STOCK PURCHASE AGREEMENT


         THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the 27th day of September, 2006, by and between ALANCO TECHNOLOGIES, INC., an
Arizona corporation ("Alanco"), and DONALD E. ANDERSON and REBECCA E. ANDERSON,
Trustees of the Anderson Family Trust, UTA dated December 20, 1993 ("Anderson").

RECITALS:

         The parties have concluded that it is to their respective mutual
advantage and benefit to effect a transaction whereby Alanco sells and transfers
all of the outstanding capital stock of Arraid, Inc., an Arizona corporation and
wholly owned subsidiary of Alanco ("Arraid") to Anderson upon the terms and
conditions contained herein.


                                   AGREEMENT

         NOW, THEREFORE, in consideration of the mutual agreements and subject
to the terms and conditions set forth in this Agreement, the parties agree as
follows:

         1.0 Purchase and Sale of Stock. Alanco agrees to sell and Anderson
agrees to purchase 1,000 shares of common stock of Arraid (the "Shares"), which
Shares are all of the outstanding shares of capital stock of Arraid.

         2.0 Consideration For the Shares. In consideration of and in exchange
for the transfer, assignment and conveyance of the Shares, Anderson shall pay
$456,422 to Alanco (the "Purchase Price"), comprised of the following:

                  2.1      $25,000, plus

                  2.2      The Net Shareholder's Equity as shown on the Balance
Sheet of Arraid as of August 31, 2006 in the amount of
$431,422.

                  2.3 The entire Purchase Price shall be paid by Anderson
crediting said amount against the amount owed by Alanco to Anderson under the
existing credit facility extended by Anderson to Alanco.

         3.0 Representations and Warranties of Alanco. Alanco represents and
warrants to Anderson as follows, and acknowledges and confirms that Anderson is
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Anderson or on their behalf:

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                  3.1 Free and Clear Title to the Shares. Alanco is the record
and beneficial owner of the Shares, and holds the Shares free and clear of any
lien, encumbrance, pledge, charge or claim, limitation, agreement or restriction
whatsoever, except for the security interest held by Anderson under the existing
credit facility, with the full and absolute right and power to assign, exchange,
transfer and deliver the Shares as herein provided; and (ii) none of the Shares
shall be subject to any voting trust or voting agreement, nor will any valid
proxy be in existence with respect to the Shares. Upon the transfer of the
Shares to Anderson as contemplated hereby, good, valid, marketable and
indefeasible title to the Shares will be vested in Anderson free and clear of
any lien, claim, charge, pledge, demand, encumbrance, limitation, agreement or
restriction except for those attributable to the actions or inactions of
Anderson. The Shares to be transferred to Anderson by Alanco hereunder represent
all of the capital stock of Arraid that will be outstanding at the Closing and
Anderson, upon acquiring the Shares, will own all of Arraid. Upon Closing, no
other person will have any right or option to acquire any interest in Arraid.

                  3.2 Organization and Standing. Arraid is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Arizona, has all of the requisite power and authority and has all of the
licenses, permits, authorities and consents that are necessary to own, operate
and lease its properties and to carry on its business as now being conducted.
Arraid is not a party to or subject to any agreement, consent decree or order,
or other understanding or arrangement with, or any directive of, any
governmental authority or other person which imposes any restriction or
otherwise affects in any material way the conduct of its business in any
jurisdiction or location.

                  3.3 Capitalization. The authorized capital of Arraid consists
solely of one million shares of common stock, 1,000 of which have been validly
issued , are now outstanding and owned by Alanco.

                  3.4 Subsidiaries. Arraid has no subsidiaries and does not
otherwise presently own or control, directly or indirectly, any other
corporation, association, or other business entity.

                  3.5 Authorization. Alanco has all the requisite legal power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby to be accomplished by it. All action on the
part of Alanco necessary for the authorization, execution, delivery, and
performance of all obligations of each under this Agreement has been taken. This
Agreement, when executed and delivered, shall constitute a legal, valid and
binding obligation of Alanco enforceable in accordance with its terms.

                  3.6 Governmental Consents. No consent, approval, order, or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Alanco or Arraid in connection with the execution, delivery or
performance of this Agreement or consummation of the transactions contemplated
hereby.

                  3.7 Compliance with Other Instruments. Neither Alanco nor
Arraid will be, as a result of the execution, delivery or performance of this
Agreement, in violation of or default under any provision of any instrument,
contract or lease to which it is a party, or of any provision of any federal or


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state judgment, writ, decree, order, statute, rule, or governmental regulation
applicable to them.

                  3.8 Financial Statements. The unaudited balance sheet and
income statement of Arraid as of and for the fiscal year ending June 30, 2006,
and preliminary projected unaudited balance sheets and income statements of
Arraid as of and for the months ending July 31, 2006 and August 31, 2006
(collectively, the "Arraid Financials"), are attached hereto as Schedule 3.8.

         The Arraid Financials have been prepared by management, are true and
correct and fairly present the financial position of Arraid as of their
respective dates and the results of its operations for the periods then ended
and contain all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation. Except to the extent reflected or reserved
against or disclosed in the Arraid Financials, as of their respective dates,
Arraid has not incurred any reasonably material liabilities or obligations of
any kind, whether accrued, absolute, contingent or otherwise, which should have
been so reflected or reserved against or disclosed, other than the lawsuit
involving Arraid Properties, LLC, for which Alanco is indemnifying the Anderson
against in accordance with section 9.1 below.

