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ALANCO TECHNOLOGIES INC
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10-Q
2012-09-30
false
--06-30
No
No
Smaller Reporting Company
Q1
2013
Yes
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<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> <br /></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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 amortized on a straight-line basis
over the requisite service periods of the award (generally the option vesting term).</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company estimates fair value using the Black-Scholes valuation model.  Assumptions used to estimate compensation expense
are determined as follows:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">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;</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Expected volatility of award grants made under the Company’s plans is measured 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;</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">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,</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures.</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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, 2012.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The following
table summarizes the Company’s stock option activity during the first three months of fiscal 2013:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
<br />
</p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 16%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Weighted</td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Weighted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Average</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Average</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Remaining</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Aggregate</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Aggregate</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Exercise Price</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Contractual</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Fair</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Instrinsic</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Shares</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Per Share</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Term (1)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Outstanding July 1, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">674,100</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$0.80</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">4.58</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       217,100</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Granted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">               -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercised</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">               -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(3)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Forfeited or expired</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               -</td>
<td style="padding-bottom: 2px; text-align: right; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">-</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">-</td>
<td style="padding-bottom: 2px; text-align: right; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                 -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Outstanding September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">674,100</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">$0.80</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">4.33</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">217,100</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercisable September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">229,600</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">$0.90</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">3.94</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">79,400</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(1)</td>
<td colspan="5" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Remaining contractual term presented in years.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">awards and the closing price of the Company's common stock as of September 30, 2012, for those awards that</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="7" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">have an exercise price below the closing price as of September 30, 2012 of $.57.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(3)</td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">This value is calculated as the difference between the exercise price and the market price of the stock on the</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">date of exercise.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="text-align: left; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">As of
September 30, 2012, the Company had 141,800 warrants outstanding with a weighted average exercise price of $6.38.  The
life of the outstanding warrants extends through July 9, 2013.  The following table summarizes the Company’s warrant
activity during the first three months of fiscal 2013:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 7%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 34%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 7%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Weighted</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Number of</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Average</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Shares</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Exercise Price</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Warrants Outstanding, June 30, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">150,400</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">6.24</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Granted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercised</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Canceled/Expired</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               (8,600)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">4.00</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Warrants Outstanding, September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">141,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">6.38</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Recent
Business Development</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">As
was discussed in our Form 10-K for the year ended June 30, 2012, the sale, in May of 2011, of the Company’s last operating
unit, the Wireless Asset Management segment, resulted in Alanco effectively becoming a holding company.  The Company
believed that status to be temporary and had stated its objective to complete an appropriate acquisition or merger and again become
an operating company.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">           In
compliance with that objective the Company formed Alanco Energy Services, Inc. (“AES”), a wholly owned subsidiary,
and in April 2012 executed an agreement with TC Operating, LLC ("TCO") of Grand Junction, CO transferring a land lease for 20 acres
near Grand Junction, CO and all related assets to AES with the intent of 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 the facilities.  The
lease terms payable to the landlord include a minimum monthly lease payment of $100 per acre (approximately $2,000 per month) during
the initial ten year term of the lease, plus $.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 as discussed above.  AES recorded the $100,000 payment
as prepaid royalties.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 27pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">TCO
can also earn contingent purchase price payments based upon a percentage of the net AES 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 I – Fair Value - Contingent Payments for additional discussion of the contingent
purchase price payment.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 27pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">AES
has also entered into a definitive agreement ("Agreement") with Deer Creek Disposal, LLC ("DCD") whereby AES acquired a 160 acre
site near Grand Junction, CO, for additional expansion to the proposed water 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.
