THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

Security Agreement

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This Security Agreement involves

Alanco Technologies, Inc | Arraid, Inc | Excel/Meridian Data, Inc | Fry Guy, Inc | Technology Systems International, Inc | TSI Acquisition Corporation

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Title: THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
Governing Law: Arizona Date: 3/28/2005
Industry: Computer Storage Devices Sector: Technology

Exhibit 99.1

THIRD AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Third Amendment")

is entered into this 22nd day of March, 2005, between Donald E. Anderson and

Rebecca E. Anderson, Trustees of the Anderson Family Trust, UTA dated December

20, 1993 ("Lender") as secured party, and Alanco Technologies, Inc. ("ATI"), an

Arizona corporation ("Borrower 1"); Arraid, Inc. ("Al"), an Arizona corporation

("Borrower 2"); Excel/Meridian Data, Inc. ("EMD"), an Arizona corporation

("Borrower 3"); Technology Systems International, Inc. ("TSI"), an Arizona

corporation (formerly, TSI Acquisition Corporation, ("Borrower 6"); and Fry Guy,

Inc., a Nevada corporation ("Borrower 7"). Borrower 1, Borrower 2, Borrower 3,

Borrower 6, and Borrower 7, jointly and severally, individually and

collectively, the "Borrower". (Borrowers 5 and 6 were corporate subsidiaries of

ATI that are no longer in operation.)

RECITALS:

The parties entered into that Loan and Security Agreement, dated June

19, 2002, pursuant to which Lender agreed to provide certain funds to Borrower

upon the terms and conditions set forth therein (the "Agreement"). The parties

amended the Agreement pursuant to the Amendment to Loan ad Security Agreement,

dated April 15, 2003 (the "First Amendment") and the Second Amendment to Loan

and Security Agreement, dated November 1, 2003 (the "Second Amendment"), and now

wish to modify the Agreement, as preciously amended in certain respects as set

forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained

herein, the parties agree as follows:

1. Definitions. The subparagraphs of Section 1 of the Agreement corresponding to

the subparagraph numbers set forth below shall be amended by substituting the

definitions set forth below for the corresponding terms identified:

1.9 "Credit Limit" shall mean One Million Three Hundred Thousand

Dollars ($1,300,000.00).

1.19 "Maturity Date" shall mean July 1, 2007.

2. Section 3.1 of the Agreement shall be amended to read as follows:

3.1 This Agreement shall remain in full force and effect until July

1, 2007 (the "Maturity Date").

3. Section 6A (added by the First Amendment) shall be amended to read as

follows:

6A. COVENANTS OF BORROWER

Borrower agrees that so long as it is indebted to Lender under this

Agreement in an amount equal to or greater than $750,000, upon written

notice from Lender to Borrower prior to the start of any calender

quarter, revenues reported from the business operations of TSI shall

equal or exceed $3,500,000 per calender quarter, commencing with the

quarter following such written notice.

Any failure to meet the requirements of Section 6A as it previously existed are

hereby waived.

<PAGE>

4. The Borrowing Base Certificate and Compliance Certificate requird by Section

6.16(c) of the Agreement shall only be required when the indebtedness

outstanding to Lender under this Agreement equals or exceeds $750,000, and then

only following the written request of Lender to Borrower. Any previous failure

to meet the requirements of Section 6.16(c) are hereby waived.

5. No further conversion rights under Section 6B of the Agreement remain. The

minimum amount to be drawn under the Loan shall remain $500,000 in accordance

with Section 2.1 of the Agreement.

6. In consideration of Lender agreeing to the modifications to the Agreement set

forth herein, ATI shall grant to Lender a Warrant to purchase up to 75,000

shares of ATI's Class A Common Stock at a purchase price of $0.90 per share for

a five (5) year period following the date hereof. Such rights shall be

memorialized in a Warrant Agreement to be executed and delivered to Lender upon

the execution hereof in the form attached hereto as Exhibit "A".

7. Borrower agrees that (a) except as expressly provided herein to the contrary,

this Third Amendment shall not modify the Agreement as previously amended, (b)

all of the collateral described in the Agreement shall remain in all respects

subject to the lien or charge of the security interest set forth in the

Agreement, and (c) nothing contained herein and nothing done pursuant hereto,

shall effect or be construed as affecting the lien or charge of said security

interest, or the priority thereof over other liens or charges, or as releasing

or affecting the liability of any party or parties who may now or hereafter be

liable under or on account of the Agreement. The provisions of this Third

Amendment are modifications only and except as provided herein all of the terms

and conditions of the Agreement as previously amended remain in full force and

effect and the parties hereto ratify and confirm the security, priority and

enforceability of the Agreement, as expressly modified by this Third Amendment.

8. This Third Amendment shall bind and inure to the benefit of the respective

successors and assigns of each of the parties. This Third Amendment may be

executed by the parties hereto in several counterparts, each of which shall be

deemed to be an original and all of which shall constitute together but one and

the same agreement.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be

executed as of the date first above written.

BORROWERS:

"Borrower l":

Alanco Technologies, Inc., an Arizona Corporation

By: /s/ John A. Carlson

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