Edgar Filing: ALANCO TECHNOLOGIES INC

ALANCO TECHNOLOGIES, INC.
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010

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PROXY STATEMENT

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held December 22, 2003

TO THE SHAREHOLDERS OF ALANCO TECHNOLOGIES, INC.

NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Alanco
Technologies, Inc., an Arizona corporation ("Alanco" or the "Company"), will be
held at 15575 North 83rd Way, Suite 3, Scottsdale, Arizona 85260, on December
22, 2003, at 10:00 a.m., Mountain Standard Time, and at any adjournment or
postponement thereof, for the purpose of considering and acting upon the
following Proposals:

Proposal No. 1 ELECTION OF DIRECTORS.

Proposal No. 2 APPROVAL OF A PROPOSAL TO AUTHORIZE THE BOARD OF
DIRECTORS, ONLY IF NECESSARY, TO REVERSE SPLIT THE
COMPANY'S OUTSTANDING CLASS A COMMON STOCK ON A BASIS NOT
TO EXCEED ONE SHARE OF CLASS A COMMON STOCK FOR UP TO TEN
SHARES OUTSTANDING. IF THE BOARD OF DIRECTORS HAS NOT
EFFECTED THE ACTION CONTEMPLATED HEREUNDER BY DECEMBER 31,
2006, THIS AUTHORIZATION WILL CEASE.

Holders of the outstanding Common Stock and Preferred Stock of the Company of
record at the close of business on October 27, 2003, will be entitled to notice
of and to vote at the Meeting or at any adjournment or postponement thereof.

All shareholders, whether or not they expect to attend the Annual Meeting of
Shareholders in person, are urged to sign and date the enclosed Proxy and return
it promptly in the enclosed postage-paid envelope which requires no additional
postage if mailed in the United States. The giving of a proxy will not affect
your right to vote in person if you attend the Meeting.

BY ORDER OF THE BOARD OF DIRECTORS.

Scottsdale, Arizona ADELE L. MACKINTOSH
November 7, 2003

ALANCO TECHNOLOGIES, INC.
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010
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PROXY STATEMENT

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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 22, 2003

GENERAL INFORMATION

The enclosed Proxy is solicited by and on behalf of the Board of Directors of
Alanco Technologies, Inc., an Arizona corporation (the "Company"), for use at
the Company's Annual Meeting of Shareholders to be held at 15575 North 83rd Way,
Suite 3, Scottsdale, Arizona 85260, on the 22nd day of December, 2003, at 10:00
a.m., Mountain Standard Time, and at any adjournment or postponement thereof. It
is anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or before November 21, 2003.

The expense of soliciting proxies, including the cost of preparing, assembling
and mailing this proxy material to shareholders, will be borne by the Company.
It is anticipated that solicitations of proxies for the Meeting will be made
only by use of the mails; however, the Company may use the services of its
Directors, Officers and employees to solicit proxies personally or by telephone
without additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.

Shares not voting as a result of a proxy not marked or marked to abstain will be
counted as part of total shares voting in order to determine whether or not a
quorum has been achieved at the Meeting. Shares registered in the name of a
broker-dealer or similar institution for beneficial owners to whom the
broker-dealer distributed notice of the Annual Meeting and proxy information and
which such beneficial owners have not returned proxies or otherwise instructed
the broker-dealer as to voting of their shares, will be counted as part of the
total shares voting in order to determine whether or not a quorum has been
achieved at the Meeting.

All shares represented by valid proxies will be voted in accordance therewith at
the Meeting unless such proxies have previously been revoked. Proxies may be
revoked at any time prior to the time they are voted by: (a) delivering to the
Secretary of the Company a written instrument of revocation bearing a date later
than the date of the proxy; or (b) duly executing and delivering to the
Secretary a subsequent proxy relating to the same shares; or (c) attending the
meeting and voting your proxy in person (although attendance at the Meeting will
not in and of itself constitute revocation of a proxy.)

The Company's Annual Report to Shareholders for the fiscal year ended June 30,
2003, has been previously mailed or is being mailed simultaneously to the
Company's shareholders, but does not constitute part of these proxy soliciting
materials.

SHARES OUTSTANDING AND VOTING RIGHTS

Voting rights are vested in the holders of the Company's Common Stock and
Preferred Stock. Only shareholders of record at the close of business on October
27, 2003 are entitled to notice of and to vote at the Meeting or any adjournment
or postponement thereof. As of October 27, 2003, the Company had 15,261,900
shares of Class A Common Stock outstanding, no shares of Class B Common Stock
outstanding, 2,509,426 shares of Series A Convertible Preferred Stock
outstanding and 57,255 shares of Series B Convertible Preferred Stock
outstanding. Each Class A Common share is entitled to one vote, each Series A
Convertible Preferred share is entitled to three votes (the equivalent number of
common shares into which the Series A Convertible Preferred Stock is
convertible), and each Series B Convertible Preferred share is entitled to
thirteen votes (the equivalent number of common shares into which the Series B
Convertible Preferred Stock is convertible). If the number of common shares into
which the preferred stock is convertible (the "common stock equivalent") is
considered, the total shares eligible to vote, including the common stock and
the common stock equivalent, on the record date are 23,534,493 shares, each of

which is entitled to one vote on all matters to be voted upon at the Meeting,
including the election of Directors. No fractional shares are presently
outstanding. A majority of the Company's outstanding voting stock represented in
person or by proxy shall constitute a quorum at the Meeting. The affirmative
vote of a majority of the votes cast, providing a quorum is present, is
necessary to approve each proposal.

Each shareholder present, either in person or by proxy, will have cumulative
voting rights with respect to the election of Directors. Under cumulative
voting, each shareholder is entitled to as many votes as is equal to the number
of shares of Common Stock (or common stock equivalent) of the Company held by
the shareholder on the Record Date multiplied by the number of directors to be
elected, and such votes may be cast for any single nominee or divided among two
or more nominees. The seven nominees, or such fewer number of nominees as may
stand for election, receiving the highest number of votes will be elected to the
Board of Directors. There are no conditions precedent to the exercise of
cumulative voting rights. Unless otherwise instructed in any proxy, the persons
named in the form of proxy which accompanies this Proxy Statement (the "Proxy
Holders") will vote the proxies received by them for the Company's seven
nominees set forth in "Election of Directors" below. If additional persons are
nominated for election as directors, the Proxy Holders intend, unless otherwise
instructed in any proxy, to vote all proxies received by them in such manner in
accordance with cumulative voting as will assure the election of as many of the
Company's nominees as possible, and, in such event, the specific nominees for
whom votes will be cast will be determined by the Proxy Holders. If authority to
vote for any nominee of the Company is withheld in any proxy, the Proxy Holders
intend, unless otherwise instructed in such proxy, to vote the shares
represented by such proxy, in their discretion, cumulatively for one or more of
the other nominees of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth certain information with respect to each
shareholder known by Alanco to be the beneficial owner of more than 5% of the
outstanding Alanco common stock or common stock equivalent as of October 27,
2003. Information regarding the stock ownership of Robert R. Kauffman, Alanco
Chairman and Chief Executive Officer, and Donald E. Anderson, Alanco Director,
is also shown in the table in the following section, Current Directors and
Executive Officers.