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 AES quarterly revenues in excess of operating expenses (contingent land payment).  See Note I –
Fair Value - Contingent Payments for additional discussion of the contingent land payment.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 27pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Related
to the treatment and disposal facilities, AES has 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 were attained in May 2012.  In an amendment to the
TCO agreement, TCO agreed to provide certain administrative duties for AES and the management fee was increased to $23,000 per
month.  In addition, the Company agreed to pay TCO, at closing, up to $85,000 and issue 40,000 shares of Common Stock
of Alanco Technologies, Inc. as reimbursement for past expenses and efforts in acquiring permits and for past management services
and covenants not to compete.</p>
<p style="text-align: justify; text-indent: 27pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> <i>Basis of Presentation</i></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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 generally accepted accounting principles 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.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">These
interim condensed consolidated financial statements should be read in conjunction with the Company’s June 30, 2012 Annual
Report filed on Form 10-K.  Interim results are not necessarily indicative of results for a full year.  Certain
reclassifications have been made to conform prior period financials to the presentation in the current reporting period.  The
reclassifications had no effect on net income (loss).</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with generally accepted accounting principles 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.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="letter-spacing: 9pt"><b><i>   </i></b></font><b><i> Fair
Value of Assets and Liabilities</i></b> – The estimated fair values 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 prices included within Level 1 such as quoted prices
for similar assets or liabilities, quoted prices in markets that are not active 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 carrying amounts of receivables, prepaid expenses, accounts payable, accrued liabilities,
and notes payable approximate fair value given their short-term nature and borrowing rates currently available to the Company for
loans with similar terms and maturities.</p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="letter-spacing: 9pt">   </font> The
following are the classes of assets and liabilities measured at fair value on a recurring basis at September 30, 2012, using quoted
prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable
inputs (Level 3):</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 32%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 1:</td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Quoted Prices</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 2:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">in active</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 3:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Total</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Markets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Other</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">at</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">for Identical</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Observable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Unobservable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">September 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Assets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Marketable Securities - Restricted</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Asset Retirement Obligation</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             410,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          410,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contigent Land Payment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             627,300</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          627,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contingent Purchase Price</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             501,900</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          501,900</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          1,539,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       4,131,000</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
Value of Marketable Securities - Restricted</i></b> – The estimated fair values of Marketable Securities - Restricted are
determined at discrete points in time based on relevant market information.  The Marketable Securities – Restricted
is comprised entirely of ORBCOMM Inc. (“ORBCOMM”) common shares (NASDAQ: ORBC) registered under a currently effective
ORBCOMM Form S-3 registration statement.  Under the terms of the Agreement, the Company is limited to selling up to 279,600
shares (12 ½% of the total shares) per month.  The sale restriction above is why the fair value measurement at
September 30, 2012 of ORBCOMM’s Stock is based on quoted prices for similar assets in active markets that are directly observable
and thus represent a Level 2 fair value measurement.  However, management does not believe the restriction will interfere
with any plans to market their stock holdings.  As such, the trading price is used as fair value with no further adjustment.  The
remaining shares will be revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive
Income (Loss) for the period.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
Value of Asset Retirement Obligation</i> – </b>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.  Although the water disposal
facility is anticipated to remain operational for a period of up to 30 years, 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 asset retirement obligation to be a Level 3 fair value measurement.  ASC Topic 820: Fair
Value Measurement requires the Company to review the asset retirement obligation on a recurring basis and record changes in the
period incurred.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
Value of Contingent Payments </i></b>– 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 of 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 to validate 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.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>New
Accounting Policies</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">During
the current quarter, the Company adopted the following significant accounting policies:</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b>Revenue
Recognition</b> – The Company operates the Deer Creek water disposal facility near Grand Junction, CO and bills customers
(primarily in the oil and gas industry) for produced water received.  The Company recognizes revenue generally at the
time the produced water is received at the Deer Creek facility and billed.  Revenue is generally recognized when all
the following have been met:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br /> <br /></p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Persuasive evidence of an arrangement exists;</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">The service has been performed;</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">The customer’s fee is deemed to be determinable and free of contingencies or significant uncertainties; and</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Collectability is probable.</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b>Accounts
Receivable Trade – </b>The Company provides for potentially uncollectible accounts receivable by use of the allowance method.  An
allowance for doubtful accounts is provided based upon a review of the individual accounts outstanding, the Company’s prior
history and the customer credit worthiness.   There were no provisions for uncollectible accounts receivable amounts
at September 30, 2012.  The Company does not typically accrue interest or fees on past due amounts.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Recent
Accounting Pronouncements</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">In
July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment.  The guidance is effective
for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption
is permitted 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
September 30, 2012, that are of significance, or potential significance, to us.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">At
September 30, 2012, the Company had net Marketable Securities - Restricted in the amount of $2,591,800 representing the market
value ($3.74 per share) of 692,996 ORBCOMM Common Shares (NASDAQ: ORBC) received as partial consideration in the May 16, 2011 sale
of StarTrak, net of an estimated 83,306 shares to be returned to ORBCOMM for settlement of obligations under the escrow agreement
more fully discussed in our Form 10-K filed for the fiscal year ended June 30, 2012.  The net cost basis of these shares
at September 30, 2012 and June 30, 2012 is $2.91 per share.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">  The ORBCOMM common shares are registered
