----

|  INDEX |
|-------------|
|        |   |   | PageNumber |
| PART I.     | FINANCIAL INFORMATION |   |
|        |   |   |   |
|        | Item 1. | Financial Statements |   |
|        |   | Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited)and June 30, 2010 |  4 |
|        |   |   |   |
|        |   | Condensed Consolidated Statements of Operations (Unaudited)For the three months ended March 31, 2011 and 2010 |  5 |
|        |   |   |   |
|        |   | Condensed Consolidated Statements of Operations (Unaudited)For the nine months ended March 31, 2011 and 2010 |  6  |
|        |   | Condensed Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)For the nine months ended March 31, 2011 |  7 |
|        |   |   |   |
|        |   | Condensed Consolidated Statements of Cash Flows (Unaudited)For the nine months ended March 31, 2011 and 2010 |  8 |
|        |   |   |   |
|        | Notes to Condensed Consolidated Financial Statements (Unaudited) | 10 |
|        |   | Note A – | Basis of Presentation and Recent Accounting Pronouncements |   |
|        |   | Note B – | Stock-Based Compensation and Warrants |   |
|        |   | Note C – | Assets Held for Sale and Discontinued Operations |   |
|        |   | Note D – | Loss per Share |   |
|        |   | Note E – | Equity |   |
|        |   | Note F – | Related Party Transactions |   |
|        |   | Note G – | Line of Credit and Term Loan |   |
|        |   | Note H – | Legal |   |
|        |   | Note I – | Sale of StarTrak Systems, LLC |   |
|        |   | Note J – | Subsequent Events |   |
|        |   | Note K – | Liquidity |   |
|        |   |   |   |   |
|        | Item 2. | Management’s Discussion and Analysis of Financial Conditionand Results of Operations |  27 |
|        |   |   |   |
|        | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 |
|        |   |   |   |
|        | Item 4. | Controls and Procedures | 32 |
|        |   |   |   |
| PART II.    | OTHER INFORMATION |   |
|        |   |   |   |
|        | Item 1. | Legal Proceedings | 33 |
|        |   |   |   |
|        | Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds | 34 |
|        |   |   |   |
|        | Item 4. | Submission of Matters to a Vote of Security Holders | 35 |
|        |   |   |   |
|        | Item 6. | Exhibits | 36 |

----

----

| CONDENSED CONSOLIDATED BALANCE SHEETS                                     |   |
|---------------------------------------------------------------------------|--------|
| AS OF MARCH 31, 2011 AND JUNE 30, 2010                                    |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   | March 31, 2011 |   |   | June 30, 2010 |   |
| ASSETS                                                                    |   | (unaudited) |   |   |   |   |
| CURRENT ASSETS                                                            |   |   |   |   |   |   |
| Cash and cash equivalents                                                 |   | $ | 183,600 |   |   | $ | 152,100 |   |
| Assets held for sale                                                      |   |   | 17,873,000 |   |   |   | 20,243,200 |   |
| Prepaid expenses and other current assets                                 |   |   | 221,800 |   |   |   | 100,000 |   |
| Total current assets                                                      |   |   | 18,278,400 |   |   |   | 20,495,300 |   |
| PROPERTY AND EQUIPMENT, NET                                               |   |   | 400 |   |   |   | 900 |   |
| TOTAL ASSETS                                                              |   | $ | 18,278,800 |   |   | $ | 20,496,200 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| LIABILITIES AND  SHAREHOLDERS' EQUITY                           |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                       |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                     |   | $ | 602,100 |   |   | $ | 581,700 |   |
| Dividends payable                                                         |   |   | 50,400 |   |   |   | 56,400 |   |
| Notes payable, current                                                    |   |   | 4,757,900 |   |   |   | 6,328,000 |   |
| Liabilites related to assets held for sale                                |   |   | 3,926,000 |   |   |   | 3,545,900 |   |
| TOTAL LIABILITIES                                                         |   |   | 9,336,400 |   |   |   | 10,512,000 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Preferred Stock - Series B Convertible - 500,000 shares authorized,       |   |   |   |   |   |   |   |   |
| 119,700 and 111,200 issued and outstanding, respectively                  |   |   | 1,183,600 |   |   |   | 1,098,500 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                                                      |   |   |   |   |   |   |   |   |
| 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,       |   |   |   |   |   |   |   |   |
| 725,000 and 735,000 shares issued and outstanding, respectively           |   |   | 3,165,900 |   |   |   | 3,210,900 |   |
| Common Stock -  75,000,000 authorized, 5,534,500 and 4,665,500  |   |   |   |   |   |   |   |   |
| shares outstanding, net of 2,000 shares of Treasury Stock,                |   |   |   |   |   |   |   |   |
| at a cost of $30,000, outstanding at June 30, 2010                        |   |   | 109,475,600 |   |   |   | 107,355,700 |   |
| Accumulated deficit                                                       |   |   | (105,697,600 | ) |   |   | (103,014,700 | ) |
| Total shareholders' equity                                                |   |   | 7,758,800 |   |   |   | 8,885,700 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                              |   | $ | 18,278,800 |   |   | $ | 20,496,200 |   |
|                                                                      |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements |   |

----

| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| FOR THE THREE MONTHS ENDED MARCH 31, (unaudited)                                                                                                  |   |
|                                                                                                                                              |   |   |   |   |   |   |
|                                                                                                                                              |   | 2011 |   |   | 2010 |   |
|                                                                                                                                              |   |   |   |   |   |   |
| NET SALES                                                                                                                                         |   | $ | - |   |   | $ | - |   |
|     Cost of goods sold                                                                                                        |   |   | - |   |   |   | - |   |
| GROSS PROFIT                                                                                                                                      |   |   | - |   |   |   | - |   |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
|     Corporate expense                                                                                                         |   |   | 262,100 |   |   |   | 227,100 |   |
|     Amortization of stock-based compensation                                                                                  |   |   | - |   |   |   | 400 |   |
|     Depreciation and amortizaton                                                                                              |   |   | 100 |   |   |   | 200 |   |
| OPERATING LOSS                                                                                                                                    |   |   | (262,200 | ) |   |   | (227,700 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
| OTHER INCOME & (EXPENSES)                                                                                                                     |   |   |   |   |   |   |   |   |
|     Interest expense, net                                                                                                     |   |   | (130,400 | ) |   |   | (277,400 | ) |
|     Other income (expense), net                                                                                               |   |   | - |   |   |   | (800 | ) |
| LOSS FROM CONTINUING OPERATIONS                                                                                                                   |   |   | (392,600 | ) |   |   | (505,900 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
| INCOME (LOSS) LOSS FROM DISCONTINUED OPERATIONS                                                                                                   |   |   | 800 |   |   |   | (514,900 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
| NET LOSS                                                                                                                                          |   |   | (391,800 | ) |   |   | (1,020,800 | ) |
|     Preferred stock dividends                                                                                                 |   |   | (79,400 | ) |   |   | (43,600 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                                                                                                      |   | $ | (471,200 | ) |   | $ | (1,064,400 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE - BASIC AND DILUTED                                                                                                     |   |   |   |   |   |   |   |   |
|      - Continuing operations                                                                                             |   | $ | (0.07 | ) |   | $ | (0.12 | ) |
|      - Discontinued operations                                                                                           |   | $ | 0.00 |   |   | $ | (0.12 | ) |
|      - Preferred stock dividends                                                                                         |   | $ | (0.02 | ) |   | $ | (0.01 | ) |
|      - Net loss per share attributable to common shareholders                                                            |   | $ | (0.09 | ) |   | $ | (0.25 | ) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
|      - Basic and diluted                                                                                                 |   |   | 5,528,800 |   |   |   | 4,331,800 |   |
|                                                                                                                                              |   |   |   |   |   |   |   |   |
|             See accompanying notes to the condensed consolidated financial statements |

