,609,100 | ||||||||||
Fair Value of Asset Retirement Obligation | The Deer Creek asset retirement obligation is the estimated cost to close the Deer Creek facility under terms of the lease, meeting environmental and State of Colorado regulatory requirements. The estimate is determined at discrete points in time based upon significant unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. Management’s estimate of the asset retirement obligation is based upon a cost estimate developed by a consultant knowledgeable of government closure requirements and costs incurred at similar water disposal facility operations. The process used was to identify each activity in the closure process, obtaining vendor estimated costs, in current dollars, to perform the closure activity and accumulating the various vendor estimates to determine the asset retirement obligation. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility. The lack of an active market to validate the estimated asset retirement obligation results in the fair value of the asset retirement obligation to be a Level 3 fair value measurement. ASC Topic 410-20: Asset Retirement Obligations requires the Company to review the asset retirement obligation on a recurring basis and record changes in the period incurred. | ||||||||||||||||
Fair Value of Contingent Payments | The contingent land payment and contingent purchase price liabilities are also determined at discrete points in time based upon unobservable inputs in which little or no market activity exists that is significant to the fair value of the liability, therefore requiring the Company to develop its own assumptions. In calculating the estimate of fair value for both of the contingent payments, management completed an estimate of the present value of each identified contingent liability based upon projected income, cash flows and capital expenditures for the Deer Creek facility developed under plans currently approved by the Company’s board of directors. Different assumptions relative to the expansion or alternative uses of the Deer Creek and Indian Mesa facilities could result in significantly different valuations. The projected payments have been discounted at a rate of 3% per annum to determine net present value. The lack of an active market tovalidate the estimated contingent land and purchase price liabilities results in the fair value of the contingent land and purchase price liabilities to be a Level 3 fair value measurement. ASC Topic 820: Fair Value Measurement requires the Company to review the contingent land and purchase price liabilities on a recurring basis and record changes in the period incurred. | ||||||||||||||||
Recent Accounting Pronouncements | In May 2014, the FASB issued guidance regarding revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period and early adoption is not permitted. The Company is currently assessing the impact on its financial position and results of operations. | ||||||||||||||||
In November 2014, the FASB issued guidance regarding derivatives and hedging in a hybrid financial instrument. The guidance is effective for annual reporting periods beginning after December 15, 2015 and early adoption is permitted. The Company has adopted the guidance, which had no material impact on its financial position and results of operations. | |||||||||||||||||
In November 2014, the FASB issued guidance regarding business combinations and thresholds under which an acquired entity can reflect the acquirer’s accounting and reporting basis in its separate financial statements. The guidance is effective November 18, 2014 and the Company has adopted the guidance, which had no material impact on its financial position and results of operations. | |||||||||||||||||
There have been no other recent accounting pronouncements or changes in accounting pronouncements during the three months ended December 31, 2014, that are of significance, or potential significance, to us. |
1_Basis_of_Presentation_Accoun2
1. Basis of Presentation, Accounting Policies and Recent Accounting Pronouncements (Tables) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | Level 1: | ||||||||||||||||
Quoted Prices | Level 2: | ||||||||||||||||
in active | Significant | Level 3: | Total | ||||||||||||||
Markets | Other | Significant | at | ||||||||||||||
for Identical | Observable | Unobservable | December 31, | ||||||||||||||