under a currently effective ORBCOMM Form S-3 registration statement, however under the terms of the Agreement, the Company is
limited to selling up to 279,600 shares (12 ½% of the total shares received) monthly.  The Company has classified
these securities as available-for-sale at September 30, 2012. The fair value measurement at September 30, 2012 is based upon quoted
prices from similar assets in active markets and thus represents a Level 2 measurement.  The restriction discussed above
is why ORBCOMM’s Common Stock trading price is deemed a Level 2 input.  However, management does not believe the
restriction will interfere with any plans to market their stock holdings.  As such, the trading price is used as fair
value with no further adjustment.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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.  Based upon the change in market value of $3.26 per share at June 30, 2012 to $3.74 per
share at September 30, 2012, the Company recorded an unrealized gain on marketable securities held at September 30, 2012 (presented
in the Condensed Consolidated Statements of Comprehensive Income (Loss)), of $332,600.  The actual gain or loss of securities
sold is reported in the Condensed Consolidated Statements of Operations.  At September 30, 2012, the Accumulated Other
Comprehensive Income of $575,200 was presented in the Shareholders’ Equity section of the Condensed Consolidated Balance
Sheet.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company reviews its marketable equity holdings in ORBCOMM on a regular basis to determine if its investment has experienced an
other-than-temporary decline in fair value.  The Company considers ORBCOMM’s cash position, earnings and revenue
outlook, stock price performance, liquidity and management ownership, among other factors, in its review.  If it is determined
that an other-than- temporary decline exists, the Company writes down the investment to its market value and records the related
write-down as an investment loss in its Statement of Operations.  As of close of market on November 6, 2012, the per
share value of the ORBCOMM Common Stock was $3.39, $.48 per share above the cost basis of $2.91 per share and below the September
30, 2012 valuation of $3.74 per share as presented on the attached balance sheet.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company sold a total of 402,888 shares of ORBCOMM, Inc. Common Stock during the quarter ended September 30, 2012 for total proceeds
of $1,453,200, and an average selling price of approximately $3.61 per share, resulting in a net gain of $280,800.  The
remaining net shares at September 30, 2012 of 692,996 includes approximately 83,300 shares that are still held in escrow.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
following table summarizes the activities related to investment in Marketable Securities for the three months ended September 30,
2012.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">  </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="14" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Marketable Securities</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Accumulated</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Net</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Cost Basis</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Market Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Unrealized</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; width: 19%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Shares</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Per Share</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Total Cost</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Per Share</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Total Value</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Gain</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">(Loss)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">June 30, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">1,095,884</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">      3,189,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">3.26</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     3,572,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      383,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             -</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">  Shares sold</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">    (402,888)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">    (1,172,400)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">692,996</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      2,016,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">3.74</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      575,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             -</td></tr>
</table>
<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> Notes receivable at September 30, 2012 and
June 30, 2012 consist of the following:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 42%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 6%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; width: 23%; font: bold 8pt Times New Roman, Times, Serif; text-indent: 0pt">September 30,</td>
<td style="width: 6%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 23%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">June 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Note receivable - ACC</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          350,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         300,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Note receivable - Symbius</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         100,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">   Notes receivable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          350,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         400,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">      Less long-term</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        (125,000)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       (150,000)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Notes receivable - current</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          225,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         250,000</td></tr>
</table>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Note
receivable – American Citizenship Center, LLC (“ACC</i>”)</b> represents a note due from American Citizenship
Center, LLC (“ACC”), a related party.  The ACC note was executed in a January 6, 2012 transaction, whereby
the Company agreed to provide a $300,000 working capital loan to American Citizenship Center, LLC (“ACC”), a private
company that provides 1) proprietary, automated on-line assistance for eligible immigrants to prepare for and obtain US citizenship;
and 2) assistance in preparing and filing for Deferred Action for Undocumented Youth under a new policy developed by the Department
of Homeland Security designed to allow certain people who did not intentionally violate immigration law to continue to live and
work in the United States.  The Company received a $300,000 Note and a two year warrant to purchase 240,000 membership
units (currently would equate to approximately 20% ownership) of ACC at an exercise price of $1.25 per unit.  The Note
accrues interest at 7.5% (paid quarterly) on the outstanding balance, is payable in monthly installments of $75,000 commencing
on March 31, 2013 and continuing until paid in full, provides for Alanco to have board of director representation and is secured
by all assets and properties of ACC.  At both September 30, 2012 and June 30, 2012 the Company considered the value of
the ACC warrants to be immaterial due to the startup nature of ACC, the limited time until the warrants expire and the significant
premium (39%) of the exercise price compared to the most recent membership unit sales.  At both June 30, 2012 and September
30, 2012, Mr. Robert Kauffman, CEO of Alanco, was a personal investor in the membership units and owned approximately 10% of ACC.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">During
the quarter ended September 30, 2012, Alanco agreed to amend the loan agreement increasing the maximum amount available under the
loan to $400,000.  The additional availability was granted under similar terms and conditions to the original agreement
and was used to open an office in Los Angeles, CA.  In addition to interest, Alanco received an additional warrant to
acquire 60,000 units of ACC at $1.25 per unit.  At September 30, 2012, ACC had a note balance of $350,000 under the $400,000
Alanco commitment.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Note
receivable – Symbius</i></b> represents an amount due from Symbius Financial, Inc. (“Symbius”) under an agreement
whereby the Company agreed to provide a secured line of credit up to $250,000, secured by all Symbius assets and accruing interest
at 7.5%.  The agreement required monthly payments starting in January 2013 of approximately $15,000 with the final payment
for any unpaid amount due July 1, 2014.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><font style="background-color: #ffffff">The
Symbius note relates to a transaction effective April 25, 2012, whereby Alanco purchased </font>300,000 shares of Series A Convertible
