| Large accelerated filer |   |   | Accelerated filer                    |   |
|-------------------------|--------|--------|--------------------------------------|--------|
|                    |   |   |                                 |   |
| Non-accelerated filer   |   |   | Smaller reporting  company | X      |

|   |   | Yes | X | No |   |
|--------|--------|-----|---|----|--------|

| INDEX    |
|----------|
|     |   |   | PageNumber |
| PART I.  | FINANCIAL INFORMATION |   |
|     |   |   |   |
|     | Item 1. | Financial Statements  |   |
|     |   | Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) |   |
|     |   |   | and June 30, 2010 | 4 |
|     |   |   |   |
|     |   | Condensed Consolidated Statements of Operations (Unaudited) |   |
|     |   |   | For the three months ended September 30, 2010 and 2009 | 5 |
|     |   |   |   |
|     |   | Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) |   |
|     |   |   | For the three months ended September 30, 2010 | 6 |
|     |   |   |   |
|     |   | Condensed Consolidated Statements of Cash Flows (Unaudited) |   |
|     |   |   | For the three months ended September 30, 2010 and 2009 | 7 |
|     |   |   |   |
|     | Notes to Condensed Consolidated Financial Statements (Unaudited) | 9 |
|     |   | Note A – | Basis of Presentation and Recent Accounting Pronouncements |   |
|     |   | Note B – | Stock-Based Compensation |   |
|     |   | Note C – | Inventories |   |
|     |   | Note D – | Discontinued Operations |   |
|     |   | Note E – | Deferred Revenue |   |
|     |   | Note F – | Loss per Share |   |
|     |   | Note G – | Equity |   |
|     |   | Note H – | Related Party Transactions |   |
|     |   | Note  I – | Line of Credit and Term Loan |   |
|     |   | Note J – | Litigation |   |
|     |   | Note K – | Subsequent Events |   |
|     |   | Note L – | Liquidity |   |
|     |   |   |   |
|     | Item 2. | Management’s Discussion and Analysis of Financial Condition |   |
|     |   |   | and Results of Operations | 19 |
|     |   |   |   |
|     | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 24 |
|     |   |   |   |
|     | Item 4. | Controls and Procedures | 24 |
|     |   |   |   |
| PART II. | OTHER INFORMATION |   |
|     |   |   |   |
|     | Item 1. | Legal Proceedings | 25 |
|     |   |   |   |
|     | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26 |
|     |   |   |   |
|     | Item 4. | Removed and Reserved | 26 |
|     |   |   |   |
|     | Item 6. | Exhibits | 27 |