Assets | Inputs | Inputs | 2014 | ||||||||||||||
Asset Retirement Obligation | $ | - | $ | - | $ | 423,700 | $ | 423,700 | |||||||||
Contigent Land Payment | - | - | 649,800 | 649,800 | |||||||||||||
Contingent Purchase Price | - | - | 535,600 | 535,600 | |||||||||||||
$ | - | $ | - | $ | 1,609,100 | $ | 1,609,100 |
2_StockBased_Compensation_Tabl
2. Stock-Based Compensation (Tables) | 6 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||
Stock option activity | Weighted | ||||||||||||||||||||
Weighted | Average | ||||||||||||||||||||
Average | Remaining | Aggregate | Aggregate | ||||||||||||||||||
Exercise Price | Contractual | Fair | Instrinsic | ||||||||||||||||||
Shares | Per Share | Term (1) | Value (3) | Value (2) | |||||||||||||||||
Outstanding July 1, 2014 | 823,400 | $ | 0.63 | 3.35 | $ | 212,600 | $ | - | |||||||||||||
Granted | 390,000 | $ | 0.5 | 4.85 | 69,500 | - | |||||||||||||||
Exercised | - | - | - | - | - | ||||||||||||||||
Forfeited or expired | (9,400 | ) | $ | 1.5 | - | (5,800 | ) | - | |||||||||||||
Outstanding December 31, 2014 | 1,204,000 | $ | 0.58 | 3.52 | $ | 276,300 | $ | - | |||||||||||||
Exercisable December 31, 2014 | 892,000 | $ | 0.61 | 3.06 | $ | 220,900 | $ | - | |||||||||||||
-1 | Remaining contractual term presented in years. | ||||||||||||||||||||
-2 | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company's common stock as of December 31, 2014, for those awards that have an exercise price currently below the closing price as of December 31, 2014 of $.35. | ||||||||||||||||||||
-3 | Aggregate Fair Value is calculated using the Black Scholes option pricing model to estimate fair value of stock-based compensation. |
3_Marketable_Securities_Tables
3. Marketable Securities (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||
Marketable Securities | Marketable Securities | ||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||
Net | Cost Basis | Market Value | Unrealized | ||||||||||||||||||||||||||
Shares | Per Share | Cost Basis | Per Share | Total Value | Gain | (Loss) | |||||||||||||||||||||||
30-Jun-14 | 85,000 | $ | 5.16 | $ | 439,100 | $ | 6.59 | $ | 560,100 | $ | 121,200 | $ | - | ||||||||||||||||
Shares sold | (45,000 | ) | 5.16 | (232,600 | ) | ||||||||||||||||||||||||
30-Sep-14 | 40,000 | $ | 5.16 | $ | 206,500 | $ | 5.75 | $ | 230,000 | $ | 23,500 | $ | - | ||||||||||||||||
Shares sold | (40,000 | ) | 5.16 | (206,500 | ) | ||||||||||||||||||||||||
31-Dec-14 | - | $ | - | $ | - | $ | 0 | $ | - | $ | - | $ | - |
5_Land_Property_and_Equipment_
5. Land, Property and Equipment (Tables) | 6 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Land Property And Equipment Tables | |||||||||||||
Land, Property and Equipment | 30-Jun-14 | Additions | 31-Dec-14 | ||||||||||
Office furniture and equipment | $ | 51,300 | $ | - | $ | 51,300 | |||||||
Water disposal facility | 2,714,600 | 3,600 | 2,718,200 | ||||||||||
Production equipment | 232,000 | 114,300 | 346,300 | ||||||||||
2,997,900 | 117,900 | 3,115,800 | |||||||||||
Less accumulation depreciation | (371,800 | ) | (91,700 | ) | (463,500 | ) | |||||||
Land and improvements | 1,536,900 | 73,500 | 1,610,400 | ||||||||||
Net book value | $ | 4,163,000 | $ | 99,700 | $ | 4,262,700 |
8_Contingent_Payments_Tables
8. Contingent Payments (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Contingent payments | December 31, | June 30, | |||||||
2014 | 2014 | ||||||||
Contingent land payment | $ | 649,800 | $ | 660,200 | |||||
Contingent purchase price | 535,600 | 528,100 | |||||||
1,185,400 | 1,188,300 | ||||||||
Less current portion | (50,000 | ) | (50,000 | ) | |||||
Contingent payments, long-term | $ | 1,135,400 | $ | 1,138,300 |
1_Basis_of_Presentation_and_Re
1. Basis of Presentation and Recent Accounting Policies and Pronouncements (Details) (USD $) | Dec. 31, 2014 |
Asset retirement obligation | $423,700 |
Contingent land payment | 649,800 |
Contingent purchase price | 535,600 |
Total | 1,609,100 |
Level 1: Quoted Prices Quoted Prices in active Markets for Identical Assets | |
Asset retirement obligation | 0 |
Contingent land payment | 0 |
Contingent purchase price | 0 |
Total | 0 |
Level 2: Significant Other Observable Inputs | |
Asset retirement obligation | 0 |
Contingent land payment | 0 |
Contingent purchase price | 0 |
Total | 0 |
Level 3: Significant Unobservable Inputs | |