Preferred Stock<font style="background-color: #ffffff"> (“Preferred Shares”) issued by </font>Symbius, the developer
and provider of PayEarly loan products.  PayEarly is a payroll loan product offered primarily through payroll provider
partners using PayEarly’s unique software, seamlessly incorporated within the payroll provider’s payroll software platforms
to process the loans directly to the employee.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Series A Convertible Preferred Shares acquired were convertible into 300,000 shares of Symbius Common Stock, or an approximate
24% ownership.  Under terms of the transaction, Alanco paid $150,000 for the Series A Convertible Preferred Shares at
closing and agreed to provide a secured credit line ($100,000 available at Closing) in the form of a term loan that, upon Symbius
achieving certain financial objectives, could reach a maximum of $250,000.  The term loan was secured by all of the assets
of Symbius, bears interest at 7 ½% and was repayable over a period of up to 17 months with payments commencing January 1,
2013.  In addition, Alanco obtained options, exercisable for 12 months from date of close, from major Symbius founders
to acquire up to 250,000 Symbius common shares currently outstanding at $1.50 per share and Symbius warrants, effective for a period
of 24 months from date of close, whereby Alanco can acquire up to 250,000 newly issued shares of common stock at a price of $1.50
per share.  Finally, the parties agreed that Alanco would have the right to acquire, from shareholders, through December
31, 2012 any remaining outstanding Symbius common shares in consideration of Alanco Common Stock at a ratio of 1.5 shares of Alanco
for each share of Symbius and at a ratio of 2 shares of Alanco for each share of Symbius from January 1, 2013 to December 31, 2013.</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">As
a result of a change in Symbius’s business model, effective July 30, 2012, with the approval of Alanco, Symbius repaid the
$100,000 balance due under the term loan, plus interest of $2,847, and repurchased, for $250,000, the 300,000 shares of Series
A Convertible Preferred Shares and all Symbius warrants held by the Company. The transaction resulted in a gain, net of related
legal expense, of approximately $86,800 and terminated the Company's investment in Symbius.</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> <br /></p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Land,
Property and Equipment at September 30, 2012 and June 30, 2012 consist of the following:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 36%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 13%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 13%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 13%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 13%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">June 30, 2012</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Additions</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Transfers</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Sept. 30, 2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Land and improvements</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            1,383,400</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            3,900</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        1,387,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Office furniture and equipment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 48,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            2,600</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             51,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Water disposal facility</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                         -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                  -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,628,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        2,628,700</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Production equipment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 79,500</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        110,400</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">           189,900</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Construction in progress</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            2,056,100</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        707,100</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     (2,628,700)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">           134,500</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Total</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            3,567,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        824,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        4,391,700</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Less accumulation depreciation</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               (43,100)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         (15,400)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            (58,500)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 4px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">  Net book value</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            3,524,600</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        808,600</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        4,333,200</td></tr>
</table>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b> </b></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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. As of September
30, 2012 and 2011, there were no 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
830,500 and 709,400 at September 30, 2012 and 2011, respectively.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 40pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company did not issue any Class A Common Stock during the three months ended September 30, 2012.  Stock-based compensation
recognized during the period was valued at $34,200.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; font: 8pt Times New Roman, Times, Serif; text-indent: 40pt">During the three months ended September 30, 2012, the
Company recognized a comprehensive unrealized gain on marketable securities held in the amount of $191,600, reported in the Condensed
Consolidated Statement of Changes in Shareholders’ Equity, to reflect the increase in value of Marketable Securities –
Restricted held at September 30, 2012. See Note A – Basis of Presentation and Recent Accounting Policies and Pronouncements
for additional discussion of fair value of financial instruments and marketable securities.</p>
<p style="text-align: justify; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 40pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">In
December 2011, the Company announced that its board of directors has authorized a stock repurchase program whereby the Company
could repurchase up to 2 million shares of its outstanding common stock through December of 2012.  As of September 30,
2012 the Company had repurchases under the program totaling 44,200 shares at a cost of approximately $30,300, or $.69 per share,
all of which were purchased prior to July 1, 2012.</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 40pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company has authorized 25,000,000 shares of Preferred Stock of which 5,000,000 shares were allocated to a class known as Series
A Convertible Preferred Stock; 500,000 shares were allocated to Series B Preferred Stock; 500,000 shares were allocated to Series
D Convertible Preferred Stock and 750,000 were allocated to Series E Convertible Preferred Stock.  At September 30, 2012
and June 30, 2012 no shares of preferred stock were outstanding.  See Footnote 16 – Shareholders’ Equity
in the Company’s Form 10-K for the year ended June 30, 2012 for additional discussion of the Company’s authorized and
allocated preferred shares.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><br /></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Notes
payable of $228,000 at September 30, 2012 and June 30, 2012 consists of a $28,000 convertible note, bearing interest at 8% and
convertible into Class A Common Stock at $2.24 per share, issued to the Company’s Chief Financial Officer for additional
working capital (see Form 10-K for the fiscal year ended June 30, 2012 for additional discussion of the outstanding note payable)
and a $200,000 note assumed in the April 2012 purchase of a 160 acre parcel of Colorado land referred to as Indian Mesa.  The
note, due to Indian Mesa, Inc., a previous owner of the land, is secured by the land, is non-interest bearing, and is due on November
15, 2012.  Due to the short term nature of the note, no interest rate was imputed.   During the three
months ended September 30, 2012 the Company accrued approximately $600 in interest expense related to the $28,000 note.  See
Note L – Related Party Transactions for additional discussion of the note payable.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Fair
value – contingent payments at September 30, 2012 and June 30, 2012 relate to AES asset purchase transactions completed
in conjunction with the construction of water disposal facilities for the treatment and disposal of produced water generated by