Five Percent Owners

Class A Total Total
Common Common Total Stock,
Shares Series A Stock Stock Options &
Owned and Equivalent Exercisable Owned Warrants
Class A Percent Series B Total Owned Stock and Percent of
Common of Preferred Common Percent Options Options Common
Shares Class Shares Stock of and and Equivalent
Owned (8) Owned Equivalent Class (8) Warrants Warrants Class (9)
--------- -------- ------------ ----------- ----------- --------- --------- ----------
Technology Systems 6,000,000 39.31% 0 6,000,000 25.49% 0 6,000,000 25.49%
International, Inc. (1)
Donald E. Anderson (2) 0 -- 808,161 (6) 2,424,483 10.30% 2,018,161 4,442,644 17.39%
Robert R. Kauffman (3) 112,000 0.73% 500,000 (6) 1,612,000 6.85% 2,505,000 4,117,000 15.81%
Rhino Fund LLLP (4) 0 -- 265,000 (6) 795,000 3.38% 510,000 1,305,000 5.43%
M. Jamil Akhtar, MD (5) 0 -- 57,255 (7) 744,315 3.16% 500,000 1,244,315 5.18%

(1) Technology Systems International, Inc., a Nevada corporation, (TSIN) is a
privately owned entity with no person or entity owning in excess of 25% of
the outstanding shares. The only TSIN shareholder that we are aware of who
beneficially controls 19% or more of the outstanding shares of TSIN, who
could potentially own more than 5% of the outstanding Alanco common stock
equivalent, is Richard C. Jones, who, to the best of our knowledge, owns
5,301,826 TSIN shares, representing 23.10% of the outstanding TSIN shares.
TSIN has previously indicated their intention to distribute the 6,000,000
shares of Alanco common stock on a pro-rata basis to their shareholders;
however, the shares have not been distributed as of the date of this Proxy
Statement, and there is no assurance that the shares will be distributed.
The address of TSIN is c/o Jeffrey M. Proper, 3550 N. Central Avenue, Suite
1200, Phoenix, Arizona 85012.
(2) The number of shares and warrants owned includes The Anderson Family Trust,
owner of 448,161 shares of Alanco Series A Convertible Preferred Stock and
1,198,161 exercisable warrants, Programmed Land, Inc., owner of 360,000

shares of Alanco Series A Convertible Preferred Stock and 760,000
exercisable warrants, both of which Mr. Anderson claims beneficial
ownership, and 60,000 exercisable options owned by Mr. Anderson. The
808,161 shares of Series A Convertible Preferred Stock beneficially owned
by Mr. Anderson represent 32.21% of the total Series A Convertible
Preferred shares outstanding. Mr. Anderson's address is 11804 North Sundown
Drive, Scottsdale, Arizona 85260.
(3) In addition to the shares shown above, Robert R. Kauffman, Alanco Chairman
and Chief Executive Officer, also beneficially owns 455,000 shares of TSIN
stock, representing an ownership position of less than 2% of the
outstanding TSIN shares. If TSIN distributes the 6,000,000 shares of Alanco
common stock owned by TSIN to TSIN shareholders on a proportionate basis,
Mr. Kauffman will acquire an additional approximately 118,700 shares of
Alanco common stock, thereby increasing his percentage of common shares
owned to approximately 1.51% and total stock and options percentage of
common stock equivalent owned to approximately 16.27%. The 500,000 shares
of Series A Convertible Preferred Stock beneficially owned by Mr. Kauffman
represent 19.92% of the total Series A Convertible Preferred shares
outstanding. The address for Mr. Kauffman is: c/o Alanco Technologies,
Inc., 15575 N. 83rd Way, Suite 3, Scottsdale, Arizona 85260.
(4) The Rhino Fund LLLP is controlled by Rhino Capital Incorporated, for which
James T. Hecker, a director of the Company, serves as Treasurer and General
Counsel. Mr. Hecker disclaims beneficial ownership of these shares. The
265,000 shares of Series A Convertible Preferred Stock owned by the Rhino
Fund LLLP represent 10.56% of the total Series A Convertible Preferred
shares outstanding. The address for the Rhino Fund LLLP is Rhino Capital
Incorporated, 32065 Castle Court, Suite 100, Evergreen, Colorado 80439.
(5) M. Jamil Akhtar, M.D. currently owns 100% of the outstanding Series B
Convertible Preferred Stock of the Company. Each share of Series B
Convertible Preferred Stock is convertible into thirteen (13) shares of
Class A Common Stock. Dr. Akhtar's address is 1454 South Dobson, Suite One,
Mesa, Arizona 85202.
(6) Preferred Shares are Series A Convertible Preferred Stock, each share of
which is convertible into three (3) shares of Class A Common Stock.
(7) Preferred Shares are Series B Convertible Preferred Stock, each share of
which is convertible into thirteen (13) shares of Class A Common Stock.
(8) The percentages for Class A Common Stock shown are calculated based upon
15,261,900 shares of Class A Common Stock outstanding on October 27, 2003.
The percentages for Total Common Stock Equivalent are calculated based upon
23,534,493 shares outstanding on October 27, 2003, except for the following
(9) In calculating the percentage of ownership, option and warrant shares are
deemed to be outstanding for the purpose of computing the percentage of
shares of common stock equivalent owned by such person, but are not deemed
to be outstanding for the purpose of computing the percentage of shares of
common stock equivalent owned by any other stockholders.

Current Directors and Executive Officers

The following table sets forth the number of exercisable stock options and the
number of shares of the Company's Common Stock and Preferred Stock beneficially
owned as of October 27, 2003, by individual directors and executive officers and
by all directors and executive officers of the Company as a group.

The number of shares beneficially owned by each director or executive officer is
determined under rules of the Securities and Exchange Commission, and the
information is not necessarily indicative of the beneficial ownership for any
other purpose. Unless otherwise indicated, each person has sole investment and
voting power (or shares such power with his or her spouse) with respect to the
shares set forth in the following table.

