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Alanco Investor Relations
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Equity Communications
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Ira Weingarten
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Source Capital Initiates Research Coverage of Alanco


Report Features New StarTrak Acquisition

(Scottsdale, AZ – June 29, 2006) - Alanco Technologies, Inc. (NASDAQ: ALAN) is pleased to announce that Source Capital Group, Inc. has initiated research coverage of Alanco with a “BUY” rating and a 12-month price target of $3.75 per share. The report by Source Capital Vice President of Research, Joe Blankenship, features an in-depth look at StarTrak Systems, LLC, which Blankenship called a “transforming acquisition.” The Alanco acquisition of StarTrak is scheduled to close on June 30, 2006.

The Source Capital research report covering Alanco is available through Mr. Joe Blankenship at 480-368-1488 or jblankenship@sourcegrp.com. The report will also be available within several days on Alanco’s website, www.alanco.com. The Company does not endorse any analyst’s views, including those of Mr. Blankenship and Source Capital, and the distribution of any such report should not be viewed as indicating that the Company has agreed with the contents and conclusions in the report.

Source Capital Group, Inc., founded in 1994 and headquartered in Westport, CT, is an NASD Broker Dealer with more than 100 registered representatives and seven branch offices. The company specializes in providing high-quality independent investment services, removed from the typical Wall Street environment, to individuals and institutions.

Alanco Technologies, Inc. (NASDAQ: ALAN), headquartered in Scottsdale, Arizona, 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, Ohio, and Missouri. 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.


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