Asset retirement obligation | 423,700 |
Contingent land payment | 649,800 |
Contingent purchase price | 535,600 |
Total | $1,609,100 |
1_Basis_of_Presentation_and_Re1
1. Basis of Presentation and Recent Accounting Policies and Pronouncements (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Company paid under management agreement | $120,000 | |
Remaining prepaid royalties | $41,600 | $58,700 |
2_StockBased_Compensation_Deta
2. Stock-Based Compensation (Details) (USD $) | 6 Months Ended |
Dec. 31, 2014 | |
Stock-Based Compensation Details | |
Shares Outstanding July 1, 2014 | 823,400 |
Shares Granted | 390,000 |
Shares Exercised | 0 |
Shares Forfeited or expired | -9,400 |
Shares Outstanding December 31, 2014 | 1,204,000 |
Shares Exercisable December 31, 2014 | 892,000 |
Weighted average exercise price per share outstanding July 1, 2014 | $0.63 |
Weighted average exercise price per share Granted | $0.50 |
Weighted average exercise price per share Exercised | $0 |
Weighted average exercise price per share Forfeited or expired | $1.50 |
Weighted average exercise price per share Outstanding December 31, 2014 | $0.58 |
Weighted average exercise price per share Exercisable December 31, 2014 | $0.61 |
Weighted average remaining contractual term Outstanding July 1, 2014 | 3 years 4 months 6 days |
Weighted average remaining contractual term Granted | 4 years 10 months 6 days |
Weighted average remaining contractual term Exercised | 0 years |
Weighted average remaining contractual term Forfeited or expired | 0 years |
Weighted average remaining contractual term Outstanding December 31, 2014 | 3 years 6 months 7 days |
Weighted average remaining contractual term Exercisable December 31, 2014 | 3 years 22 days |
Aggregate fair value outstanding July 1, 2014 | $212,600 |
Aggregate fair value Granted | 69,500 |
Aggregate fair value Exercised | 0 |
Aggregate fair value Forfeited or expired | -5,800 |
Aggregate fair value Outstanding December 31, 2014 | 276,300 |
Aggregate fair value Exercisable December 31, 2014 | 220,900 |
Aggregate Intrinsic Value Outstanding July 1, 2014 | 0 |
Aggregate Intrinsic Value Granted | 0 |
Aggregate Intrinsic Value Exercised | 0 |
Aggregate Intrinsic Value Forfeited or expired | 0 |
Aggregate Intrinsic Value Outstanding December 31, 2014 | 0 |
Aggregate Intrinsic Value Exercisable December 31, 2014 | $0 |
2_StockBased_Compensation_Deta1
2. Stock-Based Compensation (Details Narrative) (USD $) | 6 Months Ended |
Dec. 31, 2014 | |
Stock option grants | 390,000 |
Unamortized amount | $55,600 |
2014 Stock Incentive Plan [Member] | |
Authorized stock option under the stock option plan | 500,000 |
Issued stock option under the stock option plan | 115,000 |
Previously approved stock option plans | |
Issued stock option under the stock option plan | 275,000 |
3_Marketable_Securities_Detail
3. Marketable Securities (Details) | 3 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2014 | |
Net Shares | ||
Beginning balance | 40,000 | 85,000 |
Shares sold | -40,000 | -45,000 |
Ending balance | 0 | 40,000 |
Cost Basis Per Share | ||
Beginning balance | 5.16 | 5.16 |
Shares sold | 5.16 | 5.16 |
Ending balance | 0 | 5.16 |
Cost Basis Total Cost | ||
Beginning balance | 206,500 | 439,100 |
Shares sold | -206,500 | -232,600 |
Ending balance | 0 | 206,500 |
Market Value Per Share | ||
Beginning balance | 5.75 | 6.59 |
Ending balance | 0 | 5.75 |
Market Value Total Value | ||
Beginning balance | 230,000 | 560,100 |
Ending balance | 0 | 230,000 |
Accumulated Unrealized Gain | ||
Beginning balance | 23,500 | 121,200 |
Ending balance | 0 | 23,500 |
Accumulated Unrealized Loss | ||
Beginning balance | 0 | 0 |
Ending balance | 0 | 0 |
3_Marketable_Securities_Detail1
3. Marketable Securities (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Investments, Debt and Equity Securities [Abstract] | ||
Marketable Securities - Amount | $560,100 | |
Marketable Securities - Per Share | $6.59 | |
Unrealized loss on marketable securities sold | 18,000 | |
Adjustment for previously recorded unrealized gains | 103,200 | |
Common Stock sold of related party | 85,000 | |
Proceeds from sale of common Stock of related party | 542,200 | |
Average selling price of share | $6.38 | |
Net gain | $103,200 |
4_Note_Receivable_Details_Narr
4. Note Receivable (Details Narrative) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Receivables [Abstract] | ||