Securities of the Registrant Beneficially Owned (1)

Total
Stock,
Options &
Class A Shares Series A Shares Total Exercisable Total Warrants
Common Owned Preferred Owned Common Stock Stock, Percent of
Stock Percent Stock Percent Stock Options & Options & Common
Name of Shares of Class Shares of Class Equivalent Warrants Warrants Equivalent
Beneficial Owner (2) Owned (7) Owned (7) Owned (8) Owned Class (9)
------------------------ --------- -------- ---------- -------- ---------- ---------- ---------- ----------
Robert R. Kauffman (3) 112,000 0.73% 500,000 19.92% 1,612,000 2,505,000 4,117,000 15.81%
Director/COB/CEO
John A. Carlson 17,958 0.12% 100,000 3.98% 317,958 850,000 1,167,958 4.79%
Director/EVP/CFO
Harold S. Carpenter 6,541 0.04% 175,000 (5) 6.97% 531,541 415,000 946,541 3.95%
Director
James T. Hecker 1,893 0.01% 21,000 (6) 0.84% 64,893 141,000 205,893 0.87%
Director
Steven P. Oman 0 0.00% 10,000 0.40% 30,000 175,000 205,000 0.86%
Director
Thomas C. LaVoy 21,400 0.14% 35,265 1.41% 127,195 155,265 282,460 1.19%
Director
Donald E. Anderson (4) 0 0.00% 808,161 32.21% 2,424,483 2,018,161 4,442,644 17.39%
Director
Greg M. Oester 33,232 0.22% 10,000 0.40% 63,232 1,000,000 1,063,232 4.33%
President - TSIA
---------- ---------- ---------- ---------- ----------
Officers and Directors 193,024 1.26% 1,659,426 66.13% 5,171,302 7,259,426 12,430,728 40.37%
as a Group (8 individuals) ========== ========== ========== ========== ==========

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting
or investment power with respect to securities. In accordance with SEC
rules, shares that may be acquired upon conversion or exercise of stock
options, warrants or convertible securities which are currently
exercisable or which become exercisable within 60 days are deemed
beneficially owned. Except as indicated by footnote, and subject to
community property laws where applicable, the persons or entities named
in the table above have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned.
(2) COB is Chairman of the Board; CEO is Chief Executive Officer; EVP is
Executive Vice President; CFO is Chief Financial Officer.
(3) In addition to the shares shown above, Robert R. Kauffman, Alanco
Chairman and Chief Executive Officer, also beneficially owns
455,000 shares of TSIN stock. If TSIN distributes the 6,000,000 shares of
Alanco common stock owned by TSIN to TSIN shareholders on a proportionate
basis, Mr. Kauffman will acquire an additional approximately 118,700
shares of Alanco common stock, thereby increasing his percentage of Class
A Common Stock owned to approximately 1.51% and total stock and options
percentage of common stock equivalent owned to approximately 16.27%.
(4) The number of shares and warrants owned includes The Anderson Family
Trust, owner of 448,161 shares of Alanco Series A Convertible Preferred
Stock and 1,198,161 exercisable warrants, Programmed Land, Inc., owner of
360,000 shares of Alanco Series A Convertible Preferred Stock and 760,000
exercisable warrants, both of which Mr. Anderson claims beneficial
ownership, and 60,000 exercisable options owned by Mr. Anderson. Mr.
Anderson's address is 11804 North Sundown Drive, Scottsdale, Arizona
85260.
(5) Excludes 240,000 shares of Series A Convertible Preferred Stock and
240,000 warrants to purchase Class A Common Stock owned by Heartland
Systems Co., a company for which Mr. Carpenter serves as an officer. Mr.
Carpenter disclaims beneficial ownership of such shares.

(6) Excludes 265,000 shares of Series A Convertible Preferred Stock and
265,000 warrants to purchase Class A Common Stock owned by Rhino Fund
LLLP. The fund is controlled by Rhino Capital Incorporated, for which Mr.
Hecker serves as Treasurer and General Counsel. Mr. Hecker disclaims
beneficial ownership of such shares.
(7) The percentages for Class A Common Stock shown are calculated based upon
15,261,900 shares of Class A Common Stock outstanding on October 27,
2003. The percentages for Series A Convertible Preferred Stock are
calculated based upon 2,509,426 shares of Series A Convertible Preferred
Stock outstanding on October 27, 2003, each of which is convertible into
three (3) shares of Class A Common Stock. The percentages for Series B
Convertible Preferred Stock are calculated based upon 57,255 shares of
Series B Convertible Preferred Stock outstanding on October 27, 2003,
each of which is convertible into thirteen (13) shares of Class A Common
Stock.
(8) Represents unexercised stock options and warrants issued to named
executive officers and directors. All options and warrants issued to the
executive officers and directors were exercisable at October 27, 2003,
except for the following options held by Greg Oester: 187,500 options
which become exercisable in fiscal year 2004 and 187,500 options which
become exercisable in fiscal year 2005.
(9) The number and percentages shown include the shares of common stock
equivalent actually owned as of October 27, 2003 and the shares of common
stock that the identified person or group had a right to acquire within
60 days after October 27, 2003. The percentages shown are calculated
based upon 23,534,493 Common Stock Equivalent shares outstanding as of
October 27, 2003. In calculating the percentage of ownership, option and
warrant shares are deemed to be outstanding for the purpose of computing
the percentage of shares of common stock equivalent owned by such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of shares of common stock equivalent owned by any other
stockholders.

Meetings and Committees of the Board of Directors

The Board of Directors has a Compensation/Administration Committee, which was
formed in 1995 and is comprised of Messrs. Harold Carpenter and James Hecker,
who are independent non-employee directors of the Company. The
Compensation/Administration Committee recommends to the Board the compensation
of executive officers and serves as the Administrative Committee for the
Company's Stock Option Plans. The Compensation/Administration Committee met four
times during the fiscal year ended June 30, 2003.

The Board of Directors also has an Audit Committee, also formed in 1995. The
Audit Committee, comprised of Messrs. Harold Carpenter, James Hecker, and Thomas
LaVoy, all of whom are independent non-employee directors of the Company who
have significant business experience and are deemed to be financially
knowledgeable, serves as a liaison between the Board and the Company's auditor.
The Audit Committee provides general oversight of the Company's financial
reporting and disclosure practices, system of internal controls, and the
Company's processes for monitoring compliance with Company policies. The Audit
Committee reviews with the Company's independent auditors the scope of the audit
for the year, the results of the audit when completed, and the independent
auditor's fee for services performed. The Audit Committee also recommends
independent auditors to the Board of Directors and reviews with management
various matters related to its internal accounting controls. The Audit Committee
is comprised of independent members as defined under the National Association of
Securities Dealers listing standards. The Audit Committee met four times during
the fiscal year ended June 30, 2003. All meetings held by the Board of
Directors' committees were attended by each of the directors serving on such
committees.