----

----

| CONDENSED CONSOLIDATED BALANCE SHEETS                                             |   |
|-----------------------------------------------------------------------------------|--------|
| AS OF SEPTEMBER 30, 2010 AND JUNE 30, 2010                                        |   |
|                                                                              |   |   |   |   |   |   |
|                                                                              |   | September 30, 2010 |   |   | June 30, 2010 |   |
| ASSETS                                                                            |   | (unaudited) |   |   |   |   |
| CURRENT ASSETS                                                                    |   |   |   |   |   |   |
| Cash and cash equivalents                                                         |   | $ | 287,300 |   |   | $ | 400,500 |   |
| Accounts receivable, net                                                          |   |   | 2,224,300 |   |   |   | 2,493,900 |   |
| Inventories, net                                                                  |   |   | 1,578,300 |   |   |   | 1,222,500 |   |
| Assets related to discontinued operations                                         |   |   | 164,000 |   |   |   | 1,971,000 |   |
| Prepaid expenses and other current assets                                         |   |   | 547,900 |   |   |   | 654,700 |   |
| Total current assets                                                              |   |   | 4,801,800 |   |   |   | 6,742,600 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT, NET                                                |   |   | 211,400 |   |   |   | 233,800 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| OTHER ASSETS                                                                      |   |   |   |   |   |   |   |   |
| Goodwill                                                                          |   |   | 12,575,400 |   |   |   | 12,575,400 |   |
| Other intangible assets, net                                                      |   |   | 662,400 |   |   |   | 770,200 |   |
| Other assets                                                                      |   |   | 169,100 |   |   |   | 174,200 |   |
| Total other assets                                                                |   |   | 13,406,900 |   |   |   | 13,519,800 |   |
| TOTAL ASSETS                                                                      |   | $ | 18,420,100 |   |   | $ | 20,496,200 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| LIABILITIES AND  SHAREHOLDERS' EQUITY                                   |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                               |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                             |   | $ | 2,251,300 |   |   | $ | 1,917,100 |   |
| Dividends payable                                                                 |   |   | 52,000 |   |   |   | 56,400 |   |
| Notes payable, current                                                            |   |   | 4,228,000 |   |   |   | 6,328,000 |   |
| Capital leases                                                                    |   |   | 19,000 |   |   |   | 18,100 |   |
| Customer advances                                                                 |   |   | 14,600 |   |   |   | 4,500 |   |
| Liabilities related to discontinued operations                                    |   |   | 1,457,300 |   |   |   | 1,498,100 |   |
| Deferred revenue                                                                  |   |   | 386,000 |   |   |   | 309,300 |   |
| Total current liabilities                                                         |   |   | 8,408,200 |   |   |   | 10,131,500 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| LONG-TERM LIABILITIES                                                             |   |   |   |   |   |   |   |   |
| Deferred revenue, long-term                                                       |   |   | 371,400 |   |   |   | 375,500 |   |
| Capital leases, long-term                                                         |   |   | - |   |   |   | 5,000 |   |
| TOTAL LIABILITIES                                                                 |   |   | 8,779,600 |   |   |   | 10,512,000 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Preferred Stock - Series B Convertible - 500,000 shares authorized,               |   |   |   |   |   |   |   |   |
| 113,900 and 111,200 issued and outstanding, respectively                          |   |   | 1,126,200 |   |   |   | 1,098,500 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                                                              |   |   |   |   |   |   |   |   |
| Preferred Stock                                                                   |   |   |   |   |   |   |   |   |
| Preferred Stock - Series D Convertible - 500,000 shares authorized,               |   |   |   |   |   |   |   |   |
|    82,300 and 134,200 shares issued and outstanding, respectively  |   |   | 814,900 |   |   |   | 1,333,800 |   |
| Preferred Stock - Series E Convertible - 750,000 shares authorized,               |   |   |   |   |   |   |   |   |
|    735,000 and 735,000 shares issued and outstanding, respectively |   |   | 3,210,900 |   |   |   | 3,210,900 |   |
| Common Stock                                                                      |   |   |   |   |   |   |   |   |
| Class A - 75,000,000 shares authorized, 5,208,300 and  4,665,500        |   |   |   |   |   |   |   |   |
|    shares, net of 2,000 and 2,000 treasury shares, outstanding at  |   |   |   |   |   |   |   |   |
|    September 30, 2010 and June 30, 2010, respectively              |   |   | 108,866,200 |   |   |   | 107,355,700 |   |
| Class B - 25,000,000 shares authorized and 0 shares outstanding                   |   |   | - |   |   |   | - |   |
| Accumulated deficit                                                               |   |   | (104,377,700) |   |   |   | (103,014,700) |   |
| Total shareholders' equity                                                        |   |   | 8,514,300 |   |   |   | 8,885,700 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                                      |   | $ | 18,420,100 |   |   | $ | 20,496,200 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements         |   |