Outstanding amount drawn on credit line | $373,000 | $409,000 |
5_Land_Property_and_Equipment_1
5. Land, Property and Equipment (Details) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Land, property and equipment | $3,115,800 | $2,997,900 |
Additions | 117,900 | |
Less accumulation depreciation | -463,500 | -371,800 |
Net book value | 4,262,700 | 4,163,000 |
Depreciation and amortization | -91,700 | |
Office furniture and equipment | ||
Land, property and equipment | 51,300 | 51,300 |
Additions | 0 | |
Water disposal facility | ||
Land, property and equipment | 2,718,200 | 2,714,600 |
Additions | 3,600 | |
Production equipment | ||
Land, property and equipment | 346,300 | 232,000 |
Additions | 114,300 | |
Land and improvements | ||
Land, property and equipment | 1,610,400 | 1,536,900 |
Additions | 73,500 | |
Net book value | ||
Additions | $99,700 |
6_Earnings_Per_Share_Details_N
6. Earnings Per Share (Details Narrative) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Common stock equivalents issuable under these potentially dilutive securities | 1,204,000 | 1,076,600 |
7_Equity_Details_Narrative
7. Equity (Details Narrative) (USD $) | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
stock-based compensation | $13,900 | ||
Comprehensive income adjustment | -121,200 | ||
Repurchase of common stock, amount | 8,100 | 26,100 | |
Repurchase of common stock, per share | $0.41 | $0.46 | |
Repurchase of common stock, shares | 20,000 | 56,800 | |
Repurchase stock program | During the quarter ended March 31, 2014, the board of directors renewed the stock repurchase program, extending it through December 31, 2014 and establishing an aggregate future amount of shares that may be purchased under the program to 2 million shares. During the quarter ended December 31, 2014, the board of directors again renewed the stock purchase program, extending it through December 31, 2015. | ||
Accrued stock awards amount | 15,000 | ||
Stock awards granted to directors, amount | 16,500 | ||
Board of Directors [Member] | |||
Stock Grants | 25,000 | ||
Issued shares to board of director, shares | 75,000 | ||
Issued shares to board of director, value | $31,500 |
8_Contingent_Payments_Details
8. Contingent Payments (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Contingent Payments Details | ||
Contingent land payment | $649,800 | $660,200 |
Contingent purchase price | 535,600 | 528,100 |
Contingent payment | 1,185,400 | 1,188,300 |
Less current portion | -50,000 | -50,000 |
Contingent payments, long-term | $1,135,400 | $1,138,300 |
8_Contingent_Payments_Details_
8. Contingent Payments (Details Narrative) (USD $) | 6 Months Ended |
Dec. 31, 2014 | |
Contingent Payments Details Narrative | |
Fair value of the contingent land payment | $649,800 |
Accretion expense per annum | 3.00% |
Increase in fair value of contingent land payment | 9,300 |
Increase in fair value of contingent purchase price | 7,500 |
Amount earned under contingecy formula | 19,800 |
Net present value of contingent purchase price | $535,600 |
9_Asset_Retirement_Obligation_
9. Asset Retirement Obligation (Details Narrative) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Accounting Policies [Abstract] | ||
Asset Retirement Obligation | $423,700 | $423,700 |
Payment made for asset retirement obligation | 4,700 | |
Balance at trust account for asset retirement obligation | $58,000 | $48,700 |
10_Commitments_and_Contingenci1
10. Commitments and Contingencies (Details Narrative) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Commitments And Contingencies Details Narrative | ||
Accrued liability | $128,300 | $128,300 |
11_Related_Party_Transactions_
11. Related Party Transactions (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Accrued stock awards amount | $15,000 | |
Stock awards granted to directors, amount | 16,500 | |
American Citizenship Center, LLC | ||
Due from related party | 373,000 | 409,000 |
Legal services and interest | 19,400 | |
Interest expense | 3,000 | |
Board of Directors [Member] | ||
Stock Grants | 25,000 | |
Issued shares to board of director, shares | 75,000 | |
Issued shares to board of director, value | $31,500 |
13_Liquidity_Details_Narrative
13. Liquidity (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss | ($176,800) | $132,100 | ($354,900) | ($19,200) | ($106,200) |