Exhibit 99.1 Press Release from Alanco Technologies, Inc., Dated February 15,
2005.
FOR IMMEDIATE RELEASE
CONTACTS: Alanco Investor Relations Equity Communications
- -------- (480) 607-1010 Ira Weingarten
www.alanco.com (805) 897-1880
-------------- equity@silcom.com
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ALANCO SECOND QUARTER REPORT
Data Storage Paces First Half Sales Growth
Second Half Outlook - TSI PRISM(TM) Developments
(Scottsdale, AZ - February 15, 2005) - ALANCO TECHNOLOGIES, INC. (NASDAQ: ALAN)
today announced that sales revenue for its fiscal second quarter increased 69%
to $2,086,000 and for the first half ended December 31, 2004 increased 68% to
$3,823,000. The sales increases in both periods were primarily due to sales
growth in the Company's Data Storage business segment.
The Company incurred a net loss for the second quarter of ($886,000), which
included lawsuit expenses of $169,000. In the first half period, the Company
reported a net loss of ($2,032,000), which included lawsuit expenses of $303,000
and a $252,000 non-cash charge for in-kind dividends paid on the Company's
Preferred Stock.
Data Storage sales for the six-month period increased 42% to $3,187,500,
generating an operating profit increase of over 300% to $168,500. TSI PRISM
sales and operating loss for the first six months was $635,200 and ($1,136,000),
respectively, compared to the previous year period's sales of $25,000 and
operating loss of ($987,000). Despite a gross profit improvement of $250,000,
TSI PRISM operating loss increased slightly in the first half due to an increase
of approximately $400,000 in R&D and marketing expenditures compared to the
prior year period.
Relative to the first half lawsuit expenses, the Company believes the
plaintiffs' claims are without merit and is pursuing substantial reimbursement
of its legal expenses.
Bob Kauffman, Alanco Chairman and CEO, commented on the first half results and
the second half outlook:
Data Storage
- ------------
"The improved performance of our Arraid and Excel/Meridian Data Storage
businesses is the result of extensive restructuring of these operations over the
past several years during which both organizations have dramatically improved
productivity, introduced new products, and added new customers. A further boost
was provided from an improving IT marketplace that we believe is still in the
early stages of a strong recovery. Arraid President, Gene Nicholas, and
Excel/Meridian President, Dick Vanek, are commended for the successful
turnarounds of their businesses over this past very challenging period."
"The future prospects for the Data Storage segment are excellent. In January
2005, Arraid was awarded a $655,000 contract by the United States Air Force to
provide Arraid's proprietary emulation module (AEM) disc drive replacements for
ground-based testing equipment supporting the Cruise Missile Program. This
contract is scheduled for completion during the second half and Arraid expects
to be awarded two additional contracts in fiscal 2005 totaling approximately
$1.0 million."
"We are projecting strong net operating profit growth for our Data Storage
businesses in the second half of fiscal 2005."
TSI PRISM RFID Technology
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"While gratified with the profitability turnaround in our Data Storage segment,
Alanco remains absolutely committed to the development of TSI PRISM as the
Company's core strategic business opportunity. During the first half, we
continued to advance our proprietary technology, expanded market development
activities, and initiated development of new county jail and international
market opportunities."
"First half TSI PRISM sales grew modestly due to the pilot installation at
Ohio's Ross Correctional Facility, but were obviously disappointing. In order to
accelerate projects through the states' procurement process, the Company has
been establishing new lobbying relationships in key states. We are beginning to
see real progress from these efforts, which we believe will result in finalizing
at least four to five new TSI PRISM contract awards during the second half
ending June 30, 2005. We anticipate significant revenue generation from new
projects during our final fiscal quarter."
"We have also made significant progress in expanding TSI PRISM market
opportunities beyond our historical state prison market into metropolitan county
jails and the international corrections market."
"County jails represent a major new potential market for TSI PRISM with
approximately 700,000 inmates `under roof' (compared to over 2,000,000 inmates
in state and federal prisons). A `jail' TSI PRISM application offers similar
cost and safety benefits to a `prison' installation, but with distinct operating
differences, such as high inmate turnover, which will require, for example,
modified TSI PRISM inmate wristbands with quick-release features. We are
currently working with two major metropolitan county jails to adopt a modified
TSI PRISM system for their specific requirements and expect to be awarded a
pilot installation contract during the second half."