The Company's Board of Directors held four meetings during the fiscal year ended
June 30, 2003, at which time all Directors were present. All current members of
the Board of Directors' committees are expected to be nominated for reelection
at a meeting of the Board of Directors following the annual meeting.

Compliance with Section 16(a) of Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers and Directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
Directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely upon a review of the copies of such forms furnished to the Company, or
written representations that no Form 5's were required, the Company believes
that as of the date of filing of this Proxy Statement, all Section 16(a) filing
requirements applicable to its officers, Directors and greater than 10%
beneficial owners were satisfied.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation paid or accrued by the Company
for the services rendered during the fiscal years ended June 30, 2003, 2002 and
2001 to the Company's Chief Executive Officer and Chief Financial Officer, and
the compensation paid or accrued by the Company for the services rendered during
the fiscal years ended June 30, 2003, and 2002 to the President of the Company's
subsidiary, Technology Systems International, Inc., an Arizona corporation
(TSIA), acquired effective June 1, 2002, whose salaries and bonus exceeded
$100,000 during the last fiscal year (collectively, the "Named Executive
Officers"). No stock appreciation rights ("SARs") have been granted by the
Company to any of the Named Executive Officers during the last three fiscal
years.

Annual Compensation Long Term Compensation
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Name and Other Securities (# shares)
Principal Annual Annual Underlying Options
Position Salary Bonus Compensation (1) Granted during FY
------------------------------ -------- ----- ---------------- ----------------------
Robert R. Kauffman, C.E.O.
FY 2003 $180,000 None $17,400 150,000
FY 2002 $134,812 None $17,400 250,000
FY 2001 $129,000 None $17,400 200,000
John A. Carlson, C.F.O.
FY 2003 $160,000 None $8,866 75,000
FY 2002 $124,270 None $9,280 100,000
FY 2001 $119,250 None $8,980 100,000
Greg M. Oester, President, TSIA
FY 2003 $148,234 None None None
FY 2002 $12,875(2) None None 750,000

(1) Represents supplemental executive benefit reimbursement for the year
and Company matching for Alanco's 401(K) Profit Sharing Plan.
(2) Represents salary for one month of fiscal year ended June 30, 2002.

Option Grants in Last Fiscal Year

The following table sets forth each grant of stock options made during the
fiscal year ended June 30, 2003, to each of the Named Executive Officers and/or
Directors and to all other employees as a group. No stock appreciation rights
("SARs") have been granted by the Company.

INDIVIDUAL GRANTS

Number of
Securities
Underlying % of Total Exercise
Options Options Price Grant Expiration
Name Granted (#) Granted ($/Sh) Date Date
---------------- ------------ ---------- -------- ------- ----------
Robert Kauffman 150,000 30.61% $0.75 9/23/02 9/23/12
John Carlson 75,000 15.31% $0.75 9/23/02 9/23/12
Harold Carpenter 20,000 4.08% $0.75 9/23/02 9/23/12
James Hecker 20,000 4.08% $0.75 9/23/02 9/23/12
Steven Oman 20,000 4.08% $0.75 9/23/02 9/23/12
Thomas LaVoy 20,000 4.08% $0.75 9/23/02 9/23/12
Donald Anderson 20,000 4.08% $0.75 9/23/02 9/23/12
Greg Oester 0 0.00% -- -- --
Other Employees 165,000 33.67% $0.75 - $1.00 Various (1)
------- -------

Total 490,000 100.00%
======= =======

(1) These options expire ten years from the date of grant.

Unless otherwise noted, options are granted at "grant-date market." During the
fiscal year 414,038 previously granted stock options expired or were cancelled.

Aggregated Options and Warrants - Exercised in Last Fiscal Year and Values at
Fiscal Year End

The following table sets forth the number of exercised and unexercised options
held by each of the Named Executive Officers and/or Directors at June 30, 2003,
and the value of the unexercised, in-the-money options at Fiscal Year End.

Unexercised Value of
Options Unexercised
& Warrants In-The-Money
Shares Value at Fiscal Options &
Acquired On Realized Year End Warrants
Name Exercise ($) (1) (Shares) (2) At FYE (3)
---------------- ----------- -------- ------------ ------------
Robert Kauffman None $0 2,231,000 $0
John Carlson None $0 673,000 $0
Harold Carpenter None $0 375,000 $0
James Hecker None $0 121,000 $0
Steven Oman None $0 135,000 $0
Thomas LaVoy None $0 115,265 $0
Donald Anderson None $0 1,978,161 $0
Greg Oester None $0 900,000 $0

(1) Calculated as the difference between closing price on the date exercised
and the exercise price, multiplied by the number of options exercised.
(2) Represents number of securities underlying unexercised options and
warrants at Fiscal Year End. All options and warrants issued to Named
Executive Officers and Directors were exercisable at 2003 Fiscal Year
End, except for the following options held by Greg Oester: 187,500
options which become exercisable in fiscal year 2004 and 187,500 options
which become exercisable in fiscal year 2005.
(3) Calculated as the difference between the closing price of the Company's
Common Stock on June 30, 2003 and the exercise price, for those options
with an exercise price less than the closing price, multiplied by the
number of applicable options.

Option Grants Subsequent to Fiscal Year End

Underlying
Securities
Options Date of Date Expiration Option
Name Granted (6) Grant Exercisable Date Price
------------------- ------------- ------- ----------- ---------- ------
Robert R. Kauffman 250,000 (1) 7/31/03 7/31/03 7/31/13 $0.37
John A. Carlson 150,000 (1) 7/31/03 7/31/03 7/31/13 $0.37
Harold S. Carpenter 40,000 (2) 7/31/03 7/31/03 7/31/13 $0.37
James T. Hecker 40,000 (2) 7/31/03 7/31/03 7/31/13 $0.37
Steven P. Oman 40,000 (3) 7/31/03 7/31/03 7/31/13 $0.37
Thomas C. LaVoy 40,000 (2) 7/31/03 7/31/03 7/31/13 $0.37
Donald E. Anderson 40,000 (2) 7/31/03 7/31/03 7/31/13 $0.37
Greg M. Oester 100,000 (1) 7/31/03 Varies (5) 7/31/13 $0.37
Other Employees 790,000 (4) Various Various Various $0.37 - $0.50

(1) Issued pursuant to the 1999 Stock Option Plan.
(2) Issued pursuant to the 2000 Directors & Officers Stock Option Plan.
(3) Issued pursuant to the 2002 Directors & Officers Stock Option Plan.
(4) Issued pursuant to the 1998, 1999, and 2000 Stock Option Plans.
(5) 25% vest on 7/31/2003, 25% vest on 7/31/2004, and 50% vest on
7/31/2005.
(6) Does not include warrants issued in connection with the purchase of
Series A Convertible Preferred Stock in the Company's June/July 2003
private exchange offering.