----

| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                           |   |
|---------------------------------------------------------------------------|--------|
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, (unaudited)                      |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   | 2010 |   |   | 2009 |   |
|                                                                      |   |   |   |   |   |   |
| NET SALES                                                                 |   | $ | 3,694,700 |   |   | $ | 2,976,900 |   |
|                                                                      |   |   |   |   |   |   |   |   |
|    Cost of goods sold                                           |   |   | 2,491,300 |   |   |   | 1,704,400 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| GROSS PROFIT                                                              |   |   | 1,203,400 |   |   |   | 1,272,500 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                        |   |   |   |   |   |   |   |   |
|    Selling, general and administrative expenses                 |   |   | 1,547,800 |   |   |   | 1,194,600 |   |
|    Corporate expenses                                           |   |   | 302,700 |   |   |   | 160,800 |   |
|    Amortization of stock-based compensation                     |   |   | 337,900 |   |   |   | 168,800 |   |
|    Depreciation and amortization                                |   |   | 130,200 |   |   |   | 135,600 |   |
|                                                                      |   |   | 2,318,600 |   |   |   | 1,659,800 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| OPERATING LOSS                                                            |   |   | (1,115,200) |   |   |   | (387,300) |   |
|                                                                      |   |   |   |   |   |   |   |   |
| OTHER INCOME & EXPENSES                                               |   |   |   |   |   |   |   |   |
|    Interest expense, net                                        |   |   | (167,800) |   |   |   | (174,500) |   |
|    Other income (expense), net                                  |   |   | (300) |   |   |   | (800) |   |
| LOSS FROM CONTINUING OPERATIONS                                           |   |   | (1,283,300) |   |   |   | (562,600) |   |
|                                                                      |   |   |   |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS                                         |   |   | - |   |   |   | (502,800) |   |
|                                                                      |   |   |   |   |   |   |   |   |
| NET LOSS                                                                  |   |   | (1,283,300) |   |   |   | (1,065,400) |   |
|                                                                      |   |   |   |   |   |   |   |   |
|    Preferred stock dividends                                    |   |   | (79,700) |   |   |   | (140,500) |   |
|                                                                      |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                              |   | $ | (1,363,000) |   |   | $ | (1,205,900) |   |
|                                                                      |   |   |   |   |   |   |   |   |
| NET LOSS PER SHARE - BASIC AND DILUTED                                    |   |   |   |   |   |   |   |   |
|    Continuing operations                                        |   | $ | (0.25) |   |   | $ | (0.14) |   |
|    Discontinued operations                                      |   | $ | 0.00 |   |   | $ | (0.12) |   |
|    Preferred stock dividends                                    |   | $ | (0.02) |   |   | $ | (0.03) |   |
|    Net loss per share attributable to common shareholders       |   | $ | (0.27) |   |   | $ | (0.30) |   |
|                                                                      |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                |   |   | 5,094,800 |   |   |   | 4,073,900 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements |

----

| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY                              |
|--------------------------------------------------------------------------------------------------|
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 (unaudited)                                        |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |   |   |   |   |   |   | SERIES D |   |   | SERIES E |   |   |   |   |   |   |   |
|                                                                                             |   |  COMMON STOCK |   |   | CONVERTIBLE |   |   | CONVERTIBLE |   |   |   |   |   |   |   |
|                                                                                             |   | (NET OF TREASURY STOCK) |   |   | PREFERRED STOCK |   |   | PREFERRED STOCK |   |   | ACCUMULATED |   |   |   |   |
|                                                                                             |   | SHARES |   |   | AMOUNT |   |   | SHARES |   |   | AMOUNT |   |   | SHARES |   |   | AMOUNT |   |   | DEFICIT |   |   | TOTAL |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances, June 30, 2010                                                                          |   |   | 4,665,500 |   |   | $ | 107,355,700 |   |   |   | 134,200 |   |   | $ | 1,333,800 |   |   |   | 735,000 |   |   | $ | 3,210,900 |   |   | $ | (103,014,700) |   |   | $ | 8,885,700 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Shares issued for services                                                                |   |   | 3,100 |   |   |   | 5,300 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,300 |   |
|   Shares issued for payment of notes                                                        |   |   | 1,100 |   |   |   | 2,100 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,100 |   |
|   Value of stock based compensation                                                         |   | - |   |   |   | 340,900 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 340,900 |   |
|   Private offering, net of expenses                                                         |   |   | 384,300 |   |   |   | 612,600 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 612,600 |   |
|   Series B preferred dividends,  paid     in kind                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (27,600) |   |   |   | (27,600) |   |
|   Series D preferred dividends, paid      or accrued               |   |   | 9,500 |   |   |   | 16,700 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,400) |   |   |   | 6,300 |   |
|   Conversion of Series D preferred      stock to common stock |   |   | 129,700 |   |   |   | 518,900 |   |   |   | (51,900) |   |   |   | (518,900) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |      -  |   |
|   Series E preferred dividends, paid      or accrued          |   |   | 15,100 |   |   |   | 26,500 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (41,700) |   |   |   | (15,200) |   |
|   NASDAQ  listing fees                                                            |   |   |   |   |   |   | (12,500) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (12,500) |   |
|   Net loss                                                                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,283,300) |   |   |   | (1,283,300) |   |
| Balances, September 30, 2010                                                                     |   |   | 5,208,300 |   |   | $ | 108,866,200 |   |   |   | 82,300 |   |   | $ | 814,900 |   |   |   | 735,000 |   |   | $ | 3,210,900 |   |   | $ | (104,377,700) |   |   | $ | 8,514,300 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements                        |

