SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
August 14, 2002
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 14, 2002
ALANCO TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Arizona 86-0220694
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15575 N. 83rd Way, Suite 3, Scottsdale, Arizona 85260
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(Address of principal executive offices) (Zip Code)
(480) 607-1010
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(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
A special shareholders' meeting was held on May 14, 2002 where shareholders
approved the issuance of shares relative to the acquisition of the operations of
Technology Systems International, Inc. A proxy statement pertaining to the
acquisition, which included the Amended Agreement and required financial
information, was filed on April 22, 2002.
Additional pro forma financial information is presented below to comply with
Nasdaq requirements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) THE FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The
financial statements of Technology Systems International, Inc.
("TSI") were included with the related proxy statement
filed on April 22, 2002.
(b) PRO FORMA FINANCIAL INFORMATION. Required Pro Forma financial
information was included in the proxy statement filed on April 22,
2002. Additional pro forma financial information presented below is
filed to meet Nasdaq requirements:
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
The following unaudited pro forma condensed combining balance sheet reflects the
Alanco Technologies, Inc. ("Alanco") acquisition of the Technology Systems
International, Inc. ("TSI") assets recorded under the purchase method of
accounting. The pro forma balance sheet combines TSI with the consolidated
balance sheet of Alanco as of May 31, 2002.
The pro forma combining financial balance sheet is not necessarily indicative of
the financial position that would have been reported had the acquisition
occurred as of the date indicated, nor is it indicative of future financial
position.
<page>
<table>
<caption>
Summary Financial Information
Condensed Pro Forma (Unaudited)
Consolidated Balance Sheet
As of May 31, 2002
<s> <c> <c> <c> <c>
Pro Forma Pro Forma
TSI ALANCO Adjustments Combined
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ASSETS:
Cash $7,300 $282,800 $290,100
Accounts Receivable 237,300 743,600 980,900
Notes Receivable 559,100 (559,100) (5) 0
Inventory 527,000 1,195,000 1,722,000
Prepaid Expenses 8,500 86,000 94,500
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780,100 2,866,500 (559,100) 3,087,500
PROPERTY, PLANT & EQUIPMENT, NET 94,200 287,600 381,800
OTHER ASSETS:
Intangible Assets, net 445,000 4,130,400 (3) 4,575,400
Patents & Licenses 181,100 200,000 (3) 381,100
Software 465,400 200,000 (3) 665,400
Notes Receivable, Assets held
for sale and Other 25,400 452,900 478,300
Investments 375,200 (375,200) (4) 0
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TOTAL ASSETS $1,546,200 $4,427,200 $3,596,100 $9,569,500
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CURRENT LIABILITIES
Accounts Payable & Accruals $481,400 $761,100 $1,242,500
Current Notes & Bank Line 2,273,100 831,700 (559,100) (5) 971,200
(1,250,000) (1)
(324,500) (2)
Deferred Credits 117,000 117,000
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2,871,500 1,592,800 (2,133,600) 2,330,700
Long Term Debt 350,000 (1) 350,000
324,500 (2) 324,500
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2,871,500 1,592,800 (1,459,100) 3,005,200
Preferred Stock 490,000 490,000
Shareholders' Equity (1,325,300) 2,344,400 900,000 (1) 6,074,300
4,530,400 (3)
(375,200) (4)
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TOTAL LIABILITIES & EQUITY $1,546,200 $4,427,200 $3,596,100 $9,569,500
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Shares Outstanding 10,199,100 7,000,000 17,199,100
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Book Value Per Share $0.28 $0.38
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</table>
(1) Adjustment to reflect the conversion of approximately $900,000 of debt to
equity via Alanco issuing 1 million shares of Class A common stock and the
reclassification of $350,000 of current notes payable pursuant to the EMS
agreement included with related proxy information filed on April 22, 2002.
The value of the shares issued was determined by the amount of debt EMS
negotiated to convert for the shares to be issued.
(2) Reflects the reclassification of certain notes payable that are contingent
on TSI achieving an annual operating net income of $1 million.
(3) Adjustments to reflect the purchase accounting method of recording the
proposed transaction. The purchase price allocation is based only upon the
6 million Class A Common Shares, issued at closing. The $3.618 million
value of the common stock issued in the transaction was determined by
valuing the Class A common shares at 90% of the 5 day average closing
market price prior to May 14, 2002 (closing date of transaction), or $.67
per share. The discount from market reflects management's estimate of the
reduction required to reflect the unregistered nature of the shares.
The net historical cost basis of the patents, licenses and software has
been increased by $400,000 to reflect estimated fair market value for those
assets. The post allocation asset values are expected to be written off
over the estimated remaining useful life of the assets. The remaining value
of the purchase price of approximately $3.218 million has been allocated to
goodwill in recognition of the earnings potential of contracts executed,
contracts currently being negotiated, proposals outstanding and additional
contracts that are being pursued.
(4) To reflect the exchange of approximately 2.07 million shares of TSI common
stock for the Company's investment in the preferred stock of Gold &
Minerals Company, Inc. (G&M).
(5) To eliminate intercompany balances to Alanco by TSI at May 31, 2002.
(6) The unaudited pro forma balance sheet and related notes presented
above should be read in conjunction with the Company's previously filed
10-QSB's, Form 10-KSB for fiscal year ended June 30, 2002, and the proxy
statement filed on April 22, 2002.
(c) EXHIBITS. See proxy statement filed on April 22, 2002 for all
exhibits relevant to the Technology Systems International, Inc.
acquisition.
CERTIFICATION
To the best of our knowledge and belief, the information presented above (i)
complies with the requirements of Section 13(a) and/or 15(d) of the Exchange Act
and (ii) the information contained in this 8-K filing fairly presents, in all
material respects, the pro forma financial position on the dates indicated and
under the assumptions made.
Date: August 14, 2002 ALANCO TECHNOLOGIES, INC., Registrant
/s/ Robert R. Kauffman /s/ John A. Carlson
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Chief Executive Officer Chief Financial Officer