Employment Agreements and Executive Compensation

The named Executive Officers are at-will employees without employment
agreements.

Compensation of Directors

During Fiscal Year 2003, non-employee Directors were compensated for their
services in cash ($750 per meeting per day up to a maximum of $1,500 per
meeting) and through the grant of options to acquire shares of Class A Common
Stock as provided by the 1996, 1998, 1999, 2000, and 2002 Directors and Officers
Stock Option Plans (the "D&O Plans") which are described below. All Directors
are entitled to receive reimbursement for all out-of-pocket expenses incurred
for attendance at Board of Directors meetings.

The 1996 Directors and Officers Stock Option Plan was approved by the Board of
Directors on September 9, 1996. Shareholders approved the 1998, 1999, 2000, and
2002 Directors and Officers Stock Option Plans on November 6, 1998, November 5,
1999, November 10, 2000, and November 22, 2002, respectively. The purpose of the
1996, 1998, 1999, 2000, and 2002 D&O Plans is to advance the business and
development of the Company and its shareholders by affording to the Directors
and Officers of the Company the opportunity to acquire a propriety interest in
the Company by the grant of Options to acquire shares of the Company's common
stock. All Directors and Executive Officers of the Company are eligible to
participate in the 1996, 1998, 1999, 2000, and 2002 Plans. Newly appointed
Directors receive an option to purchase 20,000 shares of common stock at fair
market value. Upon each subsequent anniversary of the election to the Board of
Directors, each non-employee Director may receive an additional option to
purchase shares of common stock at fair market value.

Transactions with Management

The following directors and executive officers of the Company participated in
Alanco's December 2002 private offering. Robert Kauffman, Chief Executive
Officer, purchased 100,000 units, consisting of 200,000 shares of Class A Common
Stock and 100,000 warrants with an exercise price of $1.00 per share, for a
purchase price of $100,000; John Carlson, Chief Financial Officer, purchased
25,000 units, consisting of 50,000 shares of Class A Common Stock and 25,000
warrants with an exercise price of $1.00 per share, for a purchase price of
$25,000; Harold Carpenter, a member of the Board of Directors and a nominee,
purchased 100,000 units, consisting of 200,000 shares of Class A Common Stock
and 100,000 warrants with an exercise price of $1.00 per share, for a purchase
price of $100,000; Programmed Land, Inc., beneficially owned by Donald Anderson,
a member of the Board of Directors and a nominee, purchased 200,000 units,
consisting of 400,000 shares of Class A Common Stock and 200,000 warrants with
an exercise price of $1.00 per share, for a purchase price of $200,000; and The
Anderson Family Trust, also beneficially owned by Donald Anderson, purchased
200,000 units, consisting of 400,000 shares of Class A Common Stock and 200,000
warrants with an exercise price of $1.00 per share, for a purchase price of
$200,000. The Rhino Fund LLLP, controlled by Rhino Capital Incorporated, for
which James Hecker, a member of the Board of Directors and a nominee, serves as
Treasurer and General Counsel, purchased 225,000 units, consisting of 450,000
shares of Class A Common Stock and 225,000 warrants with an exercise price of
$1.00 per share, for a purchase price of $225,000. Mr. Hecker disclaims
beneficial ownership of these shares. Heartland Systems Co., a company for which
Harold Carpenter, a member of the Board of Directors and a nominee, serves as an
officer, purchased 200,000 units, consisting of 400,000 shares of Class A Common
Stock and 200,000 warrants with an exercise price of $1.00 per share, for a
purchase price of $200,000. Mr. Carpenter disclaims beneficial ownership of
these shares.

The following directors and executive officers of the Company participated in
Alanco's June/July 2003 private exchange offering. Each unit purchased through
the private exchange offering consisted of one (1) share of the Company's Series
A Convertible Preferred Stock and one (1) warrant to purchase one share of the
Company's Class A Common Stock at an exercise price of $0.50 per share in
exchange for $0.50 plus two (2) shares of the Company's Class A Common Stock for
each unit purchased. Robert Kauffman, Chief Executive Officer, purchased 500,000
units in exchange for 1,000,000 shares of Class A Common Stock and $250,000;
John Carlson, Chief Financial Officer, purchased 100,000 units in exchange for
200,000 shares of Class A Common Stock and $50,000; Thomas LaVoy, a member of
the Board of Directors and a nominee, purchased 35,265 units in exchange for
70,530 shares of Class A Common Stock and $17,632.50; Steven P. Oman, a member
of the Board of Directors and a nominee, purchased 10,000 units in exchange for
20,000 shares of Class A Common Stock and $5,000; Programmed Land, Inc.,
beneficially owned by Donald Anderson, a member of the Board of Directors and a
nominee, purchased 360,000 units in exchange for 720,000 shares of Class A
Common Stock and $180,000; The Anderson Family Trust, also beneficially owned by
Donald Anderson, purchased 448,161 units in exchange for 896,322 shares of Class
A Common Stock and $224,080.50; Harold Carpenter, a member of the Board of
Directors and a nominee, purchased 175,000 units in exchange for 350,000 shares
of Class A Common Stock and $87,500; Thomas C. LaVoy, a member of the Board of

Directors and a nominee, purchased 35,265 units in exchange for 70,530 shares of
Class A Common Stock and $17,632.50; James Hecker, a member of the Board of
Directors and a nominee, purchased 21,000 units in exchange for 42,000 shares of
Class A Common Stock and $10,500; and Greg Oester, President of the Company's
subsidiary, Technology Systems International, Inc., an Arizona corporation
(TSIA), purchased 10,000 units in exchange for 20,000 shares of Class A Common
Stock and $5,000. The Rhino Fund LLLP, controlled by Rhino Capital Incorporated,
for which James Hecker serves as Treasurer and General Counsel, purchased
265,000 units in exchange for 530,000 shares of Class A Common Stock and
$132,500. Mr. Hecker disclaims beneficial ownership of these shares. Heartland
Systems Co., a company for which Harold Carpenter serves as an officer,
purchased 240,000 units in exchange for 480,000 shares of Class A Common Stock
and $120,000. Mr. Carpenter disclaims beneficial ownership of these shares.

Mr. Steve Oman, a member of the Board of Directors and a nominee, received
compensation in the amount of $106,786 for legal services to the Company for the
fiscal year ended June 30, 2003.

AUDIT COMMITTEE REPORT (1)

The Audit Committee of the Board of Directors is currently comprised of three
independent directors, and operates under a written charter adopted by the
Board. The members of the Audit Committee are Harold S. Carpenter, James T.
Hecker, and Thomas C. LaVoy.

