Alanco Expects New Prison Rape Elimination Act to Accelerate Adoption of its TSI PRISM Tracking Technology.

Business Editors

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Aug. 21, 2003

New Federal Law to Provide $40 Million Annually

to States for Matching Grant Funds

Alanco Technologies Inc. (NASDAQ: ALAN) said today it expects the Prison Rape Elimination Act of 2003 to accelerate adoption of its TSI PRISM(TM) tracking technology in the nation's prisons and announced a new initiative to assist states to deploy its unique technology by accessing federal matching grants available through the new act.

Unanimously passed by the U.S. House and Senate earlier this month, and expected to be signed into law by President Bush shortly, the new legislation will create national standards for the detection and prevention of prison rape, and provide state prison systems with $40.0 million annually in federal matching grants to combat the problem.

The company said it was "uniquely qualified" to respond to this new legislative mandate with proven technology currently operating in California, Michigan and Illinois, which can significantly reduce the incidence of rape in our nation's prisons.

Utilizing wrist-worn inmate transmitters and belt-worn officer safety units, Alanco's TSI PRISM tracking system tracks and records the location of everyone in a prison facility every second of every day, providing a unique historical database for post-incident investigations and disciplinary proceedings. Proprietary anti-tampering features automatically detect and record any attempt to remove transmitters worn by inmates and staff. Inmates quickly learn that they are being continuously monitored and can no longer hide their activities nor depend on a "silent" inmate

population to cover their prohibited behavior.

Alanco Chairman and Chief Executive Officer Robert R. Kauffman, commented, "The new legislation mandates that prison operators are going to have to act decisively to combat the problem of prison rape, including sexual abuse of female inmates by prison staff."

Kauffman said that he believes most state corrections officials "already understand that adopting Alanco's TSI PRISM system will not only greatly reduce the incidence of rape, but also significantly reduce the high direct and indirect costs of this pervasive problem. Up to now, they haven't had a clear mandate to take action, nor the money. This new legislation provides both."

Kauffman added, "Federal matching grants of $40 million a year computes to about $80 million in new rape prevention expenditures, which we expect to result in a very significant number of new TSI PRISM prison installations annually, providing much safer facilities where rapists could no longer act with anonymity."

According to Greg M. Oester, president of Alanco's TSI PRISM tracking division, "Data from a two-year pilot test in the California prison system indicates that the TSI PRISM system reduced incidents of inmate violence by 65 percent per year. We believe that over time our system fundamentally changes the prevalent inmate culture and behavior, and the incidence reduction results will be significantly greater than the 65 percent evidenced in the pilot test results."

Oester added, "We are also working with a number of states on TSI PRISM-based solutions for the problem of sexual abuse of inmates by staff in women's prisons. Several of these states are facing numerous lawsuits filed by inmates against staff, with escalating legal costs adding to the related impacts on staff morale and safety, medical expenses, etc. TSI PRISM provides prison operators -- including the nation's women's facilities -- with a unique, comprehensive, preventative solution to prison rape and sexual abuse."

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 and California, and a new 2,000-bed medium-security prison in Illinois. 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.