----

| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                             |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| FOR THE NINE MONTHS ENDED MARCH 31, (unaudited)                                                                                                                                             |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                        |   | 2011 |   |   | 2010 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |
| NET SALES                                                                                                                                                                                   |   | $ | - |   |   | $ | - |   |
|     Cost of goods sold                                                                                                                                                  |   |   | - |   |   |   | - |   |
| GROSS PROFIT                                                                                                                                                                                |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|     Corporate expense                                                                                                                                                   |   |   | 847,400 |   |   |   | 657,700 |   |
|     Amortization of stock-based compensation                                                                                                                            |   |   | 193,400 |   |   |   | 99,400 |   |
|     Depreciation and amortizaton                                                                                                                                        |   |   | 500 |   |   |   | 600 |   |
| OPERATING LOSS                                                                                                                                                                              |   |   | (1,041,300 | ) |   |   | (757,700 | ) |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| OTHER INCOME & (EXPENSES)                                                                                                                                                               |   |   |   |   |   |   |   |   |
|     Interest expense, net                                                                                                                                               |   |   | (384,400 | ) |   |   | (657,300 | ) |
|     Other income (expense), net                                                                                                                                         |   |   | (9,300 | ) |   |   | (2,700 | ) |
| LOSS FROM CONTINUING OPERATIONS                                                                                                                                                             |   |   | (1,435,000 | ) |   |   | (1,417,700 | ) |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| LOSS FROM DISCONTINUED OPERATIONS                                                                                                                                                           |   |   | (1,008,900 | ) |   |   | (1,858,800 | ) |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| NET LOSS                                                                                                                                                                                    |   |   | (2,443,900 | ) |   |   | (3,276,500 | ) |
|     Preferred stock dividends                                                                                                                                           |   |   | (239,000 | ) |   |   | (301,800 | ) |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                                                                                                                                                |   | $ | (2,682,900 | ) |   | $ | (3,578,300 | ) |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE - BASIC AND DILUTED                                                                                                                                               |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|      - Continuing operations                                                                                                                                       |   | $ | (0.27 | ) |   | $ | (0.34 | ) |
|      - Discontinued operations                                                                                                                                     |   | $ | (0.19 | ) |   | $ | (0.44 | ) |
|      - Preferred stock dividends                                                                                                                                   |   | $ | (0.04 | ) |   | $ | (0.07 | ) |
|      - Net loss per share attributable to common shareholders                                                                                                      |   | $ | (0.50 | ) |   | $ | (0.85 | ) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                                                                                                  |   |   |   |   |   |   |   |   |
|      - Basic and diluted                                                                                                                                           |   |   | 5,352,400 |   |   |   | 4,215,000 |   |
|                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                    See accompanying notes to the condensed consolidated financial statements |

----

| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY       |         |
|---------------------------------------------------------------------------|--------------|
| FOR THE NINE MONTHS ENDED MARCH 31, 2011 (unaudited)                      |         |
|                                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |         |   |   |   | SERIES D |   | SERIES E |   |   |   |   |   |   |   |
|                                                                      | COMMON 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 on notes and interest              |         | 1,100 |   |   | 2,100 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 2,100 |   |
|    Shares issued for exercise of warrants                       |         | 256,200 |   |   | 304,800 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 304,800 |   |
|    Value of stock based compensation                            |         | - |   |   | 498,600 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 498,600 |   |
|    Private offering, net of expenses                            |         | 384,300 |   |   | 612,400 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 612,400 |   |
|    Series D Preferred dividends, paid as indicated              |         | 23,700 |   |   | 37,500 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 37,500 |   |
|    Series B Preferred dividends, paid in kind                   |         | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | (85,000 | ) |   |   | (85,000 | ) |
|    Series D Preferred dividends, paid or accrued                |         | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | (31,000 | ) |   |   | (31,000 | ) |
|    Series E Preferred dividends, paid or accrued                |         | 53,900 |   |   | 83,200 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | (123,000 | ) |   |   | (39,800 | ) |
|    Conversion of Pref D to common                               |         | 129,700 |   |   | 518,900 |   |   | (51,900) |   |   | (518,900) |   |   | - |   |   | - |   |   |   | - |   |   |   | - |   |
|    Conversion of Pref E to common                               |         | 15,000 |   |   | 45,000 |   |   | - |   |   | - |   |   | (10,000) |   |   | (45,000) |   |   |   | - |   |   |   | - |   |
|    NASDAQ listing fees and other                                |         | - |   |   | (17,900) |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | (17,900 | ) |
|    Treasury share adjustment                                    |         | 2,000 |   |   | 30,000 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | - |   |   |   | 30,000 |   |
|    Net loss                                                     |         | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   | (2,443,900 | ) |   |   | (2,443,900 | ) |
| Balances, March 31, 2011                                                  |         | 5,534,500 |   | $ | 109,475,600 |   |   | 82,300 |   | $ | 814,900 |   |   | 725,000 |   | $ | 3,165,900 |   |   | $ | (105,697,600 | ) |   | $ | 7,758,800 |   |
|                                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements |

----

| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                              |
|----------------------------------------------------------------------------------------------|
| FOR THE NINE MONTHS ENDED MARCH 31, (unaudited)                                              |
|                                                                                         |   |   |   |   |   |   |
|                                                                                         |   | 2011 |   |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                         |   |   |   |   |   |   |
|     Net loss                                                             | $  |   | (2,443,900 | ) | $  |   | (3,276,500 | ) |
|     Adjustments to reconcile net loss to net                             |   |   |   |   |   |   |   |   |
|     cash used in operating activities:                                   |   |   |   |   |   |   |   |   |
|        Depreciation and amortization                      |   |   | 394,600 |   |   |   | 478,200 |   |
|        Stock-based compensation                           |   |   | 498,600 |   |   |   | 341,800 |   |
|        Stock issued for services                          |   |   | 5,300 |   |   |   | 14,800 |   |
|        Loss on sale of data storage assets                |   |   | - |   |   |   | 48,700 |   |
|        Impairment charge                                  |   |   | - |   |   |   | 325,000 |   |
|        Interest converted to equity                       |   |   | - |   |   |   | 62,500 |   |
|        Fees and interest paid with debt                   |   |   | - |   |   |   | 108,100 |   |
|     Changes in operating assets and liabilities:                         |   |   |   |   |   |   |   |   |
|        Accounts receivable, net                           |   |   | 796,100 |   |   |   | (758,500 | ) |
|        Inventories, net                                   |   |   | (841,700 | ) |   |   | 370,500 |   |
|        Costs in excess of billings and estimated earnings |   |   |   |   |   |   |   |   |
|          on uncompleted contracts               |   |   | 12,800 |   |   |   | 56,600 |   |
|        Prepaid expenses and other current assets          |   |   | 133,300 |   |   |   | 186,200 |   |
|        Accounts payable and accrued expenses              |   |   | 241,000 |   |   |   | (445,100 | ) |
|        Deferred revenue                                   |   |   | 52,400 |   |   |   | (13,700 | ) |
|        Billings and estimated earnings in excess of costs |   |   |   |   |   |   |   |   |
|           on uncompleted contracts         |   |   | 7,300 |   |   |   | (146,900 | ) |
|        Customer advances                                  |   |   | (4,500 | ) |   |   | 677,500 |   |
|        Other assets                                       |   |   | 42,600 |   |   |   | 143,600 |   |
|     Net cash used in operations                                          |   |   | (1,106,100 | ) |   |   | (1,827,200 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                         |   |   |   |   |   |   |   |   |
|     Purchase of property, plant and equipment                            |   |   | (21,500 | ) |   |   | (15,200 | ) |
|     Cash received for sale of net data storage assets                    |   |   | - |   |   |   | 61,500 |   |
|     Proceeds from sale of net RFID Technology segment assets             |   |   | 2,000,000 |   |   |   | - |   |
|     Net cash provided by investing activities                            | $  |   | 1,978,500 |   | $  |   | 46,300 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements                    |

----

| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)                                                  |    |
|--------------------------------------------------------------------------------------------------------------|---------|
| FOR THE NINE MONTHS ENDED MARCH 31, (continued)                                                              |    |
|                                                                                                         |    |   |   |   |   |   |
|                                                                                                         |    | 2011 |   |   | 2010 |   |
|                                                                                                         |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                         |    |   |   |   |   |   |
|     Proceeds from borrowings                                                             | $  |   | 784,800 |   | $  |   | 812,700 |   |
|     Repayment on borrowings                                                              |    |   | (2,382,800 | ) |   |   | (142,800 | ) |
|     Repayment of capital lease                                                           |    |   | (13,200 | ) |   |   | (11,100 | ) |
|     Proceeds from sale of equity instruments                                             |    |   | 947,200 |   |   |   | 965,500 |   |
|     Cash dividends paid                                                                  |    |   | (39,200 | ) |   |   | (17,800 | ) |
|     Other                                                                 |    |   | (17,900 | ) |   |   | (25,000 | ) |
|        Net cash provided (used) by financing  activities             |    |   | (721,100 | ) |   |   | 1,581,500 |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                              |    |   | 151,300 |   |   |   | (199,400 | ) |
|                                                                                                         |    |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, beginning of period                                                               |    |   | 400,500 |   |   |   | 413,500 |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, end of period                                                                     | $  |   | 551,800 |   | $  |   | 214,100 |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
| SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION                                                               |    |   |   |   |   |   |   |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
|     Net cash paid during the period for interest                                         | $  |   | 376,000 |   | $  |   | 323,300 |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
|     Non-Cash Activities:                                                                 |    |   |   |   |   |   |   |   |
|        Value of shares issued for services                                | $  |   | 5,300 |   | $  |   | 14,800 |   |
|        Value of stock issued for payment of notes                         | $  |   | 2,100 |   | $  |   | 748,700 |   |
|        Value of stock issued for payment of interest                      | $  |   | - |   | $  |   | 67,300 |   |
|        Dividends accrued                                                  | $  |   | - |   | $  |   | 29,600 |   |
|        Series B preferred stock dividend, paid in kind                    | $  |   | 85,000 |   | $  |   | 77,000 |   |
|        Series D preferred stock dividend, paid in kind                    | $  |   | - |   | $  |   | 178,500 |   |
|        Series D preferred stock dividend, paid in common                  | $  |   | 37,000 |   | $  |   | 105,300 |   |
|        Series D preferred stock converted to line of credit               | $  |   | - |   | $  |   | 1,691,100 |   |
|        Series D preferred stock converted to common stock                 | $  |   | 518,900 |   | $  |   | - |   |
|        Series E preferred stock dividend, paid in common stock or accrued | $  |   | 83,700 |   | $  |   | - |   |
|        Series E preferred stock converted to common stock                 | $  |   | 45,000 |   | $  |   | - |   |
|        Financing costs paid with debt                                     | $  |   | 30,000 |   | $  |   | - |   |
|        Net data storage assets sold                                       | $  |   | - |   | $  |   | 110,200 |   |
|                                                                                                         |    |   |   |   |   |   |   |   |
| See accompanying notes to the condensed consolidated financial statements                                    |    |

----

----

| ·   | 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 to approximate 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 granted                                                                                        |
|----------------------------------------|-------------------------------------------------------------------------------------------------------|
|                                   | Nine months ended                                                                                     |
|                                   | March 31, 2011                                                                                        |
| Dividend yield                         | 0%                                                                                                    |
| Expected volatility                    | 62%                                                                                                   |
| Weighted-average volatility            | 62%                                                                                                   |
| Risk-free interest rate                |              2% - 4%                      |
| Expected life of options (in years)    |          2.0 - 3.75                                      |
| Weighted average grant-date fair value |                  $.68 |

