America Service Group Inc. Announces Plan for Strategic Alliance between Prison Health Services, Inc. and Maxor National Pharmacy Services Corporation.

BRENTWOOD, Tenn. -- America Service Group Inc. (NASDAQ:ASGR) announced today that a non-binding proposal letter has been executed for Maxor National Pharmacy Services Corporation (Maxor) to acquire, at book value, certain assets of Secure Pharmacy Plus, LLC (SPP), an affiliate of the Company. As part of this proposed transaction, Maxor would become the exclusive provider of pharmaceuticals and medical supplies to Prison Health Services, Inc. (PHS), the principal operating subsidiary of the Company.

Maxor has a national reputation for excellence in correctional pharmacy services. PHS believes Maxor has the resources and client base to further enhance the market-leading technological assets acquired from SPP and to provide SPP employees with continuing opportunities for growth within a fully-integrated pharmacy services company. Maxor has indicated that it plans to maintain operations at the existing offices of SPP and offer continued employment to its current staff.

Through its proposed alliance with Maxor, PHS expects to continue to provide clients with competitively-priced medications, high service levels and advanced clinical information. The objectives of the proposed strategic alliance are to combine and improve the best practices in correctional pharmacy and healthcare in order to provide patients with outstanding medical care and clients with the best value proposition in this challenging public service sector.

The Company and Maxor are currently targeting the closing of this transaction effective March 31, 2007. The final execution of a definitive asset purchase agreement, long-term supply contract and closing of the transaction is subject to final negotiations of the agreements, completion of due diligence and final approval of the respective companies' boards of directors, among other things.

America Service Group Inc., based in Brentwood, Tennessee, is a leading provider of correctional healthcare services in the United States. America Service Group Inc., through its subsidiaries, provides a wide range of healthcare and pharmacy programs to government agencies for the medical care of inmates. More information about America Service Group can be found on the Company's website at www.asgr.com or at www.prisonhealthmedia.com.

Maxor National Pharmacy Services Corporation is a Texas-based company located in Amarillo, Texas. Maxor operates, manages and consults inpatient, outpatient, mail order, specialty and correctional pharmacies throughout the United States. More information about Maxor National Pharmacy Services Corporation can be found on its website at www.maxor.com.

Cautionary Statement

This press release contains "forward-looking" statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements in this release that are not historical facts, including statements about the Company's or management's beliefs and expectations, constitute forward-looking statements and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

* the risk that government entities (including the Company's government customers) may bring enforcement actions against, seek additional refunds from, or impose penalties on, the Company or its subsidiaries as a result of the matters recently investigated by the Audit Committee or the previous restatement of the Company's financial results;

* the risks arising from shareholder litigation as a result of the matters recently investigated by the Audit Committee or the previous restatement of the Company's financial results;

* risks associated with the possibility that we may be unable to satisfy covenants under our credit facility;

* risks arising from potential weaknesses or deficiencies in our internal control over financial reporting;

* risks arising from the possibility that we may be unable to collect accounts receivable;

* the Company's ability to retain existing client contracts and obtain new contracts at acceptable pricing levels;

* whether or not government agencies continue to privatize correctional healthcare services;

* the possible effect of adverse publicity on the Company's business;

* increased competition for new contracts and renewals of existing contracts;

* the Company's ability to execute its expansion strategies;

* the Company's ability to limit its exposure for catastrophic illnesses and injuries in excess of amounts covered under contracts or insurance coverage;

* the outcome or adverse development of pending litigation, including professional liability litigation;

* risks arising from the possibility that the potential sale of certain assets of Secure Pharmacy Plus either does not occur or does not occur on the terms described in this release;

* risks arising from the possibility that the potential acquirer of certain assets of Secure Pharmacy Plus cannot provide pharmaceuticals or related services at either a cost or service level sufficient to allow the Company to meet its contractual obligations with its customers without negatively impacting financial performance;

* risks arising from the possibility of continued financial underperformance by Secure Pharmacy Plus;

* the Company's dependence on key personnel; and

* the Company's determination whether to repurchase shares under its stock repurchase program.

A discussion of important factors and assumptions regarding certain statements and risks involved in an investment in the Company is contained in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release. The Company assumes no obligations to update or revise them or provide reasons why actual results may differ.