oil and natural gas producers in Western Colorado.  Details of the contingent payments are as follows: </p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 50%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">September 30,</td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt"> June 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent land payment</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            627,300</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        625,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent purchase price</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            501,900</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        500,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         1,129,200</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">     1,125,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         Less current portion</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            (50,000)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        (50,000)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent payments, long-term</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         1,079,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     1,075,000</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> <br /></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
value – contingent land payment </i></b>of $627,300 at September 30, 2012 represents the net present value of $800,000 of
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) 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.  Interest is being imputed at 3% per annum, increasing the fair value of the contingent land
payment during the three months ended September 30, 2012 by $2,300.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
value – contingent purchase price</i> </b>of $501,900<b> </b>at September 30, 2012<b> </b>represents 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 20 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 the earlier of (i) the recovery of AES’s
capital investment, or (ii) 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.  Interest
is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the three months ended September
30, 2012 by $1,900.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company has recognized estimated asset retirement obligations (closure cost) of $410,000 to remove leasehold improvements, remediate
any pollution issues and return the Deer Creek water disposal property to its natural 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
during the quarter ended September 30, 2012.  Although the Deer Creek water disposal facility is anticipated to remain
operational for a period of up to 30 years, 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.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Asset
retirement obligations are recorded in the period in which they are incurred and reasonably estimable.  Retirement of
assets may involve efforts such as removal of leasehold improvements, contractually required demolition, and other related activities,
depending on the nature and location of the assets.  In identifying asset retirement obligations, the Company considers
identification of legally enforceable obligations, changes in existing law, estimate of potential settlement dates, and the calculation
of an appropriate discount rate to be used in calculating the fair value of the obligation.   The Company performs
an annual review and reassesses its estimates to determine if an adjustment to the value of the asset retirement obligation is
required.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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 $3,500
into a trust that over the expected lease period will build liquid assets to meet the asset retirement obligation.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Sale
of StarTrak Systems, LLC</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">In
May of 2011, the Company sold the operations of StarTrak Systems, LLC (“StarTrak”), a subsidiary comprising the Company’s
Wireless Asset Management segment, to ORBCOMM Inc. (“ORBCOMM”).  (See Form 10-K for the year ended June 30,
2012 for a complete discussion on the sale.)   The following discusses the remaining unresolved contingency items
related to the sale as of September 30, 2012:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Working
Capital Adjustment</i></b> – The Asset Purchase Agreement (“APA”) provided compensation for changes in working
capital between November 30, 2010 and May 31, 2011, the measurement date, determined in accordance with GAAP consistently applied.  If
working capital, defined as current assets minus current liabilities less long-term deferred revenue, increased over the period,
ORBCOMM will pay the value of that increase in cash or additional ORBCOMM Common Stock.  If the defined working capital
decreased during the period, Alanco will return that amount from ORBCOMM Common Stock, valued at $3.001 per share.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">ORBCOMM
delivered to Alanco on August 12, 2011, a written statement of the Current Assets, Current Liabilities and Net Working Capital
Amount pursuant to the terms of the Agreement reflecting a working capital adjustment in favor of ORBCOMM of approximately $700,000.  Under
terms of the Agreement, Alanco submitted a “Notice of Disagreement” of the Net Working Capital Amount submitted by
ORBCOMM.  The Agreement stipulates third party arbitration to resolve disagreements over the working capital adjustment.  In
an attempt to avoid the expense of submitting the disagreement to arbitration prematurely, and in consideration of mutual desires
to resolve the issue, the parties agreed to extend the resolution period to November 30, 2012 and are working to resolve the issue.  The
Company has recorded a reserve in excess of $100,000 for this contingent liability as of September 30, 2012.  However,
based upon the limited documentation received from ORBCOMM to date, we cannot reasonably estimate the likelihood of additional
liability.  Although we believe our reserve to be adequate, the ultimate liability may be materially revised as we continue
to work to resolve the matter.  As of the filing of this Form 10-Q, the parties were reviewing the working capital calculations
and no resolution had been reached.</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><br />
<font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: 9pt"><b><i>   </i></b></font><b><i> Product
Warranty Escrow</i> - </b>The APA required a Product Warranty Escrow account in the amount of 166,611 shares of ORBCOMM common
stock be established to provide for the availability of ORBCOMM shares to pay for half of certain product warranty costs incurred
during the period March 1, 2011 to April 30, 2012, but only to the extent total warranty costs during the period exceed $600,000.  Under
the escrow agreement, shares returned to ORBCOMM in payment of those warranty costs would again be valued at $3.001 per share.  Upon
distribution of the shares to ORBCOMM from the escrow account, the remaining shares would be distributed to Alanco.  To
recognize at September 30, 2012 and June 30, 2012 the potential return of ORBCOMM shares under this agreement, Alanco has reduced
the balance of the Marketable Securities – Restricted by the value of 83,306 shares.  The 83,306 shares reduction
is based on management’s best estimate of the warranty costs at September 30, 2012 and June 30, 2012.  The ultimate
number of shares of ORBCOMM Common Stock to be returned to ORBCOMM in the final settlement is currently undeterminable and may
be in excess of the 83,306 shares currently estimated by the Company.  Resolution of the final distribution under this
escrow agreement has been delayed and is now expected to be completed by November 30, 2012, after measurement period warranty costs
have been analyzed and the actual obligations under escrow agreement determined.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Legal
Proceedings</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company may from time to time be involved in litigation arising from the normal course of business.  As of September 30, 2012,
there was no such litigation pending deemed material by the Company.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Notes
payable at September 30, 2012 included a $28,000 unsecured convertible note, bearing interest at 8% issued to the Company’s
Chief Financial Officer for additional working capital.   See Form 10-K for the fiscal year ended June 30, 2012
for additional discussion of the related party note.  During the three months ended September 30, 2012 the Company accrued
approximately $600 in interest expense related to the note and at September 30, 2012 had a total of $4,600 of accrued but unpaid
interest expense.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">On
October 10, 2011, the Company entered into employment agreements with the Company’s Chief Executive Officer and Chief Financial
Officer.  The agreements have severance provisions and are effective through December 31, 2014.  In addition,
the Company and the parties had agreed to defer certain compensation to future years.  At September 30, 2012, all deferred
amounts had been paid.  Prior to December 31, 2011, the Company also agreed to defer the January 1, 2012 salary reductions