|                                  |                                                                                                              |      |                                                                                                                                        |   | Weighted Average |   | Weighted Average                                                                                                           |                                                                      | Aggregate                                                                                                                                   |   | Aggregate |
|---------------------------------------|-------------------------------------------------------------------------------------------------------------------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|----------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|
|                                  |                                                                                                              |      |                                                                                                                                        |   | Exercise Price   |   | Remaining                                                                                                                  |                                                                      | Fair                                                                                                                                        |   | Intrinsic |
|                                  |                                                                                                              |      | Shares                                                                                                                                      |   | Per Share        |   | Contractual Term (1)                                                                                                       |                                                                      | Value                                                                                                                                       |   | Value (2) |
|                                  |                                                                                                              |      |                                                                                                                                        |   |             |   |                                                                                                                       |                                                                      |                                                                                                                                        |   |      |
| Outstanding July 1, 2010              | 955,800                                                                                                           |      | $6.27                                                                                                                                       |   | 3.01             |   |  $     4,324,300                                                                                  |                                                                      | -                                                                                                                                           |
|                                  | Shares repriced during period                                                                                     | (866,000) |                                                                                                                                        | $5.82  |             | 2.78   |                                                                                                                       |         (3,873,400)                    |                                                                                                                                        | -      |
|                                  | Repriced replacement shares                                                                                       | 866,000   |                                                                                                                                        | $1.52  |             | 2.78   |                                                                                                                       |            415,900 |                                                                                                                                        | -      |
|                                  | Granted                                                                                                           |      | 172,500                                                                                                                                     |   | $1.91            |   | 4.50                                                                                                                       |                                                                      |           117,600                                                                         |   | -         |
|                                  | Exercised                                                                                                         |      |                        - |   | $0.00            |   | -                                                                                                                          |                                                                      |                        - |   | -         |
|                                  | Forfeited or expired                                                                                              | (86,600)  |                                                                                                                                        | $4.90  |             | -      |                                                                                                                       |           (391,800)     |                                                                                                                                        | -      |
| Outstanding March 31, 2011            | 1,041,700                                                                                                         |      | $1.59                                                                                                                                       |   | 2.66             |   |  $       592,600                                                                   |                                                                      | $0                                                                                                                                          |
| Exercisable March  31, 2011 | 813,400                                                                                                           |      | $1.59                                                                                                                                       |   | 2.34             |   |  $                   - |                                                                      | $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 March 31, 2011, for those awards that have an           |      |                                                                                                                                        |   |             |
|                                  | exercise price below the closing price as of March 31, 2011 of $1.14.                                             |      |                                                                                                                                        |   |             |   |                                                                                                                       |

----

|                                 |             |    |                                                           |   | Weighted       |
|--------------------------------------|------------------|---------|----------------------------------------------------------------|--------|----------------|
|                                 |             |    | Number of                                                      |   | Average        |
|                                 |             |    | Shares                                                         |   | Exercise Price |
| Warrants Outstanding, June 30, 2010  |             | 409,000 | $                                                              | 11.47  |
|                                 | Granted          |    | 95,100                                                         |   | 2.64           |
|                                 | Exercised        |    | (256,200)                                                      |   | 1.19           |
|                                 | Canceled/Expired |    |          (46,800) |   | 24.00          |
| Warrants Outstanding, March 31, 2011 |             | 201,100 | $                                                              | 5.77   |

----

|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |
|--------------------------------------------------------------|---------|-----------------------------|------------|--------|------------------------------|--------|------------|--------|---------|--------|-----------|--------|
|                                                         |    | Nine Months Ended March 31, |       |   | Three Months Ended March 31, |   |
|                                                         |    | 2011                        |       |   | 2010                         |   |       | 2011   |    |   | 2010      |   |
| Sales                                                        |    |                        |       |   |                         |   |       |   |    |   |      |   |
|     Wirelesss Asset Management           | $  |                        | 11,741,200 |   | $                            |   | 10,430,000 |   | $       |   | 4,088,400 |   |  $ |   | 3,825,800 |   |
|     RFID Technology                      |    |                        | 38,700     |   |                         |   | 674,000    |   |    |   | -         |   |   |   | 110,300 |   |
|     Data Storage                         |    |                        | -          |   |                         |   | 974,100    |   |    |   | -         |   |   |   | 144,600 |   |
|   Total Sales                                      | $  |                        | 11,779,900 |   |  $                      |   | 12,078,100 |   | $       |   | 4,088,400 |   |  $ |   | 4,080,700 |   |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Gross Profit (Loss)                                          |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wirelesss Asset Management           | $  |                        | 4,578,600  |   | $                            |   | 4,494,500  |   | $       |   | 1,892,300 |   |  $ |   | 1,637,400 |   |
|     RFID Technology                      |    |                        | 13,500     |   |                         |   | 86,500     |   |    |   | -         |   |   |   | (27,700 | ) |
|     Data Storage                         |    |                        | -          |   |                         |   | 321,000    |   |    |   | -         |   |   |   | 36,700 |   |
|   Total Gross Profit (Loss)                        | $  |                        | 4,592,100  |   | $                            |   | 4,902,000  |   | $       |   | 1,892,300 |   |  $ |   | 1,646,400 |   |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Gross Margin                                                 |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wirelesss Asset Management           |    |                        | 39.0       | %      |                         |   | 43.1       | %      |    |   | 46.3      | %      |   |   | 42.8 | % |
|     RFID Technology                      |    |                        | 34.9       | %      |                         |   | 12.8       | %      |    |   | -         |   |   |   | -25.1 | % |
|     Data Storage                         |    |                        | -          |   |                         |   | 33.0       | %      |    |   | -         |   |   |   | 25.4 | % |
|   Total Gross Margin                               |    |                        | 39.0       | %      |                         |   | 40.6       | %      |    |   | 46.3      | %      |   |   | 40.3 | % |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Selling, General and Administrative Expense                  |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wireless Asset Management            | $  |                        | 5,487,600  |   | $                            |   | 4,736,900  |   | $       |   | 1,891,500 |   |  $ |   | 1,642,300 |   |
|     RFID Technology                      |    |                        | 13,500     |   |                         |   | 1,239,800  |   |    |   |      |   |   |   | 371,500 |   |
|     Data Storage                         |    |                        | 99,900     |   |                         |   | 410,400    |   |    |   | -         |   |   |   | 98,800 |   |
|     Data Storage asset impairment charge |    |                        | -          |   |                         |   | 325,000    |   |    |   | -         |   |   |   | - |   |
|   Total SG&A Expense                           | $  |                        | 5,601,000  |   | $                            |   | 6,712,100  |   | $  |   | 1,891,500 |   |  $ |   | 2,112,600 |   |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Income (Loss) from Discontinued Operations                   |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wireless Asset Management            | $       |                        | (909,000   | )      |  $                      |   | (242,400   | )      | $  |   | 800       |   |  $ |   | (4,900 | ) |
|     RFID Technology                      |    |                        | -          |   |                         |   | (1,153,300 | )      |    |   | -         |   |   |   | (399,200 | ) |
|     Data Storage                         |    |                        | (99,900    | )      |                         |   | (414,400   | )      |    |   | -         |   |   |   | (62,100 | ) |
|     Loss on Sale - Data Storage          |    |                        | -          |   |                         |   | (48,700    | )      |    |   | -         |   |   |   | (48,700 | ) |
|   Total Income (Loss) from Discontinued Operations | $  |                        | (1,008,900 | )      | $                            |   | (1,858,800 | )      | $  |   | 800       |   |  $ |   | (514,900 | ) |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Capital Expenditures                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wirelesss Asset Management           | $  |                        | 151,400    |   | $                            |   | -          |   | $  |   | 16,600    |   |  $ |   | - |   |
|     Data Storage                         |    |                        | -          |   |                         |   | -          |   |    |   | -         |   |   |   | - |   |
|     RFID Technology                      |    |                        | -          |   |                         |   | 5,600      |   |    |   | -         |   |   |   | - |   |
|   Total Capital Expenditures                       | $  |                        | 151,400    |   | $                            |   | 5,600      |   | $  |   | 16,600    |   |  $ |   | - |   |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
| Depreciation and Amortization                                |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |
|     Wirelesss Asset Management           | $  |                        | 390,700    |   | $                            |   | 402,500    |   | $  |   | 134,600   |   |  $ |   | 132,800 |   |
|     Data Storage                         |    |                        | 3,400      |   |                         |   | 57,100     |   |    |   | -         |   |   |   | 14,800 |   |
|     RFID Technology                      |    |                        | -          |   |                         |   | 18,200     |   |    |   | -         |   |   |   | 4,600 |   |
|   Total Depreciation and Amortization              | $  |                        | 394,100    |   | $                            |   | 477,800    |   | $  |   | 134,600   |   |  $ |   | 152,200 |   |
|                                                         |    |                        |       |   |                         |   |       |   |    |   |      |   |   |   |   |   |