----

| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                           |
|---------------------------------------------------------------------------|
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, (unaudited)                      |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   |   | 2010 |   | 2009 |
| CASH FLOWS FROM OPERATING ACTIVITIES                                      |   |   |   |   |
|                                                                      | Net loss | $ | (1,283,300) | $ | (1,065,400) |
|                                                                      | Adjustments to reconcile net income to net |   |   |   |   |
|                                                                      | cash used in operating activities: |   |   |   |   |
|                                                                      |   | Depreciation and amortization |   | 133,600 |   | 164,600 |
|                                                                      |   | Stock and warrants issued for services |   | 5,300 |   | 69,000 |
|                                                                      |   | Stock-based compensation |   | 340,900 |   | 179,200 |
|                                                                      | Changes in operating assets and liabilities: |   |   |   |   |
|                                                                      |   | Accounts receivable, net |   | 207,600 |   | 422,500 |
|                                                                      |   | Inventories, net |   | (335,400) |   | 215,700 |
|                                                                      |   | Prepaid expenses and other current assets |   | 56,700 |   | (41,500) |
|                                                                      |   | Accounts payable and accrued expenses |   | 237,000 |   | (726,900) |
|                                                                      |   | Deferred revenue |   | 54,500 |   | 269,700 |
|                                                                      |   | Costs and estimated earnings in excess of billings |   |   |   |   |
|                                                                      |   |   on uncompleted contracts |   | 12,700 |   | 64,000 |
|                                                                      |   | Billings in excess of costs and estimated earnings |   |   |   |   |
|                                                                      |   |    on uncompleted contracts |   |                  7,300 |   |              (43,300) |
|                                                                      |   | Customer advances |   |                  (40,100) |   |               155,300 |
|                                                                      |   | Other assets |   | 5,100 |   | 94,000 |
|                                                                      | Net cash used in operations |   |                (598,100) |   |             (243,100) |
|                                                                      |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                      |   |   |   |   |
|                                                                      | Proceeds from sale of net RFID Technology segment assets |   | 2,000,000 |   | -  |
|                                                                      | Purchase of property, plant and equipment |   |                    - |   |                 (7,400) |
|                                                                      | Net cash provided by (used in) investing activities | $ |                    2,000,000 | $ |                 (7,400) |
|                                                                      |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements |

----

| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)               |
|---------------------------------------------------------------------------|
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, (continued)                      |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   |   | 2010 |   | 2009 |
|                                                                      |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                      |   |   |   |   |
|                                                                      | Proceeds from borrowings |       $ | 84,875  |  $ |  - |
|                                                                      | Repayment on borrowings |   |                    (2,182,775) |   |                                  (25,000) |
|                                                                      | Repayment on capital leases |   |                      (4,100) |   |                                    (3,600) |
|                                                                      | Net proceeds from sale of preferred stock |   |                     - |   |                                   541,000 |
|                                                                      | Proceeds from sale of equity instruments, net |   |                                 612,600  |   |                        - |
|                                                                      | Cash dividends paid |   |                               (13,200) |   |                        - |
|                                                                      | Payment for NASDAQ fees |   |       (12,500) |   |       - |
|                                                                      |    Net cash provided by (used in) financing  activities |   |                     (1,515,100) |   |            512,400 |
|                                                                      |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                           |   |                     (113,200) |   |            261,900 |
|                                                                      |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, beginning of period                            |   |                     400,500 |   |            413,500 |
|                                                                      |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, end of period                                  | $ |                    287,300 | $ |           675,400 |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |
| SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION                            |   |   |   |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      | Net cash paid during the period for interest | $ |                      167,800 | $ |             115,800 |
|                                                                      |   |   |   |   |   |   |
|                                                                      | Non-Cash Activities: |   |   |   |   |
|                                                                      |   | Value of shares issued for services and credit line amendment | $ |                       - | $ |               19,000 |
|                                                                      |   | Value of shares issued in payment of interest and services | $ |                      5,300 | $ |              50,000 |
|                                                                      |   | Value of stock issued for payment of notes | $ |                    2,100 | $ |           460,000 |
|                                                                      |   | Series B preferred stock dividend, paid in kind | $ |                       27,700 | $ |               25,100 |
|                                                                      |   | Series D preferred stock dividend, paid in common stock or accrued | $ |                      23,100 | $ |             110,000 |
|                                                                      |   | Series E preferred stock dividend, paid or accrued | $ |                         24,500 | $ |                5,400 |
|                                                                      |   | Series D preferred stock converted to common stock |   $ |   518,900 |   $ |   - |
|                                                                      |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements |

----

| A.   | A Reverse Stock Split to Regain NASDAQ Listing compliance:  The Company believes that continued NASDAQ Listing is crucial to maximize long term market valuation and trading liquidity of the Company’s common stock.  Therefore, Alanco has implemented a shareholder-approved reverse stock split to maintain compliance with the NASDAQ minimum $1.00 per share price listing requirement. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B.   | A Corporate Name Change:  The Company plans to execute a corporate name change, subject to shareholder approval, to reflect the refocused business and recognition of the StarTrak brand as the leading wireless asset management solution for the refrigeration transportation market. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C.   | Corporate Consolidation:  Alanco plans to consolidate its corporate headquarters into the StarTrak’s offices in Morris Plains, New Jersey, targeted for calendar year end, to improve efficiency, communications and operational support. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| D.   | Evaluation of Strategic Alternatives:  The Company will solicit investment banker advice to evaluate strategic alternatives available to enhance shareholder value.  The Company anticipates that a range of options will be developed as a result of this process for review with its board of directors and advisors.  Although the Company is committed to maximizing shareholder value, there can be no assurance of any particular outcome or course of action. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| E.   | Corporate Succession Issues:  Robert R. Kauffman, Alanco Chairman announced that “As the Company transitions from a holding company structure, we are implementing a management succession plan to select an outstanding candidate to eventually assume my CEO responsibilities and guide the new Company’s exciting future growth plan.” |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Expected volatility of award grants made under the Company’s plans is measured using the historical daily changes in the market price of the Company’s common stock over the expected term of the award; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Risk-free interest rate is the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                     | Awards re-priced during the |
|------------------------------------------|-----------------------------|
|                                     | three months ended          |
|                                     | September 30, 2010          |
| Dividend yield                           |     0%  |
| Expected volatility                      |   62%                  |
| Weighted-average volatility              |   62%                  |
| Risk-free interest rate                  |     2%       |
| Expected life of options (in years)      |   2.78                 |
| Weighted average re-priced Black Scholes |                        |
|   calculated fair value        | $1.52                       |
|                                     |