discussed in the agreements due to anticipated increased business activity.  The effective date of the salary reduction
is currently on hold and will be reviewed on a quarterly basis.   Copies of the agreements were attached as exhibits
to the Form 10-K filed for the fiscal year ended June 30, 2011.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
Company agreed to amend the ACC loan agreement on August 14, 2012 increasing the maximum amount available under the loan from $300,000
to $400,000.  ACC had drawn an additional $50,000 of the available line as of September 30, 2012 at which point the note
balance outstanding under the agreement was $350,000.  The additional availability was granted under similar terms and
conditions to the original loan and was to be used to open an office in Los Angeles, CA.  Alanco also received an additional
warrant to acquire 60,000 units of ACC at $1.25 per unit.  See Note 9 – Investments in the Company’s Form
10-K for the fiscal year ended June 30, 2012 for additional discussion of the ACC investment.  In addition to interest,
the Company bills ACC for accounting services provided. At September 30, 2012, other receivables included approximately
$6,100 of interest receivable and $9,000 of billings related to the performance of accounting services.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">Subsequent
to September 30, 2012 and through the date of this report, the Company sold 200,027 shares of ORBCOMM, Inc. (presented at September
30, 2012 as marketable securities) for approximately $792,300, or an average of $3.96 per share.  See Note C - Marketable
Securities – Restricted for additional discussion on the ORBCOMM stock held.</p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">During
the three months ended September 30, 2012, the Company reported net income of $95,900 and for fiscal year ended June 30, 2012,
the Company reported a net loss of ($635,200).  During fiscal 2013, the Company expects to meet its working capital and
other cash requirements with its current 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 to acquire 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.</p>
<p style="text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">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 generally accepted accounting principles 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.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">These
interim condensed consolidated financial statements should be read in conjunction with the Company’s June 30, 2012 Annual
Report filed on Form 10-K.  Interim results are not necessarily indicative of results for a full year.  Certain
reclassifications have been made to conform prior period financials to the presentation in the current reporting period.  The
reclassifications had no effect on net income (loss).</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with generally accepted accounting principles 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.</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="letter-spacing: 9pt"><b><i>   </i></b></font><b><i> Fair
Value of Assets and Liabilities</i></b> – The estimated fair values 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 prices included within Level 1 such as quoted prices
for similar assets or liabilities, quoted prices in markets that are not active 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 carrying amounts of receivables, prepaid expenses, accounts payable, accrued liabilities,
and notes payable approximate fair value given their short-term nature and borrowing rates currently available to the Company for
loans with similar terms and maturities.</p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: justify; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="letter-spacing: 9pt">   </font> The
following are the classes of assets and liabilities measured at fair value on a recurring basis at September 30, 2012, using quoted
prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable
inputs (Level 3):</p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 32%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 1:</td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Quoted Prices</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 2:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">in active</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 3:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Total</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Markets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Other</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">at</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">for Identical</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Observable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Unobservable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">September 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Assets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Marketable Securities - Restricted</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Asset Retirement Obligation</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             410,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          410,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contigent Land Payment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             627,300</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          627,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contingent Purchase Price</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             501,900</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          501,900</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          1,539,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       4,131,000</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Fair
Value of Marketable Securities - Restricted</i></b> – The estimated fair values of Marketable Securities - Restricted are
determined at discrete points in time based on relevant market information.  The Marketable Securities – Restricted
is comprised entirely of ORBCOMM Inc. (“ORBCOMM”) common shares (NASDAQ: ORBC) registered under a currently effective
ORBCOMM Form S-3 registration statement.  Under the terms of the Agreement, the Company is limited to selling up to 279,600
shares (12 ½% of the total shares) per month.  The sale restriction above is why the fair value measurement at
September 30, 2012 of ORBCOMM’s Stock is based on quoted prices for similar assets in active markets that are directly observable
and thus represent a Level 2 fair value measurement.  However, management does not believe the restriction will interfere
with any plans to market their stock holdings.  As such, the trading price is used as fair value with no further adjustment.  The
remaining shares will be revalued at the end of each reporting period with per share market value fluctuations reported as Comprehensive
Income (Loss) for the period.</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"><b><i>Fair Value of Asset Retirement Obligation</i> – </b>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.  Although the water disposal facility is anticipated to remain operational for a period
of up to 30 years, 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 asset retirement obligation
to be a Level 3 fair value measurement.  ASC Topic 820: Fair Value Measurement requires the Company to review the asset
retirement obligation on a recurring basis and record changes in the period incurred.</p>
<p style="font: 8pt Times New Roman, Times, Serif"></p>
<p style="font: 8pt Times New Roman, Times, Serif"><b><i>Fair Value of Contingent Payments </i></b>– 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 of 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 to validate 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.</p>
<p style="font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b>Revenue
Recognition</b> – The Company operates the Deer Creek water disposal facility near Grand Junction, CO and bills customers
(primarily in the oil and gas industry) for produced water received.  The Company recognizes revenue generally at the
time the produced water is received at the Deer Creek facility and billed.  Revenue is generally recognized when all
the following have been met:</p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br /></p>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Persuasive evidence of an arrangement exists;</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">The service has been performed;</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">The customer’s fee is deemed to be determinable and free of contingencies or significant uncertainties; and</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54pt; text-align: right; font: 8pt Times New Roman, Times, Serif">·  </td>
<td style="font: 8pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Collectability is probable.</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="font: 8pt Times New Roman, Times, Serif"><b>Accounts Receivable Trade – </b>The Company provides for potentially
uncollectible accounts receivable by use of the allowance method.  An allowance for doubtful accounts is provided based
upon a review of the individual accounts outstanding, the Company’s prior history and the customer credit worthiness.   There