----

|                                                    |                                                                                                             |    | Wireless   |       |    |       |      |    |    |    |    |   |    |    |       |
|---------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|---------|------------|------------|---------|------------|-----------|---------|---------|---------|---------|--------|---------|---------|------------|
|                                                    |                                                                                                             |    | Asset      |       |    | RFID       |      |    | Data    |    |    |   |    |    |       |
|                                                    |                                                                                                             |    | Management |       |    | Technology |      |    | Storage |    |    | Total  |    |    |       |
| As of March 31, 2011                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |
| Assets held for sale                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |
|                                                    | Cash                                                                                                             | $  |       | 368,200    |    | $          |      | -       |    | $       |    | -      |    | $  |       | 368,200 |   |   |   |
|                                                    | Accounts receivable, net                                                                                         |    |       | 1,690,000  |    |       |      | 37,300  |    |    |    | -      |    |    |       | 1,727,300 |   | (1) |   |
|                                                    | Inventory, net                                                                                                   |    |       | 2,134,600  |    |       |      | 2,500   |    |    |    | -      |    |    |       | 2,137,100 |   | (2) |   |
|                                                    | Prepaid expenses and other assets                                                                                |    |       | 301,200    |    |       |      | -       |    |    |    | -      |    |    |       | 301,200 |   |   |   |
|                                                    | Property and equipment, net                                                                                      |    |       | 316,600    |    |       |      | -       |    |    |    | -      |    |    |       | 316,600 |   |   |   |
|                                                    | Goodwill                                                                                                         |    |       | 12,575,400 |    |       |      | -       |    |    |    | -      |    |    |       | 12,575,400 |   |   |   |
|                                                    | Other intangibles                                                                                                |    |       | 447,200    |    |       |      | -       |    |    |    | -      |    |    |       | 447,200 |   |   |   |
| Total assets held for sale                              | $                                                                                                           |    | 17,833,200 |       | $  |       | 39,800    |    | $       |    | -       |   | $       |    | 17,873,000 |   |   |   |
|                                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |   |
| Liabilties related to assets held for sale              |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |
|                                                    | Billings in excess of costs and estimated earnings                                                               | $  |       | -          |    | $     |      | 23,600  |    |  $ |    | -      |    | $  |       | 23,600 |   |   |   |
|                                                    | Deferred warranty revenue and customer advances                                                                  |    |       | 753,500    |    |       |      | 751,700 |    |    |    | -      |    |    |       | 1,505,200 |   | (3) |   |
|                                                    | Accounts payable and accrued expenses                                                                            |    |       | 1,742,600  |    |       |      | 644,700 |    |    |    | -      |    |    |       | 2,387,300 |   |   |   |
|                                                    | Capital leases                                                                                                   |    |       | 9,900      |    |       |      | -       |    |    |    | -      |    |    |       | 9,900 |   |   |   |
| Total liabilities related to assets held for sale       | $                                                                                                           |    | 2,506,000  |       | $  |       | 1,420,000 |    | $       |    | -       |   | $  |    | 3,926,000  |   |   |   |
|                                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |   |
| As of June 30, 2010                                     |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |
| Assets held for sale                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |
|                                                    | Cash                                                                                                             | $  |       | 248,400    |    | $     |      | -       |    | $  |    | -      |    | $  |       | 248,400 |   |   |   |
|                                                    | Accounts receivable, net                                                                                         |    |       | 2,289,000  |    |       |      | 135,000 |    |    |    | 69,900 |    |    |       | 2,493,900 |   | (1) |   |
|                                                    | Inventory, net                                                                                                   |    |       | 1,222,500  |    |       |      | 860,900 |    |    |    | 50,000 |    |    |       | 2,133,400 |   | (2) |   |
|                                                    | Costs and estimated earnings in excess of billings                                                               |    |       | -          |    |       |      | 95,200  |    |    |    | -      |    |    |       | 95,200 |   |   |   |
|                                                    | Prepaid expenses and other assets                                                                                |    |       | 729,000    |    |       |      | 328,800 |    |    |    | -      |    |    |       | 1,057,800 |   |   |   |
|                                                    | Property, plant and equipment, net                                                                               |    |       | 232,900    |    |       |      | 59,400  |    |    |    | -      |    |    |       | 292,300 |   |   |   |
|                                                    | Goodwill                                                                                                         |    |       | 12,575,400 |    |       |      | 576,700 |    |    |    | -      |    |    |       | 13,152,100 |   |   |   |
|                                                    | Other intangibles                                                                                                |    |       | 770,100    |    |       |      | -       |    |    |    | -      |    |    |       | 770,100 |   |   |   |
| Total assets held for sale                              | $                                                                                                           |    | 18,067,300 |       | $  |       | 2,056,000 |    | $  |    | 119,900 |   | $  |    | 20,243,200 |   |   |   |
|                                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |   |
| Liabilties related to assets held for sale              |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |
|                                                    | Billings in excess of costs and estimated earnings                                                               | $  |       | -          |    | $     |      | 98,700  |    | $  |    | -      |    | $  |       | 98,700 |   |   |   |
|                                                    | Deferred warranty revenue and customer advances                                                                  |    |       | 689,200    |    |       |      | 768,100 |    |    |    | -      |    |    |       | 1,457,300 |   | (3) |   |
|                                                    | Accounts payable and accrued expenses                                                                            |    |       | 1,335,400  |    |       |      | 631,300 |    |    |    | -      |    |    |       | 1,966,700 |   |   |   |
|                                                    | Capital leases                                                                                                   |    |       | 23,200     |    |       |      | -       |    |    |    | -      |    |    |       | 23,200 |   |   |   |
| Total liabilities related to assets held for sale       | $                                                                                                           |    | 2,047,800  |       | $  |       | 1,498,100 |    | $  |    | -       |   | $  |    | 3,545,900  |   |   |   |
|                                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |   |
| (1)                                                     | Accounts receivable as of March 31, 2011 and June 30, 2010 are reported net of reserves for the Wireless Asset   |
|      Management segment of $40,000. |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |
| (2)                                                     | Inventory as of March 31, 2011 is reported net of reserves of $15,000 for the Wireless Asset Management Segment. |    |       |       |    |       |      |    |
|                                                    | Inventory as of June 30, 2010 is reported net of reserves for the Wireless Asset Management, RFID Technology and |    |       |       |    |       |      |    |
|                                                    | Data Storage segments in the amount of $415,000, $175,000 and $50,000, respectively.                             |
| (3)                                                     | Deferred warranty revenue and customer advances as of March 31, 2011 and June 30, 2010 include $366,100 and |
|                                                    | $375,400, respectively, of long-term deferred warranty revenue for the Wireless Asset Management segment.        |
|                                                    |                                                                                                             |    |       |       |    |       |      |    |    |    |    |   |    |    |       |   |   |   |   |