|                                                                                                                                            |                                                                                                                                                                                                                |   |                                                |   | Weighted Average                                                            |   |                                                                                                                                                                                                           |   |                                                                                              |
|-------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                                                                                                                                            |                                                                                                                                                                                                                |   | Weighted Average                                    |   |        Remaining                              |   | Aggregate                                                                                                                                                                                                      |   | Aggregate                                                                                         |
|                                                                                                                                            | Number of                                                                                                                                                                                                           |   |    Exercise Price                    |   |       Contractual                                  |   | Fair                                                                                                                                                                                                           |   | Intrinsic                                                                                         |
|                                                                                                                                            | Shares                                                                                                                                                                                                              |   |        Per Share |   |             Term (1) |   | Value                                                                                                                                                                                                          |   | Value(2)                                                                                          |
|                                                                                                                                            |                                                                                                                                                                                                                |   |                                                |   |                                                                             |   |                                                                                                                                                                                                           |   |                                                                                              |
| Outstanding July 1, 2010                                                                                                                        | 955,800                                                                                                                                                                                                             |   | $6.27                                               |   | 3.01                                                                             |   |  $         4,324,300                                                                                                                                         |   |                 - |
|   Shares repriced during period                                                                                                       | (866,000)                                                                                                                                                                                                           |   | $5.75                                               |   | 2.78                                                                             |   |        (124,900)                                                                                                                                                            |   |                 - |
|   Repriced replacement shares                                                                                                         | 866,000                                                                                                                                                                                                             |   | $1.52                                               |   | 2.78                                                                             |   |          415,900                                                                                                                                                  |   |                 - |
|   Granted                                                                                                                             |                    -                                                                                                 |   | $0.00                                               |   | -                                                                                |   |                      -                                                                                |   |                 - |
|   Exercised                                                                                                                           |                                    - |   | $0.00                                               |   | -                                                                                |   |                                    - |   |                 - |
|   Forfeited or expired                                                                                                                | (7,200)                                                                                                                                                                                                             |   | $3.10                                               |   | -                                                                                |   |                        (32,700)                                                                  |   |                 - |
| Outstanding September 30, 2010                                                                                                                  | 948,600                                                                                                                                                                                                             |   | $2.35                                               |   | 2.75                                                                             |   |  $         4,582,600                                                                                                                                              |   | $0                                                                                                |
| Exercisable September 30, 2010                                                                                                                  | 745,500                                                                                                                                                                                                             |   | $2.41                                               |   | 2.44                                                                             |   | $                       -                                                                   |   | $0                                                                                                |
|                                                                                                                                            |                                                                                                                                                                                                                |   |                                                |   |                                                                             |   |                                                                                                                                                                                                           |   |                                                                                              |
|  (1) Remaining contractual term presented in years.                                                                                        |                                                                                                                                                                                                                |   |                                                |   |                                                                             |   |                                                                                                                                                                                                           |   |
|  (2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards                     |
|       and the closing price of the Company's common stock as of September 30, 2010, for those awards that have an |
|       exercise price currently below the closing price as of September 30, 2010 of $1.49.                         |

|                              |    | September 30, |      |   | June 30, |   |
|-----------------------------------|---------|---------------|-----------|--------|----------|--------|
|                              |    | 2010          |      |   | 2010     |   |
|                              |    | (unaudited)   |      |   |     |   |
| Raw materials and purchased parts | $  |          | 1,993,300 |   | $   |   | 1,637,500 |   |
| Finished goods                    |    |          | -         |   |     |   | - |   |
|                              |    |          | 1,993,300 |   |     |   | 1,637,500 |   |
| Less reserves for obsolescence    |    |          | (415,000) |   |     |   | (415,000) |   |
|                              | $  |          | 1,578,300 |   | $   |   | 1,222,500 |   |