The Audit Committee provides general oversight of the Company's financial
reporting and disclosure practices, system of internal controls, and the
Company's processes for monitoring compliance by the Company with Company
policies. The Audit Committee reviews with the Company's independent auditors
the scope of the audit for the year, the results of the audit when completed,
and the independent auditor's fee for services performed. The Audit Committee
also recommends independent auditors to the Board of Directors and reviews with
management various matters related to its internal accounting controls. During
the last fiscal year, there were four meetings of the Audit Committee.

Management is responsible for the Company's internal controls and the financial
reporting process. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee is responsible for overseeing and monitoring the
quality of the Company's accounting and auditing practices.

The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and may not be experts in the fields of
accounting or auditing, or in determining auditor independence. Members of the
Audit Committee rely, without independent verification, on the information
provided to them and on the representations made by management and the
independent accountants. Accordingly, the Audit Committee's oversight does not
provide an independent basis to determine that management has maintained
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not assure that the audit of
the Company's financial statements has been carried out in accordance with
generally accepted auditing standards, that the financial statements are
presented in accordance with accounting principles generally accepted in the
United States of America or that the Company's auditors are in fact
"independent."

Review of Audited Financial Statements

In this context, the Audit Committee reviewed and discussed the Company's
audited financial statements with management and with the Company's independent
auditors. Management represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. Discussions about
the Company's audited financial statements included the auditor's judgments
about the quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in its
financial statements. The Audit Committee also discussed with the auditors other
matters required by Statement on Auditing Standards, ("SAS") No. 61
"Communication with Audit Committees," as amended by SAS No. 90, "Audit
Committee Communications."

The Company's auditors provided to the Committee written disclosures required by
the Independence Standards Board Standard No. 1 "Independence Discussion with
Audit Committee." The Audit Committee discussed with the auditors their
independence from the Company, and considered the compatibility of non-audit
services with the auditor's independence.

Audit Fees

The aggregate fees billed by Semple & Cooper, LLP, the Company's independent
auditor, for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended June 30, 2003 and the
review of the financial statements included in the Company's Forms 10-QSB for
such fiscal year were approximately $79,000.

Financial Information Systems Design and Implementation

There were no fees billed for the professional services described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by Semple & Cooper, LLP for
the fiscal year ended June 30, 2003.

All Other Fees

Semple & Cooper, LLP billed the Company during the current fiscal year a total
of approximately $9,000 for tax preparation and tax consulting services. The
Audit Committee has considered whether the provision of these services is
compatible with maintaining the principal accountant's independence.

Recommendation

Based on the Audit Committee's discussion with management and the auditors, and
the Audit Committee's review of the representations of management and the report
of the auditors to the Audit Committee, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 2003, filed
with the Securities and Exchange Commission.

AUDIT COMMITTEE
Harold S. Carpenter
James T. Hecker
Thomas C. LaVoy
-------------------------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the commission and is not be to incorporated by reference in any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.

Proposal No. 1 ELECTION OF DIRECTORS

The Articles of Incorporation presently provide for a Board of Directors of not
more than nine members. The number of Directors of the Company has been fixed at
seven by the Company's Board of Directors. The Company's Board of Directors
recommends the election of the seven nominees listed below to hold office until
the next Annual Meeting of Shareholders or until their successors are elected
and qualified or until their earlier death, resignation or removal. The persons
named as "proxies" in the enclosed form of Proxy, who have been designated by
Management, intend to vote for the seven nominees for election as Directors
unless otherwise instructed in such proxy. If at the time of the Meeting, any of
the nominees named below should be unable to serve, which event is not expected
to occur, the discretionary authority provided in the Proxy will be exercised to
cumulatively vote for the remaining nominees, or for a substitute nominee or
nominees, if any, as shall be designated by the Board of Directors.

Nominees

The following table sets forth the name and age of each nominee for Director,
indicating all positions and offices with the Company presently held by him, and
the period during which he has served as such:

Year
Name Age Position First Director
------------------- --- ---------------------- --------------
Harold S. Carpenter 69 Director 1995
James T. Hecker 46 Director 1997
Robert R. Kauffman 63 Director/C.O.B./C.E.O. 1998
Thomas C. LaVoy 44 Director 1998
Steven P. Oman 54 Director 1998
John A. Carlson 56 Director/E.V.P./C.F.O. 1999
Donald E. Anderson 69 Director 2002

Business Experience of Nominees

Robert R. Kauffman: Mr. Kauffman was appointed as Chief Executive Officer and
Chairman of the Board effective July 1, 1998. Mr. Kauffman was formerly
President and Chief Executive Officer of NASDAQ-listed Photocomm, Inc., from
1988 until 1997 (since renamed Kyocera Solar, Inc.). Photocomm was the nation's
largest publicly owned manufacturer and marketer of wireless solar electric
power systems with annual revenues in excess of $35 million. Prior to Photocomm,
Mr. Kauffman was a senior executive of the Atlantic Richfield Company (ARCO)
whose varied responsibilities included Senior Vice President of ARCO Solar,
Inc., President of ARCO Plastics Company and Vice President of ARCO Chemical
Company. Mr. Kauffman earned an M.B.A. in Finance at the Wharton School of the
University of Pennsylvania, and holds a B.S. in Chemical Engineering from
Lafayette College, Easton, Pennsylvania.

Harold S. Carpenter: Mr. Carpenter is presently the President of Superiorgas
Co., Des Moines, Iowa, which is engaged in the business of trading and brokering
bulk refined petroleum products with gross sales of approximately $500 million
per year. He is also the General Partner of Superiorgas L.P., an investment
company affiliated with Superiorgas Co. Mr. Carpenter founded these companies in
1984 and 1980, respectively. Mr. Carpenter is also the President of Carpenter
Investment Company, Des Moines, Iowa, which is a real estate investment company
holding properties primarily in central Iowa. From 1970 until 1994, Mr.
Carpenter was the Chairman of the George A. Rolfes Company of Boone, Iowa, which
manufactured air pollution control equipment. Mr. Carpenter graduated from the
University of Iowa in 1958 with a Bachelor of Science and Commerce degree.

James T. Hecker: Mr. Hecker is both an Attorney and a Certified Public
Accountant. Since 1987 Mr. Hecker has been Vice President, Treasurer and General
Counsel of Rhino Capital Incorporated, Evergreen, Colorado, a private capital
management company which manages a $60 million portfolio. He also served, since
1992, as a trustee of an $11 million charitable trust. From 1984 to 1987, Mr.
Hecker was the Controller of Northern Pump Company, Minneapolis, Minnesota, a
multi-state operating oil and gas company with more than 300 properties, with
responsibility of all accounting and reporting functions. Prior to that, from
1981 to 1984, Mr. Hecker was Audit Supervisor of Total Petroleum, Inc., Denver,
responsible for all phases of internal audit and development of audit and
systems controls. Mr. Hecker received a J.D. degree from the University of
Denver in 1992, and a B.B.A. degree in Accounting and International Finance from
the University of Wisconsin in 1979. He is a member in good standing of the
Colorado and the American Bar Associations, the Colorado Society of CPAs, and
the American Institute of CPAs.