were no provisions for uncollectible accounts receivable amounts at September 30, 2012.  The Company does not typically
accrue interest or fees on past due amounts.</p>
<p style="font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b><i>Recent
Accounting Pronouncements</i></b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">In
July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment.  The guidance is effective
for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption
is permitted 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
September 30, 2012, that are of significance, or potential significance, to us.</p>
<p style="font: 8pt Times New Roman, Times, Serif">  </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 32%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 1:</td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 14%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Quoted Prices</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 2:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">in active</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Level 3:</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Total</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Markets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Other</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Significant</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">at</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">for Identical</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Observable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Unobservable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">September 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Assets</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Inputs</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: italic 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Marketable Securities - Restricted</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,591,800</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Asset Retirement Obligation</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             410,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          410,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contigent Land Payment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             627,300</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          627,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Contingent Purchase Price</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             501,900</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          501,900</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                       -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          1,539,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       4,131,000</td></tr>
</table>
<p style="text-align: center; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 16%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Weighted</td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 3%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 4%; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Weighted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Average</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Average</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Remaining</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Aggregate</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Aggregate</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Exercise Price</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Contractual</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Fair</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Instrinsic</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Shares</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Per Share</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Term (1)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Outstanding July 1, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">674,100</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$0.80</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">4.58</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       217,100</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Granted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">               -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercised</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">               -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(3)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Forfeited or expired</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               -</td>
<td style="padding-bottom: 2px; text-align: right; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">-</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">-</td>
<td style="padding-bottom: 2px; text-align: right; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                 -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Outstanding September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">674,100</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">$0.80</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">4.33</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">217,100</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercisable September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">229,600</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">$0.90</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">3.94</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">79,400</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">              -</td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(1)</td>
<td colspan="5" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Remaining contractual term presented in years.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(2)</td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">awards and the closing price of the Company's common stock as of September 30, 2012, for those awards that</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="7" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">have an exercise price below the closing price as of September 30, 2012 of $.57.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">(3)</td>
<td colspan="11" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">This value is calculated as the difference between the exercise price and the market price of the stock on the</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">date of exercise.</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="text-align: left; text-indent: 36pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 7%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 34%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 12%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 7%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Weighted</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Number of</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Average</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Shares</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Exercise Price</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Warrants Outstanding, June 30, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">150,400</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">6.24</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Granted</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Exercised</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                       -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">-</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Canceled/Expired</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               (8,600)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">4.00</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="3" style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Warrants Outstanding, September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">141,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">6.38</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"><br />
</p>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">  </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td colspan="14" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Marketable Securities</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Accumulated</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Net</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Cost Basis</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Market Value</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Unrealized</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; width: 19%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Shares</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Per Share</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Total Cost</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Per Share</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Total Value</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">Gain</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 3%"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; width: 9%; text-align: center; text-indent: 0pt">(Loss)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">June 30, 2012</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">1,095,884</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">      3,189,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">3.26</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     3,572,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      383,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             -</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">  Shares sold</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">    (402,888)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">    (1,172,400)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">September 30, 2012</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">692,996</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">2.91</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      2,016,600</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">3.74</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     2,591,800</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">      575,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">             -</td></tr>