----

----

|                                                 |    | Data    |          |   | RFID       |   |          |   |    |
|------------------------------------------------------|---------|---------|---------------|--------|------------|--------|---------------|--------|---------|
|                                                 |    | Storage |          |   | Technology |   |          | Total  |    |
| Three Months Ended September 30, 2010                |    |    |          |   |       |   |          |   |    |
| Sales                                                | $  |    | -             |   | $     |   | 38,700        |   | $  |   | 38,700 |   |
| Cost of Goods Sold                                   |    |    | -             |   |       |   | 25,200        |   |    |   | 25,200 |   |
| Gross Profit (Loss)                                  |    |    | -             |   |       |   | 13,500        |   |    |   | 13,500 |   |
| Selling, General & Administrative Expenses       |    |    | -             |   |       |   | 155,700       |   |    |   | 155,700 |   |
| Operating Income (Loss)                              | $  |    | -             |   | $     |   | (142,200)     |   | $  |   | (142,200) |   |
|    Operating Loss Accrued at June 30, 2010 |    |    | -             |   |       |   | 142,200  |   |    |   |  142,200 |   |
| Operating Income (Loss) After June 30, 2010 Accrual  | $  |    |   - |   | $     |   |   - |   | $  |   |      - |   |
| Gross Margin                                         |    |    | -             |   |       |   | 34.9%         |   |    |   | 34.9% |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| Capital Expenditures                                 | $  |    | -             |   | $     |   | -             |   | $  |   | - |   |
| Depreciation & Amortization                      | $  |    | -             |   | $     |   | 3,400         |   | $  |   | 3,400 |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| As of September 30, 2010                             |    |    |          |   |       |   |          |   |    |   |   |   |
| Assets related to discontinued operations            |    |    |          |   |       |   |          |   |    |   |   |   |
| Accounts Receivable, net                             | $  |    | 55,000        |   | $     |   | 36,500        |   | $  |   | 91,500 |   |
| Inventory, net                                       |    |    | 50,000        |   |       |   | 2,500         |   |    |   | 52,500 |   |
| Prepaid expenses and other assets                    |    |    | -             |   |       |   | 20,000        |   |    |   | 20,000 |   |
|    Total                              | $  |    | 105,000       |   | $     |   | 59,000        |   | $  |   | 164,000 |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| Liabilities related to discontinued operations       |    |    |          |   |       |   |          |   |    |   |   |   |
| Billings in excess of costs and estimated earnings   | $  |    | -             |   | $     |   | 23,500        |   | $  |   | 23,500 |   |
| Customer advances                                    |    |    | -             |   |       |   | 755,100       |   |    |   | 755,100 |   |
| Accounts payable and accrued expenses                |    |    | -             |   |       |   | 678,700       |   |    |   | 678,700 |   |
|    Total                              | $  |    | -             |   | $     |   | 1,457,300     |   | $  |   | 1,457,300 |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| Three Months Ended September 30, 2009                |    |    |          |   |       |   |          |   |    |   |   |   |
| Sales                                                | $  |    | 470,800       |   | $     |   | 231,900       |   | $  |   | 702,700 |   |
| Cost of Goods Sold                                   |    |    | 298,600       |   |       |   | 240,600       |   |    |   | 539,200 |   |
| Gross Profit (Loss)                                  |    |    | 172,200       |   |       |   | (8,700        | )      |    |   | 163,500 |   |
| Selling, General & Administrative Expenses       |    |    | 165,600       |   |       |   | 500,700       |   |    |   | 666,300 |   |
| Operating Income (Loss)                              | $  |    | 6,600         |   | $     |   | (509,400      | )      | $  |   | (502,800 | ) |
| Gross Margin                                         |    |    | 36.6%         |   |       |   | -3.8%         |   |    |   | 23.3% |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| Capital Expenditures                                 | $  |    | -             |   | $     |   | 1,700         |   | $  |   | 1,700 |   |
| Depreciation & Amortization                      | $  |    | 6,900         |   | $     |   | 22,100        |   | $  |   | 29,000 |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| As of June 30, 2010                                  |    |    |          |   |       |   |          |   |    |   |   |   |
| Assets related to discontinued operations            |    |    |          |   |       |   |          |   |    |   |   |   |
| Inventory, net                                       |    | $       | 50,000        |   | $     |   | 860,900       |   | $  |   | 910,900 |   |
| Costs and estimated earnings in excess of billings   |    |    | -             |   |       |   | 95,200        |   |    |   | 95,200 |   |
| Prepaid expenses and other assets                    |    |    | -             |   |       |   | 328,800       |   |    |   | 328,800 |   |
| Property, plant and equipment, net                   |    |    | -             |   |       |   | 59,400        |   |    |   | 59,400 |   |
| Goodwill                                             |    |    | -             |   |       |   | 576,700       |   |    |   | 576,700 |   |
|    Total                              |    | $       | 50,000        |   | $     |   | 1,921,000     |   |  $ |   | 1,971,000 |   |
|                                                 |    |    |          |   |       |   |          |   |    |   |   |   |
| Liabilities related to discontinued operations       |    |    |          |   |       |   |          |   |    |   |   |   |
| Billings in excess of costs and estimated earnings   |    | $       | -             |   | $     |   | 98,700        |   | $  |   | 98,700 |   |
| Customer advances                                    |    |    | -             |   |       |   | 768,100       |   |    |   | 768,100 |   |
| Accounts payable and accrued expenses                |    |    | -             |   |       |   | 631,300       |   |    |   | 631,300 |   |
|    Total                              |    | $       | -             |   | $     |   | 1,498,100     |   | $  |   | 1,498,100 |   |