----

----

----

----

| 1.   | Cash consideration in an amount equal to two million dollars ($2,000,000) less any amount due under the secured loan referred to in 3 below; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | ORBCOMM’s acquisition and discharge of the Anderson Trust secured debt in the principal amount of $3,900,000; |
|----------------|---------------------------------------------------------------------------------------------------------------------|

| 3.   | Cancellation  and termination of all outstanding obligations of Alanco and StarTrak to ORBCOMM under the Secured Promissory Note (as defined below), including the then outstanding principal amount anticipated to be $300,000 plus interest and fees, if any, due thereunder as of the closing date; |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Delivery to Alanco of 500,000 shares of Series E Convertible Preferred Stock of Alanco having a face amount of $2,250,000; |
|----------------|----------------------------------------------------------------------------------------------------------------------------|

| 5.   | Delivery of approximately 1,212,500 shares of Alanco Class A Common Stock; |
|----------------|----------------------------------------------------------------------------|

| 6.   | Issuance and delivery to Mellon Investor Services LLC, as escrow agent, (“Mellon”) of 249,917 shares of ORBCOMM common stock (“ORBCOMM Stock”) registered in the name of Alanco, which escrowed shares will be available to pay for half of the out of pocket costs incurred as a result of certain litigation currently pending against StarTrak; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | The issuance and delivery to Mellon, as escrow agent of 166,611 shares of ORBCOMM Stock registered in the name of Alanco (subject to certain reductions), which escrowed shares will be available to pay for a portion of certain product warranty costs; |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | The issuance and delivery to Alanco of 1,987,194 shares of ORBCOMM Stock, minus the number of escrowed shares described under 6 above; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------|

| 9.   | The issuance and delivery to Alanco of 183,550 shares of Series A perpetual convertible preferred stock of ORBCOMM with a face value of $10 per share, entitled to a 4% annual paid-in-kind dividend and each such share convertible into 1.666 shares of ORBCOMM Stock; and |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.   | Assumption by ORBCOMM of certain specified liabilities, generally consisting of liabilities arising after the closing date and liabilities reflected in the closing working capital calculations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Alanco Technologies, Inc. and Subsidiaries                                                                              |
|-------------------------------------------------------------------------------------------------------------------------|
| Pro Forma Condensed Consolidated Balance Sheet (Unaudited)                                                              |
| March 31, 2011                                                                                                          |
| Pro Forma Condensed Consolidated Unaudited Financial Information:                                                       |
| The following represents an unaudited pro forma condensed consolidated balance sheet as of March 31, 2011, assuming the |
| Company's StarTrak System, LLC sale was consummated as of that date.                                                    |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
|                                                                                                                    |   |   |   | ----------------------------(Dollars in Thousands)------------------------ |
|                                                                                                                    |   |   |   |   |   | Pro |   |   | Pro Forma |
| ASSETS                                                                                                                  |   |   | Alanco |   | Forma |   |   | Consolidated |
| Current Assets:                                                                                                         |   | (Historical) |   | Adj |   |   | Amounts |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
|                                                                                                                    | Cash |   | $ | 184 | $ | 2,000 | (1) | $ | 656 |
|                                                                                                                    |   |   |   |   |   | (670) | (2) |   |   |
|                                                                                                                    |   |   |   |   |   | (228) | (3) |   |   |
|                                                                                                                    |   |   |   |   |   | (330) | (6) |   |   |
|                                                                                                                    |   |   |   |   |   | (300) | (9) |   |   |
|                                                                                                                    | ORBCOMM Common Stock |   |                    - |   | 5,464 | (1) |   | 5,464 |
|                                                                                                                    | ORBCOMM Common Stock, held in Escrow |   |                    - |   | 1,250 | (1) |   | 1,250 |
|                                                                                                                    | ORBCOMM Preferred Stock |   |                    - |   | 1,835 | (1) |   |                     - |
|                                                                                                                    |   |   |   |   |   | (1,835) | (4) |   |   |
|                                                                                                                    | Assets Held for Sale |   | 17,873 |   |     (17,833) | (8) |   |                    40 |
|                                                                                                                    | Other Current Assets |   | 222 |   |               - |   |   | 222 |
|                                                                                                                    |   | Total Current Assets |   | 18,279 |   | (10,647) |   |   | 7,632 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
|                                                                                                                    | TOTAL ASSETS | $ | 18,279 | $ | (10,647) |   | $ | 7,632 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                    |   |   |   |   |   |   |   |
|                                                                                                                    | Accounts Payable and Accrued Expenses | $ | 602 | $ |               - |   | $ | 602 |
|                                                                                                                    | Dividends Payable |   | 50 |   | (50) | (5) |   |                     - |
|                                                                                                                    | Notes Payable - Current Portion |   | 4,758 |   | (3,900) | (1) |   |                     - |
|                                                                                                                    |   |   |   |   |   | (330) | (6) |   |   |
|                                                                                                                    |   |   |   |   |   | (228) | (3) |   |   |
|                                                                                                                    |   |   |   |   |   | (300) | (9) |   |   |
|                                                                                                                    | Liabilities related to Assets Held for Sale |   | 3,926 |   |      (2,506) | (8) |   |               1,420 |
|                                                                                                                    |   | Total Current Liabilities |   | 9,336 |   | (7,314) |   |   | 2,022 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                                                                                                       |   | 9,336 |   | (7,314) |   |   | 2,022 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
| PREFERRED STOCK - SERIES B CONVERTIBLE                                                                                  |   | 1,184 |   |               - |   |   | 1,184 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS' EQUITY                                                                                                    |   |   |   |   |   |   |   |
|                                                                                                                    | Series D Convertible Preferred Stock |   | 815 |   | (815) | (4) |   |                     - |
|                                                                                                                    | Series E Convertible Preferred Stock |   | 3,165 |   | (2,250) | (1) |   |                     - |
|                                                                                                                    |   |   |   |   |   | (915) | (4) |   |   |
|                                                                                                                    | Class A Common Stock |   | 109,476 |   | (1,588) | (1) |   | 107,888 |
|                                                                                                                    | Accumulated Deficit |   | (105,697) |   | 18,287 | (1) |   | (103,462) |
|                                                                                                                    |   |   |   |   |   | 50 | (5) |   |   |
|                                                                                                                    |   |   |   |   |   | (670) | (2) |   |   |
|                                                                                                                    |   |   |   |   |   | (105) | (4) |   |   |
|                                                                                                                    |   |   |   |   |   | (15,327) | (8) |   |   |
|                                                                                                                    |   | Total Shareholders' Equity |   | 7,759 |   | (3,333) | (7) |   | 4,426 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |
|                                                                                                                    | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 18,279 | $ | (10,647) |   | $ | 7,632 |
|                                                                                                                    |   |   |   |   |   |   |   |   |   |

