Alanco Updates TSI PRISM(TM) Asia Strategy; New Local Alliances Resulting In Numerous Opportunities.

SCOTTSDALE, Ariz. -- Alanco Technologies Inc. (NASDAQ: ALAN), developer of the TSI PRISM RFID inmate tracking system for the corrections industry, announced today a redirected marketing strategy for the Asia region to replace the company's previously announced plan to be exclusively represented by the NEC Corp. (letter of intent dated May 27, 2005), as the parties were unable to reach final agreement. The new strategy is focused upon developing a series of individual country alliances with local systems integration firms experienced in the corrections market.

The company said that numerous potential opportunities have already resulted from implementation of the new strategy in Asia and Australia, as follows:

In Japan, Alanco will partner with AeroScout Japan, jointly owned by San Mateo-based AeroScout Inc., and local interests, to exclusively represent TSI PRISM in Japan. The initial project for Alanco/AeroScout Japan will be a November 2005 tender for the new 2,000 inmate Shiname Prison in central Japan.

In Malaysia, AMG Infotech, Ltd. and Alanco are teaming to pursue two prison projects, a 700 inmate prison at Banda Hilir Melaka in Malaysia, and the 500 inmate Brunie facility in Borneo. AMG also represented TSI PRISM technology at the annual Security Conference in Malaysia Sept. 10-25, 2005.

In Taiwan, Summit Automation Co., Ltd., is representing TSI PRISM, and local corrections officials have requested a preliminary proposal for a new 2,000-inmate prison currently under construction.

In Australia, the ACT (Australian Capital Territory) Department of Corrections is considering a TSI PRISM installation for a 375-bed multilevel prison opening in Canberra in late 2006. An ACT DOC technology evaluation team is scheduled to tour TSI PRISM installations in Illinois and Michigan on Nov. 7-9, 2005. NEC Australia is also involved in this project as the prospective local systems integrator.

In New Zealand, Alanco is working with Honeywell, New Zealand, which has a contract with the New Zealand Ministry of Justice to introduce new technologies into the corrections system.

In Thailand, Alanco and Japan NTT Data have introduced TSI PRISM technology to corrections officials and are developing a preliminary proposal for a major new prison complex with several thousand inmates.

In China, Shenzhen Industry Co., Ltd. introduced TSI PRISM technology to prison authorities in late 2004 and is now pursuing a 1,000-bed pilot installation within a major 10,000-bed prison facility.

Robert R. Kauffman, Alanco's chairman and chief executive officer, commented, "While disappointed in being unable to reach final agreement with NEC on exclusive Asian marketing representation, I believe that direct engagement with local partners will ultimately provide a quicker and more efficient route to achieve our long-term Asian market objectives. Our early results with the new strategy are very encouraging with seven new Asian region partnerships now under active development."

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.