Alanco Updates FY 2004 Outlook.

Business Editors

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Feb. 26, 2004

Alanco Technologies Inc. (NASDAQ: ALAN), developer of the TSI PRISM RFID inmate tracking system for the corrections industry, today provided an updated outlook for its fiscal year 2004, including the status of outstanding RFPs (requests for proposals) in Ohio and Michigan.

In Ohio, an RFP was issued Feb. 25, 2004, to install an inmate tracking system at the Ross Correctional Facility, with a response date of March 19, 2004. In Michigan, the RFP to install an inmate tracking system at its Western Wayne Women's Correctional Facility was withdrawn due to landfill-related environmental concerns, which resulted in a decision to close the facility. However, Michigan indicated it will issue a new RFP in the near future for the Ypsilanti facility where the Western Wayne inmates are to be relocated.

Robert R. Kauffman, Alanco chairman and CEO, commented on the FY 2004 outlook, "Our TSI PRISM business development program will continue to be dependent upon state procurement timelines, with each state exhibiting an individualized procurement process and unique political/budgetary dynamics. However, significant progress has been achieved on numerous state opportunities which have been pending for months, and we can offer the following outlook update: Within fiscal year 2004 we anticipate new contract awards in Ohio, Missouri, Florida, Colorado, and Illinois. Longer-term opportunities are also progressing in California, Texas, Tennessee, New York, Arizona and with the U.S. Army (Ft. Leavenworth). The total value of this prospective new business remains in the range of $15 million, but the timeline in several opportunities has extended beyond our current fiscal year, which ends June 30, 2004. We remain confident that 2004 will be the breakthrough year for broad adoption of our TSI PRISM technology in the corrections industry, providing unique, cost-effective inmate management and officer safety.

"We are also pleased with the completed turnaround in our Data Storage business segment, which finally recorded its first quarterly operating profit in over two years of $64,000. Significant future profit growth is anticipated for this business segment."

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.