"Despite numerous foreign inquiries, until recently the Company has not
aggressively pursued the international market for TSI PRISM. Available
transmission frequency spectrum has been a primary obstacle. In most major
foreign localities, the 900 MHz frequency utilized in our current TSI PRISM
system is either unavailable or difficult to license. In consultation with
potential partners in Asia and in Europe, Alanco has commenced development of a
2.4 GHz version of TSI PRISM, which is an open, license-free frequency available
for use internationally. During the first half the Company made significant
progress in this area and is currently bidding, with local partners, on two
major prison RFPs for RFID inmate tracking in the Netherlands and in Japan. Both
potential contracts are scheduled to be awarded during the second half of this
fiscal year."
Alanco Technologies, Inc. (NASDAQ: ALAN), headquartered in Scottsdale, Arizona,
is the developer of the TSI PRISM RFID continuous tracking system for the
corrections industry, which tracks the location and movement of inmates and
officers, resulting in significant prison operating cost reductions and enhanced
officer safety and facility security. Utilizing RFID (Radio Frequency
Identification) tracking technology with proprietary software and patented
hardware components, TSI PRISM provides real-time inmate and officer
identification, location and tracking capabilities both indoors and out. TSI
PRISM is currently utilized in prisons in Michigan, California, Illinois, and a
new Ohio installation. The Company also participates in the data storage
industry through two subsidiary companies: Arraid, Inc., a manufacturer of
proprietary storage products to upgrade older "legacy" computer systems; and
Excel/Meridian Data, Inc., a manufacturer of Network Attached Storage (NAS)
systems.
Except for historical information, the statements contained in this press
release are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All such
forward-looking statements are subject to, and are qualified by, risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by those statements. These risks and uncertainties include,
but are not limited to, reduced demand for information technology equipment;
competitive pricing and difficulty managing product costs; development of new
technologies which make the Company's products obsolete; rapid industry changes;
failure of an acquired business to further the Company's strategies; the ability
to maintain satisfactory relationships with lenders and to remain in compliance
with financial loan covenants and other requirements under current banking
agreements; and the ability to secure and maintain key contracts and
relationships.
(table follows)
Alanco Technologies, Inc.
Condensed Consolidated Statement of Operations
Six Months Ended 12/31 Three Months Ended 12/31
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenue
Data Storage $ 3,187,500 $ 2,246,700 $ 1,821,800 $ 1,211,300
RFID Technology 635,200 24,800 263,700 22,800
----------- ----------- ----------- -----------
Total Revenue 3,822,700 2,271,500 2,085,500 1,234,100
=========== =========== =========== ===========
Gross Profit
Data Storage 1,047,000 863,900 567,100 468,000
RFID Technology 257,500 7,000 116,000 10,200
----------- ----------- ----------- -----------
Total Gross Profit 1,304,500 870,900 683,100 478,200
----------- ----------- ----------- -----------
Selling, General & Admin Exp
Data Storage 878,500 822,100 433,300 404,000
RFID Technology 1,393,900 993,700 703,900 497,400
----------- ----------- ----------- -----------
Total Segment Oper Exp 2,272,400 1,815,800 1,137,200 901,400
----------- ----------- ----------- -----------
Operating Profit (Loss)
Data Storage 168,500 41,800 133,800 64,000
RFID Technology (1,136,400) (986,700) (587,900) (487,200)
Corporate Expense (795,200) (448,700) (411,700) (243,300)
----------- ----------- ----------- -----------
Operating Loss (1,763,100) (1,393,600) (865,800) (666,500)
----------- ----------- ----------- -----------
Other Income & Expenses (16,800) (75,500) (5,400) 5,100
Preferred Stock Dividends (251,700) (27,000) (15,000) (14,500)
----------- ----------- ----------- -----------
Net Loss Attributable to
Common Shareholders $(2,031,600)$(1,496,100) $ (886,200)$ (675,900)
=========== =========== =========== ===========
Net Loss Per Share $ (0.08)$ (0.09) $ (0.03)$ (0.04)
=========== =========== =========== ===========
Weighted Average Common
Shares Outstanding 24,887,000 15,789,200 25,416,700 16,402,100
=========== =========== =========== ===========
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