----

| (1)    | Pro forma adjustments to reflect the sale of StarTrak Systems, LLC for consideration totaling $18.287 million,                  |   |   |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|   | including $2 million cash, $6.714 million in ORBCOMM Common Stock, $1.835 million in ORBCOMM Preferred                          |   |   |   |
|   | Stock, the assumption of $3.9 million in Notes Payable, the surrender of $1.588 million in Alanco Common Stock                  |   |   |   |
|   | valued at $1.31 per share and $2.25 million of Series E Preferred Stock held by ORBCOMM.                                        |   |   |   |   |
| (2)    | To record estimated costs related to the transaction including investment banking costs, legal and bonus incentives.            |
| (3)    | To reflect the payoff of an additional $228,000 in notes payable, eliminating the interest bearing debt.                        |
| (4)    | The entry reflects the retirement of Alanco's remaining preferred stock with similar value of ORBCOMM preferred                 |   |   |   |
|   | stock.  The Company believes the transaction will facilitate the retirement of the remaining $815,000 of Series D and |   |   |   |
|   | $915,000 of Series E Preferred Stock with a combined stated value of $1,835,000 through an exchange with the                    |   |   |   |
|   | equal face value of the ORBCOMM preferred stock received in the transaction.                                                    |   |   |   |   |   |
| (5)    | To eliminate preferred stock dividends at March 31, 2011 consistent with the retirement of the Series D and Series E            |   |   |   |
|   | Preferred Stock discussed in 4 above.                                                                                           |   |   |   |   |   |   |   |
| (6)    | To record repayment of an approximate final $330,000 balance under the Anderson Family Trust line of credit agreement.          |
| (7)    | Pro forma book value at 3-31-11 of $1.07 is determined by dividing the pro forma shareholder equity by the                      |
|   | net common shares outstanding after adjusting for the 1,212,500 treasury shares to be acquired in the transaction,              |   |   |   |
|   | resulting in a pro forma common shares outstanding at March 31, 2011 of 4,139,900.                                              |
| (8)    | Elimination of StarTrak Assets Held for Sale  and Liabilities Related to Assets Held for Sale.                        |   |   |   |   |
| (9)    | Payment of the $300,000 note payable to ORBCOMM pursuant to the loan agreement for an advance provided                          |   |   |   |
|   | to Alanco.                                                                                                                      |   |   |   |   |   |   |   |   |   |
|   |                                                                                                                            |   |   |   |   |   |   |   |   |   |

