Stock Alert for Alanco Technologies Inc. (ALAN)(D*)

Alanco Technologies Inc. (NASDAQ: ALAN)(D*)

* Finacial status indicator is deficient: Issuer failed to meet NASDAQ continued listing requirements.

Alanco Technologies Inc. (ALAN) is a provider of advanced information technology solutions. The Company operates in two segments: Radio Frequency Identification (RFID) Technology, which is engaged in incorporating design, production, marketing and distribution of RFID tracking technology; and Wireless Asset Management, which is engaged in incorporating the design, production, marketing, distribution and monitoring of wireless asset management products, primarily for the transportation industry. During the fiscal year ended June 30, 2009, the Company discontinued its Data Storage segment. In March 2010, the Company announced the sale of its data storage subsidiary, Excel Meridian Data Inc.

The Company was founded in 1969 and is based in Scottsdale, Arizona.

Share Statistics (Jul-8-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	ALAN	Revenue, $Mn	18.47M	13.48M	27.0%	4.72M	4.43M	6.1%
Current price	$0.212	Gross marg.	31.8%	27.8%	12.6%	n/a	42.4%	n/a
52wk Range:	$0.64-0.20	Oper. margin	-24.1%	-45.7%	89.6%	n/a	-33.0%	n/a
Avg Vol (3m):	426,480	Net margin	-28.2%	-54.2%	92.2%	n/a	-44.2%	n/a
Market Cap.	7.69M
Shares Outst.	38.0M	EPS, $	-0.30	-0.32	6.7%	-0.16	-0.06	62.5%

Source: Reuters.com, SEC Filings.

Financial Summary

ALAN posted an increase in sales from continuing operations for its third quarter ended March 31, 2010, 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.

ALAN’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.

Financial Strength (Jul-8-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.36	1.80	1.32	0.76
Current Ratio (MRQ)	1.49	1.92	1.53	0.91
Long-Term Debt to Equity(MRQ)	31.95	33.88	16.72	137.30
Total Debt to Equity (MRQ)	52.05	51.28	27.45	205.26

Source: Reuters.com, SEC Filings.

Analyst Consensus

No recommendation data available.

Source: www.ft.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=ALAN.W

Investment Highlights

ALAN announced last month that its appeal to the NASDAQ Listing Qualifications Panel for an extension to regain NASDAQ’s minimum $1.00 bid price listing requirement has been granted.  The Company now has until September 13, 2010, to regain minimum NASDAQ bid price requirements, and is in full compliance with all other NASDAQ listing requirements.

ALAN 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.

ALAN operates in two business segments:  Wireless Asset Management and RFID Tracking Technology.

Wireless Asset Management

StarTrak Systems, acquired by ALAN on June 30, 2006, is a provider of GPS tracking and wireless asset management services to the transportation industry and the dominant provider of tracking, monitoring and control services to the refrigerated or “Reefer” segment of the transportation marketplace.  StarTrak products wirelessly monitor and control critical Reefer data, including GPS location, cargo temperatures and Reefer fuel levels.  StarTrak’s subscription monitoring and control services provide transportation customers with a high return on investment (ROI) through improved equipment utilization, less cargo spoilage, lower fuel use and other supply chain efficiency improvements.  StarTrak offers complete integrated solutions for tracking, monitoring and controlling refrigerated trailers, trucks, railcars and containers.

RFID Tracking Technology

Alanco/TSI PRISM, acquired by ALAN in May 2002, has developed a state-of-the-art wireless RFID (Radio Frequency Identification) tracking technology featuring proprietary software and patented hardware components, marketed as the TSI PRISM™ system.  The TSI PRISM system is utilized for area security management and personnel monitoring with present market focus on the corrections industry, where the system provides continuous, real-time prison inmate and officer identification and tracking capabilities indoors and out.  TSI PRISM enhances staff safety and facility security; deters inmate violence; and provides the correctional industry with operational cost reductions and unique inmate management capabilities.

Source: http://www.alanco.com/

Technical Analysis

Source: http://stockcharts.com

ALAN is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

ALAN’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below zero, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Jul-8-2010	symbol	Share, $	$ Mn	2010	2011	2010	2011
Pinnacle Data Systems Inc.	PNS	0.97	7.59M	n/a	n/a	0.20	n/a
Innodata Isogen Inc.	INOD	2.61	66.33M	28.84	n/a	0.83	n/a
Xata Corp.	XATA	2.55	25.03M	n/a	n/a	0.41	n/a
Computer Services Median			32.98M	n/a	n/a	0.48	n/a
Alanco Technologies Inc.	ALAN	0.212	7.69M	n/a	n/a	0.39	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	20,000	1
Sales	100,000	1
Net Shares Purchased (Sold)	(80,000)	2
Total Insider Shares Held	13.17M	n/a
% Net Shares Purchased (Sold)	(0.6%)	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(84,513)
% Change in Institutional Shares Held	(4.89%)

Source: Yahoo Finance

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