TSI PRISM Technology Significantly Reduces Prison Operating Costs.

Business Editors

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Dec. 17, 2002

New Cost Reduction Planning Guide Details Operational Cost Reductions

for Prisons Utilizing the TSI PRISM(TM) Wireless Tracking System

Alanco Technologies Inc. (NASDAQ: ALAN) announced today the completion of a comprehensive Cost Reduction Planning Guide (CRPG) to assist prison administrators in calculating operating cost reductions made possible by Alanco's TSI PRISM(TM) system.

The CRPG was developed after two years of TSI PRISM testing in a California state prison. During the testing period, TSI PRISM provided early warning of escape attempts, and inmate-on-inmate violence dropped over 65 percent per year. Data collected during the testing period was analyzed by a team of corrections professionals led by Larry Small of LSA Correctional Consultants. Small has had a distinguished career, spanning more than 28 years with the California Department of Corrections and was the principal design manager on several major California prison sites including Pelican Bay State Prison, Corcoran State Prison and the Richard J. Donovan Correctional facility. In addition, Small served as a member of the California Department of Corrections Technology Transfer Committee for six years.

Analysis of the testing data revealed that the TSI PRISM system technology can provide a dramatic reduction in prison operating costs in the areas of staff overtime, medical expense, investigations, litigation costs resulting from injury or sexual abuse, workers' compensation and inmate food costs. Study findings were then quantified and incorporated into the Cost Reduction Planning Guide. Potential savings range from $700,000 to $1 million for a typical 2,000-bed facility, providing a return on investment (ROI) of 25 to 40 percent per year.

Small said, "The California experience clearly demonstrates the potential of the TSI PRISM(TM) system to make our nation's prisons not only a much safer place for both staff and inmates, but also significantly reduce operating costs."

TSI subsidiary President Greg Oester stated, "One of the initial challenges in introducing revolutionary technology like TSI PRISM to a professionally managed industry is the need to clearly articulate various potentials for savings in some rather subjective areas. The outstanding work done by the industry professionals who sifted through over two years of data to create the Cost Reduction Planning Guide is invaluable to us as we work for early adaptation of the TSI PRISM system as the industry standard. We now have a document, written in a format that experienced corrections professionals are familiar with, that shows how this new technology can reduce costs in many areas that otherwise might not be recognized."

Alanco Technologies Inc. is a provider of advanced information technology solutions with a strategic focus upon RFID (Radio Frequency Identification) tracking technology through the 2002 acquisition of Technology Systems International Inc. (TSI). TSI has developed a state-of-the-art wireless RFID tracking technology featuring proprietary software and patented hardware components, marketed as the TSI PRISM system. The TSI PRISM system is utilized for area security management and personnel monitoring with present market focus on the corrections industry, where the system provides continuous, real-time prison inmate and officer identification and tracking capabilities indoors and out. TSI PRISM enhances staff safety and facility security; deters inmate violence; and provides the correctional industry with operational cost reductions and unique inmate management capabilities. Alanco 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.