Alanco Adopts Shareholder Rights Plan.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--May 25, 2004

Alanco Technologies Inc. (NASDAQ: ALAN), today announced the adoption of a stockholder rights plan designed to ensure that all Alanco stockholders receive fair and equal treatment in the event of any third party effort to acquire or gain control of the company.

The Alanco Shareholder Rights Plan authorizes the distribution of one Right for each share of the company's outstanding Class A Common Stock. Until the occurrence of specified events, the Rights will not be exercisable and no certificates for the Rights will be sent to stockholders. Upon the occurrence of such events, each Right will entitle the holder (other than the party seeking to acquire control of the company) to acquire shares of the Common Stock of the company at a significant discount from market value. The Rights may be terminated by Alanco's board at any time prior to the date they become exercisable; thereafter, they may be redeemed for a specified period of time at a nominal price.

Robert R. Kauffman, chairman and chief executive officer of Alanco, said, "The Alanco Shareholder Rights Plan will encourage any entity seeking to acquire or gain control of the company to negotiate with the board of directors and will allow the board to continue to represent shareholders in a manner which will seek maximization of stockholder value."

Alanco Technologies Inc., headquartered in Scottsdale, Ariz., is the developer of the TSI PRISM RFID continuous tracking system for the corrections industry, which tracks the location and movement of inmates and officers, resulting in significant prison operating cost reductions and dramatically enhanced officer safety and facility security. Utilizing RFID (Radio Frequency Identification) tracking technology with proprietary software and patented hardware components, TSI PRISM provides real-time inmate and officer identification, location and tracking capabilities both indoors and out. The TSI PRISM system is currently utilized in prisons in Michigan, California and Illinois.

EXCEPT FOR HISTORICAL INFORMATION, THE STATEMENTS CONTAINED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ALL SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO, AND ARE QUALIFIED BY, RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THOSE STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, REDUCED DEMAND FOR INFORMATION TECHNOLOGY EQUIPMENT; COMPETITIVE PRICING AND DIFFICULTY MANAGING PRODUCT COSTS; DEVELOPMENT OF NEW TECHNOLOGIES WHICH MAKE THE COMPANY'S PRODUCTS OBSOLETE; RAPID INDUSTRY CHANGES; FAILURE OF AN ACQUIRED BUSINESS TO FURTHER THE COMPANY'S STRATEGIES; THE ABILITY TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH LENDERS AND TO REMAIN IN COMPLIANCE WITH FINANCIAL LOAN COVENANTS AND OTHER REQUIREMENTS UNDER CURRENT BANKING AGREEMENTS; AND THE ABILITY TO SECURE AND MAINTAIN KEY CONTRACTS AND RELATIONSHIPS.