Steven P. Oman: Mr. Oman was appointed to the Board in June 1998. Since 1991 Mr.
Oman has been in the private practice of law in Phoenix, Arizona. From 1986 to
1991, Mr. Oman served as Vice President and General Counsel of Programmed Land,
Inc., a Scottsdale-based diversified holding company engaged in real estate,
including ownership, development, marketing and management of properties, as
well as non-real estate subsidiaries involved in the electronics and automotive
industries. Prior to that, from 1978 to 1986, Mr. Oman was President and General
Counsel of Charter Development, Inc., a real estate development firm in St.
Paul, Minnesota. Mr. Oman received a J.D. degree, cum laude, in 1975 from
William Mitchell College of Law, St. Paul, and a Bachelor of Mechanical
Engineering degree from the University of Minnesota, Institute of Technology,
Minneapolis, in 1970.

Thomas C. LaVoy: Thomas C. LaVoy has served as Chief Financial Officer of
SuperShuttle International, Inc., since July 1997 and as Secretary since March
1998. From September 1987 to February 1997, Mr. LaVoy served as Chief Financial
Officer of NASDAQ-listed Photocomm, Inc. Mr. LaVoy was a Certified Public
Accountant with the firm of KPMG Peat Marwick from 1980 to 1983. Mr. LaVoy has a
Bachelor of Science degree in Accounting from St. Cloud University, Minnesota,
and is a Certified Public Accountant.

John A. Carlson: Mr. Carlson, Executive Vice President and Chief Financial
Officer of Alanco Technologies, Inc., joined the Company in September 1998 as
Senior Vice President/Chief Financial Officer. Mr. Carlson started his career
with Price Waterhouse & Co. in Chicago, Illinois. He has over twenty-five years
of public and private financial and operational management experience, including
over twelve years as Chief Financial Officer of a Fortune 1000 printing and
publishing company. He earned his Bachelor of Science degree in Business
Administration at the University of South Dakota, and is a Certified Public
Accountant.

Donald E. Anderson: Donald E. Anderson is President and owner of Programmed
Land, Inc., a Minnesota and Scottsdale, Arizona, based company. Programmed Land
is a diversified holding company engaged in real estate, including ownership,
development, marketing and management of properties. He is also majority owner

of a company involved in the automotive industry. From 1988 until 1997, Mr.
Anderson was Chairman of the Board of NASDAQ-listed Photocomm, Inc., a company
involved in the solar electric business. Since 1983, Mr. Anderson has also been
President of Pine Summit Bible Camp, a non-profit organization that operates a
year-round youth camp in Prescott, Arizona. Mr. Anderson has a B.A. degree in
accounting.

Proposal No. 2 APPROVAL OF A PROPOSAL TO AUTHORIZE THE BOARD OF
DIRECTORS, ONLY IF NECESSARY, TO REVERSE SPLIT THE
COMPANY'S OUTSTANDING CLASS A COMMON STOCK ON THE BASIS OF
ONE SHARE OF CLASS A COMMON STOCK FOR UP TO TEN SHARES
OUTSTANDING. IF THE BOARD OF DIRECTORS HAS NOT EFFECTED
THE ACTION CONTEMPLATED HEREUNDER BY DECEMBER 31, 2006,
THIS AUTHORIZATION WILL CEASE.

The Board of Directors has recommended a proposal to the Company's Shareholders
authorizing the Board of Directors to reverse split the Company's Class A Common
Stock if Management determines that a reverse split would be necessary to keep
the Common Stock eligible to be quoted on The NASDAQ Stock Market ("NASDAQ").
The effective date and the precise number of shares to be converted is to be
determined by the Company's Board of Directors at a later time, but under no
circumstances would the reverse stock split be greater than 1 for 10. (This is a
similar proposal that the Shareholders approved at the Shareholder Meeting of
November 6, 1998, at the Shareholder Meeting of November 5, 1999, at the
Shareholder Meeting of November 10, 2000, and at the Shareholder Meeting of
November 22, 2002. Authorization under those proposals extended to October 31,
1999, October 31, 2000, October 31, 2002, and December 31, 2005, respectively,
and has not been used. The Board of Directors believes the continuation of that
proposal through December 31, 2006, is prudent for the reasons explained below.)

The Board is requesting Shareholder authorization to reverse split the Company's
outstanding Class A Common Stock on the basis of one share of Class A Common
Stock for up to ten shares outstanding, only if necessary, in order to keep the
Common Stock eligible to be quoted on The NASDAQ Stock Market ("NASDAQ"). With
an objective to maintain the NASDAQ $1.00 minimum bid price for at least 10
trading days, the Board of Directors will take into consideration the immediate
impact of a reverse stock split on the stock price as well as price fluctuations
caused by current market conditions when determining the final reverse stock
split ratio. Approval of this proposal would authorize the Board to reverse
split the Company's Class A Common Stock from the time of approval until
December 31, 2006. The Board of Directors desires not to effect a reverse stock
split but believes that retaining the Company's listing on NASDAQ is crucial to
Shareholder value and liquidity and the Company's long-term business prospects.
This proposed reverse stock split is not the first part of a Rule 13e-3 Going
Private Transaction as defined in paragraph (a)(3)(i) of that regulation, as the
reverse stock split proposal is solely for the purpose of maintaining the
Company's listing on the NASDAQ SmallCap market.

As of the date of this Proxy Statement, the Company had received notice from
NASDAQ that the Company's stock price does not meet the NASDAQ listing
eligibility requirement of a minimum closing bid price of $1.00. However, NASDAQ
has determined that the Company does meet the initial listing requirements for
the NASDAQ SmallCap Market and has given the Company an extension to meet the
closing bid price requirement. On September 25, 2003, NASDAQ submitted an
amended proposal to the SEC to provide additional extensions for companies
failing to meet NASDAQ's minimum $1.00 bid price requirement. If the NASDAQ
proposal is approved by the SEC as submitted, the Company could be granted an
additional extension up to February, 2004 to take the appropriate actions
necessary to meet the bid price requirement.

It is recommended that the shareholders give authorization until December 31,
2006, to the Board of Directors to effect up to a 1 for 10 reverse stock split
of the Company's Class A Common Stock. Assuming that a reverse stock split would
cause the trading price of the Company's Common Stock to increase in the same
proportion as the amount of the split, a reverse stock split would result in a
proportionate increase in the quoted bid price of the Common Stock, thereby
exceeding NASDAQ's minimum bid price of $1.00.