----

|                         |    | September 30, |      |   | June 30, |   |
|------------------------------|---------|---------------|-----------|--------|----------|--------|
|                         |    | 2010          |      |   | 2010     |   |
|                         |    | (unaudited)   |      |   |     |   |
| Deferred revenue             |  $ |          | 757,400   |   | $   |   | 684,800 |   |
| Less - current portion       |    |          | (386,000) |   |     |   | (309,300) |   |
| Deferred revenue - long term |  $ |          | 371,400   |   |  $  |   | 375,500 |   |

----

----

----

----

----

----

----

| EBITDA RECONCILIATION to NET LOSS FROM CONTINUING OPERATIONS |
|--------------------------------------------------------------|
| (Unaudited)                                                  |
|                                                         |   | 3 months ended |   |   | 3 months ended |   |
|                                                         |   | September 30, |   |   | September 30, |   |
|                                                         |   | 2010 |   |   | 2009 |   |
| EBITDA before Stock-based compensation                       |   |   |   |   |   |   |
| and Corporate Expense                                        |  $ | (344,700) |   |  $ | 77,100 |   |
|                                                         |   |   |   |   |   |   |
|    Corporate Expense                               |   | (302,700) |   |   | (160,800) |   |
|    Stock-based compensation                        |   | (337,900) |   |   | (168,800) |   |
|                                                         |   |   |   |   |   |   |
| EBITDA                                                       |   | (985,300) |   |   | (252,500) |   |
|                                                         |   |   |   |   |   |   |
|    Net interest expense                            |   | (167,800) |   |   | (174,500) |   |
|    Depreciation and amortization                   |   | (130,200) |   |   | (135,600) |   |
|                                                         |   |   |   |   |   |   |
| NET LOSS FROM CONTINUING OPERATIONS                          | $  | (1,283,300) |   | $  | (562,600) |   |

----

----

----

| (b)   | CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING |
|-----------------|------------------------------------------------------|

----

----

|   | 31.1 | Certification of Chief Executive Officer |
|--------|------|------------------------------------------|
|   | 31.2 | Certification of Chief Financial Officer |
|   | 32.1 | Certification of Chief Executive Officer |
|   | 32.2 | Certification of Chief Financial Officer |

|                                        /s/ John A. Carlson             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                         John A. Carlson           |
|                                         Chief Financial Officer   |
|                                         Alanco Technologies, Inc. |

----

| /s/ Robert R. Kauffman               |
|--------------------------------------|
| ________________________             |
| Robert R. Kauffman                   |
| Chairman and Chief Executive Officer |

----

| /s/ John A. Carlson                                  |
|------------------------------------------------------|
| ________________________                             |
| John A. Carlson                                      |
| Executive Vice President and Chief Financial Officer |

----

| 1.   | The Report 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 the Company for the periods presented. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        /s/ Robert R. Kauffman                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                         Robert R. Kauffman                   |
|                                         Chairman and Chief Executive Officer |
|                                         Alanco Technologies, Inc.            |

----

| 1.   | The Report 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 the Company for the periods presented. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        /s/ John A. Carlson             |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                         John A. Carlson           |
|                                         Chief Financial Officer   |
|                                         Alanco Technologies, Inc. |

----