</table>
<p style="text-align: left; text-indent: 0pt; margin-right: 0; margin-left: 36pt; font: 8pt Times New Roman, Times, Serif">  </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 42%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 6%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: center; width: 23%; font: bold 8pt Times New Roman, Times, Serif; text-indent: 0pt">September 30,</td>
<td style="width: 6%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 23%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">June 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Note receivable - ACC</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          350,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         300,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Note receivable - Symbius</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         100,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">   Notes receivable</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">          350,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         400,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">      Less long-term</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        (125,000)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">       (150,000)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Notes receivable - current</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">          225,000</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         250,000</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; width: 2%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 8%; text-align: center; text-indent: 0pt">June 30, 2012</td>
<td style="padding-bottom: 2px; width: 2%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 8%; text-align: center; text-indent: 0pt">Additions</td>
<td style="padding-bottom: 2px; width: 2%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 8%; text-align: center; text-indent: 0pt">Transfers</td>
<td style="padding-bottom: 2px; width: 2%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; width: 8%; text-align: center; text-indent: 0pt">Sept. 30, 2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Land and improvements</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            1,383,400</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            3,900</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        1,387,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Office furniture and equipment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 48,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            2,600</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">             51,300</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Water disposal facility</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                         -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                  -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">       2,628,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        2,628,700</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Production equipment</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                 79,500</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        110,400</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">           189,900</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Construction in progress</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            2,056,100</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        707,100</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     (2,628,700)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">           134,500</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Total</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            3,567,700</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        824,000</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">                    -</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        4,391,700</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Less accumulation depreciation</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">               (43,100)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         (15,400)</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            (58,500)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 4px; text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">  Net book value</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            3,524,600</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        808,600</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">                    -</td>
<td style="text-align: right; padding-bottom: 4px; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        4,333,200</td></tr>
</table>
<p style="text-align: justify; text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif"><b> </b></p>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 50%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">September 30,</td>
<td style="width: 5%; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="width: 20%; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt"> June 30,</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td>
<td style="padding-bottom: 2px; font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: bold 8pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">2012</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent land payment</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">            627,300</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">        625,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent purchase price</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            501,900</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        500,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         1,129,200</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">     1,125,000</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">         Less current portion</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">            (50,000)</td>
<td style="font: 8pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">        (50,000)</td></tr>
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="text-align: left; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">Fair value - contingent payments, long-term</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">         1,079,200</td>
<td style="text-align: right; text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> $</td>
<td style="border-bottom: black 4px double; font: 8pt Times New Roman, Times, Serif; text-align: right; text-indent: 0pt">     1,075,000</td></tr>
</table>
<p style="text-indent: 0pt; font: 8pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin-right: 0; margin-left: 0; font: 8pt Times New Roman, Times, Serif">  </p>
501900
501900
627300
627300
4131000
2591800
1539200
674100
674100
229600
0.80
0.80
0.90
P4Y7M5D
P4Y4M
P3Y11M17D
P0Y0M0D
P0Y0M0D
P0Y0M0D
150400
-8600
141800
6.24
4.00
6.38
1079200
1075000
-50000
-50000
1129200
1125000
501900
500000
627300
625000
824000
3900
2600
110400
707100
2628700
-2628700
-58500
-43100
1,095,884
2.91
3,189,000
3.26
3,572,600
383,600
-
(402,888)
2.91
(1,172,400)
692,996
2.91
2,016,600
3.74
2,591,800
575,200
-
84500
4200
-86800
100000
50000
248900
4000
30500
217100
217100
<font style="display: inline; font: 10pt Times New Roman">In
December 2011, the Company announced that its board of directors has
authorized a stock repurchase program whereby the Company could
repurchase up to 2 million shares of its outstanding common stock
through December of 2012. As of September 30, 2012 the
Company had repurchases under the program totaling 44,200 shares at a
cost of approximately $30,300, or $.69 per share, all of which were
purchased prior to July 1, 2012.</font>
2300
1900
<font style="display: inline; font: 10pt Times New Roman">The
Company has recorded a reserve in excess of $100,000 for this contingent
liability as of September 30, 2012</font>
83306
600
4600
50000
350000
6100
9000
30500
5010300
4333200
3524600
2591800
2591800
410000
410000
79400
50000
50000