For example, if the Board of Directors elects to effect a 1 for 3 reverse stock
split, each three issued shares of the Company's Class A Common Stock held on
the effective date will automatically be converted into one share of Class A
Common Stock. The reverse stock split conversion ratio would also have a
proportionate effect on any outstanding Preferred Stock, Options and Warrants.
No fractional shares will be issued. Fractional shares created by the reverse
stock split will be rounded down to the next whole number. The accumulation of
the fractional shares created by the reverse stock split will be accounted for
as acquired treasury shares and immediately cancelled pursuant to Arizona law.
NO CASH WILL BE PAID FOR FRACTIONAL SHARES.

EFFECT OF REVERSE SPLIT ON HOLDERS OF ODD LOTS OF SHARES

If the maximum 1 for 10 reverse split is authorized and declared, the reverse
split would result in holders of fewer than 1,000 shares holding an "odd lot" or
less than 100 shares. A securities transaction of 100 or more shares is a "round
lot" transaction of shares for securities trading purposes and a transaction of
less than 100 shares is an "odd lot" transaction. Round lot transactions are the
standard size requirements for securities transactions and odd lot transactions
may result in higher transaction costs to the odd lot seller.

EFFECT OF REVERSE SPLIT ON NUMBER OF SHARES OUTSTANDING

The following table sets forth the number of Alanco Common Stock Equivalent
shares outstanding after each potential reverse stock split ranging from a 1 for
2 split to a 1 for 10 split, based on 23,534,493 Common Stock Equivalent shares
outstanding as of October 27, 2003. The Common Stock Equivalent includes the
number of Class A Common Shares plus the number of common shares into which the
Series A and Series B Convertible Preferred Stock is convertible, the Series A
Convertible Preferred Stock being convertible into three shares of Common Stock
and the Series B Convertible Preferred Stock being convertible into thirteen
shares of Common Stock. The numbers shown below do not take into account the
effect of rounding down of fractional shares resulting from the potential
reverse stock split. As discussed above, the fractional shares created by the
reverse stock split will be converted into treasury shares and immediately
cancelled, thereby reducing the total number of shares outstanding from the
values shown below.

Potential Post-Split
Reverse Common Stock
Stock Equivalent
Split Shares
Outstanding

1 for 2 11,767,247
1 for 3 7,844,831
1 for 4 5,883,623
1 for 5 4,706,899
1 for 6 3,922,416
1 for 7 3,362,070
1 for 8 2,941,812
1 for 9 2,614,944
1 for 10 2,353,449

The actual reverse stock split ratio shall be determined by the Board of
Directors of the Company based upon the Company's estimation of the post-split
trading bid price and the probability of the bid price maintaining the $1.00
minimum for 10 consecutive trading days under various market conditions.

As of the date of this Proxy Statement, the Company has approximately 1,820
shareholders of record (does not include shareholders holding shares in street
name). Depending on the final reverse stock split ratio that may be effected,
the post-split shareholder of record count would range from approximately 1,515
shareholders of record if a 1 for 2 reverse stock split were effected to
approximately 845 shareholders of record if a 1 for 10 reverse stock split were
effected.

INDEPENDENT AUDITOR

Semple & Cooper, LLP, Phoenix, Arizona, was appointed as the Company's
Independent Auditor for the fiscal years ended June 30, 2000, 2001, 2002, and
2003. The Company anticipates the appointment of Semple & Cooper, LLP to audit
the Company's financial statements for the fiscal year ending June 30, 2004. A
representative of Semple & Cooper, LLP is expected to attend the Shareholders'
Meeting and will have an opportunity to make a statement if the representative
desires to do so and is expected to be available to respond to appropriate
questions.

REQUEST FOR COPY OF FORM 10-KSB

Shareholders may view a copy of the Form 10-KSB online via the Company's website
at www.alanco.com, or may receive a copy, without charge, via e-mail request to
alanco@alanco.com, by calling the Company at (480) 607-1010, Ext. 857, or by
writing to the Company, to the attention of the Company's Corporate Secretary at
15575 N. 83rd Way, Suite 3, Scottsdale, Arizona 85260.

SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING;
DISCRETIONARY AUTHORITY; OTHER BUSINESS

Any shareholder who intends to present a proposal at the annual meeting of
shareholders for the year ending June 30, 2004 and have it included in the
Company's proxy materials for that meeting generally must deliver the proposal
to us for our consideration not less than 120 calendar days in advance of the
date of the Company's proxy statement released to security holders in connection
with the previous year's annual meeting of security holders and must comply with
Rule 14a-8 under the Securities Exchange Act of 1934, as amended. In accordance
with the above rule, the applicable proposal submission deadline for the 2004
annual meeting of shareholders would be June 29, 2004.

Pursuant to Rule 14a-4 under the Securities Exchange Act of 1934, as amended,
the Company intends to retain discretionary authority to vote proxies with
respect to shareholder proposals properly presented at the Meeting, except in
circumstances where (i) the Company receives notice of the proposed matter a
reasonable time before the Company begins to mail its proxy materials (including
this proxy statement), and (ii) the proponent complies with the other
requirements set forth in Rule 14a-4.

The Board of Directors is not aware of any other business to be considered or
acted upon at the Meeting other than that for which notice is provided, but in
the event other business is properly presented at the Meeting, requiring a vote
of shareholders, the proxy will be voted in accordance with the judgment on such
matters of the person or persons acting as proxy (except as described in the
preceding paragraph). If any matter not appropriate for action at the Meeting
should be presented, the holders of the proxies shall vote against the
consideration thereof or action thereon.

ADELE L. MACKINTOSH
SECRETARY
Scottsdale, Arizona
November 7, 2003

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert R. Kauffman, Chief Executive Officer of Alanco Technologies, Inc.,
certify that:

1. The Proxy Statement of Alanco Technologies, Inc. for use at the Company's
Annual Meeting of Shareholders to be held on December 22, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), which
this statement accompanies, fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Alanco
Technologies, Inc.

/s/ Robert R. Kauffman
Robert R. Kauffman
Chief Executive Officer
November 7, 2003

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Carlson, Chief Financial Officer of Alanco Technologies, Inc.,
certify that:

2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Alanco
Technologies, Inc.

/s/ John A. Carlson
John A. Carlson
Chief Financial Officer
November 7, 2003

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Adele L. Mackintosh, Secretary of Alanco Technologies, Inc., certify that:

2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Alanco
Technologies, Inc.

/s/ Adele L. Mackintosh
Adele L. Mackintosh
Secretary
November 7, 2003