----

| Alanco Technologies, Inc. and Subsidiaries                                                                         |
|--------------------------------------------------------------------------------------------------------------------|
| Pro Forma Condensed Consolidated Statement of Operations (Unaudited)                                               |
| For the Nine Months Ended March 31, 2011                                                                           |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |
| The following represents an unaudited pro forma condensed consolidated statement of operations for the nine months |   |   |   |   |   |
| ended March 31, 2011, assuming the sale of StarTrak Systems, LLC was consumated on July 1, 2010.                   |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                               |   |   | ----------------------------(Dollars in Thousands)------------------------- |   |
|                                                                                                               |   |   |   |   |   | Pro |   |   |   | Pro Forma |   |
|                                                                                                               |   |   | Alanco |   |   | Forma |   |   |   | Consolidated |   |
|                                                                                                               |   |   | (Historical) |   |   | Adjustments |   |   |   | Amounts |   |
| Sales                                                                                                              |   |   | $ | - |   |   | $ | - |   |   |   | $ | - |   |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cost of Sales                                                                                         |   |   | - |   |   |   | - |   |   |   |   | - |   |
|    Corporate expense                                                                                     |   |   | 1,041 |   |   |   | - |   |   |   |   | 1,041 |   |
|                                                                                                               |   |   |   | 1,041 |   |   |   | - |   |   |   |   | 1,041 |   |
|                                                                                                               | Operating Loss |   |   | (1,041 | ) |   |   | - |   |   |   |   | (1,041 | ) |
|    Interest Expense, net                                                                                 |   |   | (334 | ) |   |   | 334 |   | (1) |   |   | - |   |
|    Other Income (Expense)                                                                                |   |   | (10 | ) |   |   | - |   |   |   |   | (10 | ) |
| LOSS FROM CONTINUING OPERATIONS                                                                                    |   |   | (1,385 | ) |   |   | 334 |   |   |   |   | (1,051 | ) |
|    Loss from Discontinued Operations                                                                     |   |   | (1,059 | ) |   |   | 959 |   | (4) |   |   | (100 | ) |
| NET LOSS                                                                                                           |   |   | (2,444 | ) |   |   | 1,293 |   |   |   |   | (1,151 | ) |
|    Preferred Stock Dividends                                                                             |   |   | (239 | ) |   |   | 154 |   | (2) |   |   | (85 | ) |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                                                                       |   | $ | (2,683 | ) |   | $ | 1,447 |   |   |   | $ | (1,236 | ) |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE - BASIC AND DILUTED                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                               | Continuing Operations |   | $ | (0.26 | ) |   |   |   |   |   |   | $ | (0.26 | ) |
|                                                                                                               | Discontinued Operations |   | $ | (0.20 | ) |   |   |   |   |   |   | $ | (0.02 | ) |
|                                                                                                               | Preferred Stock Dividends |   | $ | (0.04 | ) |   |   |   |   |   |   | $ | (0.02 | ) |
|                                                                                                               | Net Loss Per Share Attributiable to Common Shareholders |   | $ | (0.50 | ) |   |   |   |   |   |   | $ | (0.30 | ) |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                               | Basic and Diluted |   |   | 5,352,400 |   |   |   | (1,212,500 | ) | (3) |   |   | 4,139,900 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                                                                                                                | To reverse interest expense for the period based upon assumption that all interest bearing debt was paid. |   |   |
| (2)                                                                                                                | Elimination of dividends for Series E and Series D preferred shares to be retired with ORBCOMM |   |   |   |   |   |
|                                                                                                               | preferred shares received in the transaction. Balance of dividends related to Series B Preferred Stock. |   |   |
| (3)                                                                                                                | To adjust for Alanco Common Shares received from ORBCOMM in transaction. |   |   |   |
| (4)                                                                                                                | Elimination of Loss from Discontinued Operations related to StarTrak. |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Alanco Technologies, Inc. and Subsidiaries                                                                                |
|---------------------------------------------------------------------------------------------------------------------------|
| Pro Forma Condensed Consolidated Statement of Operations (Unaudited)                                                      |
| For the Twelve Months Ended June 30, 2010                                                                                 |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The following represents an unaudited pro forma condensed consolidated statement of operations for the twelve months |   |
| ended June 30, 2010, assuming the sale of StarTrak Systems, LLC was consumated on July 1, 2009.                      |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   | ------------------------------(Dollars in Thousands)-------------------------- |   |
|                                                                                                                      |   |   |   |   |   |   |   | Pro |   |   |   | Pro Forma |   |
|                                                                                                                      |   |   | Alanco |   |   |  StarTrak |   | Forma |   |   |   | Consolidated |   |
|                                                                                                                      |   |   | (Historical) |   |   |  (Historical) |   | Adjustments |   |   |   | Amounts |   |
| Sales                                                                                                                     |   |   | $ | 14,632 |   | $  | (14,632)  |   | $ | - |   |   |   | $ | - |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Cost of Sales                                                                                                |   |   | 8,664 |   |   | (8,664)  |   |   | - |   |   |   |   | - |   |
|    Selling, General and Administrative Expense                                                             |   |   | 6,726 |   |   | (5,780)  |   |   |    - |   |   |   |   | 946 |   |
|    Amortization of Stock Based Compensation                                                                     |   |   |   400 |   |   | (292)  |   |   | - |   |   |   |   | 108 |   |
|    Depreciation and Amortization                                                                                |   |   | 535 |   |   | (535)  |   |   | - |   |   |   |   | - |   |
|                                                                                                                      |   |   |   | 16,325 |   |   | (15,271)  |   |   | - |   |   |   |   | 1,054 |   |
|                                                                                                                      | Operating Loss |   |   | (1,693 | ) |   | (639)  |   |   | - |   |   |   |   | (1,054 | ) |
|    Interest Expense, net                                                                                        |   |   | (862 | ) |   | -  |   |   | 862 |   | (1) |   |   | - |   |
|    Other Income (Expense)                                                                                       |   |   | (4 | ) |   |     -  |   |   | - |   |   |   |   | (4 | ) |
| LOSS FROM CONTINUING OPERATIONS                                                                                           |   |   | (2,559 | ) |   | (639)   |   |   | 862 |   |   |   |   | (1,058 | ) |
|    Loss from Discontinued Operations                                                                            |   |   | (6,569 | ) |   | -   |   |   | -  |   |   |   |   | (6,569 | ) |
| NET LOSS                                                                                                                  |   |   | (9,128 | ) |   | (639)  |   |   | 862 |   |   |   |   | (7,627 | ) |
|    Preferred Stock Dividends                                                                                    |   |   | (385 | ) |   | -    |   |   | 281 |   | (2) |   |   | (104 | ) |
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                                                                              |   | $ | (9,513 | ) | $  | (639)  |   | $ | 1,143 |   |   |   | $ | (7,731 | ) |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE - BASIC AND DILUTED                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      | Continuing Operations |   | $ | (0.60 | ) |   |   |   |   |   |   |   |   | $ | (0.34 | ) |
|                                                                                                                      | Discontinued Operations |   | $ | (1.53 | ) |   |   |   |   |   |   |   |   | $ | (2.13 | ) |
|                                                                                                                      | Preferred Stock Dividends |   | $ | (0.09 | ) |   |   |   |   |   |   |   |   | $ | (0.03 | ) |
|                                                                                                                      | Net Loss Per Share Attributiable to Common Shareholders |   | $ | (2.22 | ) |   |   |   |   |   |   |   |   | $ | (2.50 | ) |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      | Basic and Diluted |   |   | 4,295,100 |   |   |   |   |   | (1,212,500 | ) | (3) |   |   | 3,082,600 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                                                                                                                       | To reverse interest expense for the period based upon assumption that all interest bearing debt was paid. |   |   |
| (2)                                                                                                                       | Elimination of dividends for Series E and Series D preferred shares to be retired with ORBCOMM |   |   |   |   |   |
|                                                                                                                      | preferred shares received in the transaction. Balance of dividends related to Series B Preferred Stock. |   |   |
| (3)                                                                                                                       | To adjust for Alanco Common Shares received from ORBCOMM in the transaction. |   |   |   |

----

----

----

----

----

----

----

|   | The Company carried out, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended).  Based on their evaluation, the Company’s Chief Executive Officer and its Chief Financial Officer concluded that, the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this report, because of the material weaknesses previously identified as of June 30, 2010 and the lack of appropriate independent verification supporting the proper disposal of some $415,000 of obsolete inventory, previously reserved, during the quarter ended December 31, 2010.  The inventory was disposed of by a subcontractor at the direction of StarTrak management who had reviewed inventory values in previous periods.  Notwithstanding the existence of the material weaknesses identified as of June 30, 2010 and the additional material weaknesses identified during the quarter ended December 31, 2010, management has concluded that the condensed consolidated financial statements in this Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods and dates presented. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

----

----

| For: | 4,120,988 |   | Against: | 510,559 |   | Abstain: | 37,500 |   | % For: | 88.3% |
|------|-----------|--------|----------|---------|--------|----------|--------|--------|--------|-------|

| For: | 4,616,774 |   | Against: | 2,646 |   | Abstain: | 49,627 |   | % For: | 98.9% |
|------|-----------|--------|----------|-------|--------|----------|--------|--------|--------|-------|

| For:   | 3,660,817 |   | Against: | 1,002,029 |   | Abstain: | 6,201  |   | % For: | 78.4%  |
|--------|-----------|--------|----------|-----------|--------|----------|--------|--------|--------|--------|
|   |      |   |     |      |   |     |   |   |   |   |

| For: | 4,637,151 |   | Against: | 27,761 |   | Abstain: | 4,135 |   | % For: | 67.2% |
|------|-----------|--------|----------|--------|--------|----------|-------|--------|--------|-------|

----

|   | 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/ 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. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 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. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|