Alanco Awarded Virginia TSI Prism(TM) Contract.

SCOTTSDALE, Ariz. -- Alanco Technologies Inc. (NASDAQ: ALAN), developer of the TSI PRISM RFID officer safety and inmate tracking system for the corrections industry, today announced award of a contract from the Virginia Department of Corrections (VDOC) for a TSI PRISM system to be installed at the Marion Correctional Treatment Center, a 230-bed psychiatric facility.

The VDOC has elected to self-install the TSI PRISM system, with Alanco providing system hardware, software and services valued at approximately $400,000. The Marion Center TSI PRISM installation is intended as a pilot project to evaluate system performance for future utilization in additional VDOC facilities. The VDOC operates 42 correctional facilities housing approximately 34,000 inmates.

Today's announcement completes a long procurement cycle which began in April 2005, with public notice of Virginia's Marion Center Request for Proposal (RFP), followed by the VDOC's selection of Alanco's TSI PRISM in December 2005 (Alanco news release of Dec. 8, 2005).

Robert R. Kauffman, Alanco's chairman and chief executive officer, commented, "The Virginia contract, although small, is representative of a growing backlog of new projects which have been very slowly progressing through the procurement cycle, a significant number of which we expect to finally land in the next several months."

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 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. TSI PRISM is currently utilized in prisons in Michigan, California, Illinois and Ohio. The company also participates in the data storage industry through two subsidiary companies: Arraid Inc., a manufacturer of proprietary storage products to upgrade older "legacy" computer systems; and Excel/Meridian Data Inc., a manufacturer of Network Attached Storage (NAS) systems.

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.