                  3.9 Undisclosed Liabilities. Arraid has no liabilities or
obligations, either absolute, accrued, contingent or otherwise, which
individually or in the aggregate are reasonably materially adverse to the
financial condition and business of Arraid, which (i) have not been reflected in
the Arraid Financials, (ii) have not been described in this Agreement or in any
of the Schedules hereto, or (iii) have not been incurred in the ordinary course
of business since August 31, 2006, consistent with past practices.

                  3.10 No Prebillings. Arraid has not pre-billed or received
payment from any of its accounts for goods to be delivered or for services to be
rendered or for expenses to be incurred by Arraid subsequent to August 31, 2006.

                  3.11 Inventory. The inventory of Arraid, as reflected in the
Arraid Financials, is stored and/or located at premises owned or leased by
Arraid or at Arraid's suppliers. The value at which Arraid's inventory is
reflected in the Arraid Financials is the cost thereof on a first-in, first-out
basis and reflects write-offs or write-downs for damaged or obsolete items in
accordance with the historical inventory policy and practices of Arraid. Arraid
has not transferred inventory on consignment or granted return privileges to any
purchaser of its goods, other than in the ordinary course of business.

                  3.12 Accounts Receivable. No amount included in the accounts
receivable of Arraid as stated in the Arraid Financials has been released for an
amount less than the value at which it was included or is or will be regarded as
unrecoverable in whole or in part except to the extent there shall have been an
appropriate bad debt reserve therefor. Such receivables are not, to the best
knowledge of Arraid, subject to any counterclaim, refusal to pay or setoff not
reflected in the reserves set forth on the Arraid Financials.

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                  3.13 Title to Assets; Liens, etc. The assets of Arraid, both
real, personal and mixed, tangible and intangible, necessary or useful to the
operation of the business of Arraid are in good condition and repair, ordinary
wear and tear excepted, and suitable for the uses intended. Arraid has good and
marketable title to its assets, free and clear of all liens and encumbrances,
other than the lien for current taxes not yet due and payable and the security
interest previously granted to Anderson. No default or event of default on the
part of Arraid, as lessee, exists with respect to any lease with respect to real
property.

                  3.14 Outstanding Indebtedness. Arraid has no indebtedness for
borrowed money (including deferred compensation) which Arraid has directly or
indirectly created, incurred, assumed or guaranteed, or with respect to which
Arraid has otherwise become directly or indirectly liable, other than as
disclosed in the Arraid Financials.

                  3.15 Employees. Arraid has no employment contracts with any of
its employees which are not terminable at will or any consulting or independent
contractor agreements with any individual or entity, and it does not have any
collective bargaining agreements covering any of its employees. There are no
employee or labor disagreements or union organization activities pending or
threatened between Arraid and its employees, and Arraid is not a party to any
union or collective bargaining agreement. Arraid complied with all applicable
federal and state equal employment opportunity laws and other laws related to
employment.

                  3.16     Employee Benefit Plans.

                  (a)      Definitions:

                           (i) "Welfare Plans" means all "employee welfare
benefit plans," as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any
other employee benefit arrangements or payroll practices, including, without
limitation, sick leave, vacation pay, salary continuation for disability,
severance hospitalization, medical insurance, and life insurance programs
maintained by Arraid or each trade or business under common control with Arraid
(as determined under Section 4001(b)(1) of ERISA, an "ERISA Affiliate") or to
which Arraid or any ERISA Affiliate has made contributions during the preceding
five (5) years; and

                           (ii) "Pension Plans" means all "employee pension
benefit plans," as defined in Section 3(2) of ERISA,
maintained by Arraid or any ERISA Affiliate or to which Arraid or any ERISA
Affiliate has made contributions during the preceding five (5) years thereunder,
including, without limitation, retirement, pension, savings, profit sharing,
severance and stock purchase programs. The Welfare Plans and Pension Plans are
hereinafter collectively referred to as the "Employee Benefit Plans."

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                  (b) No Arraid Employee Benefit Plan is required to be
qualified under ERISA or other applicable laws. There is no violation of ERISA
with respect to the filing of any applicable reports, documents and notices
regarding the Employee Benefit Plans with the Secretary of Labor and the
Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Employee Benefit Plans.

                  (c) Arraid does not maintain retiree life or retiree health
insurance plans which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after termination of employment
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA").

                  (d) Arraid is in compliance with the notice and continuation
requirements of COBRA and the regulations thereunder.

                  (e) Arraid has no formal plan or commitment, whether legally
binding or not, to create any additional Employee Benefit Plans or arrangement
or modify or change any existing Employee Benefit Plan, which would affect any
employee or former employee of Arraid.

                  (f) Neither the execution or delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in any
rights under any of the Employee Benefit Plans becoming exercisable by the
holders thereof or result in the creation or vesting of any rights in such
holder under any of the Employee Benefit Plans, or accelerate the time of
payment or vesting or increase the amount of compensation or benefits due to any
director, officer, employee or former employee of Arraid, except amounts
contributed by Alanco to the Arraid employee 401(k) plan which Alanco shall
declare immediately vested..

                  3.17 Taxes. Arraid has filed all federal, state, county, local
and foreign tax returns, reports and forms for income, excise, social security,
property, payroll, unemployment and other taxes which are required to be filed
by it, including all sales tax returns ("Tax Returns"). Arraid has paid, or
adequate provision has been made on the Arraid Financials for the payment of,
all federal, state, county, local and foreign taxes, assessments, levies or
duties, howsoever measured or imposed, and related interest and penalties, if
any (collectively, "Taxes"). No Taxes in addition to those so paid or provided
for shall be assessed or levied against or become due or payable by Arraid on or
after the Closing Date in respect to the period prior to and including the
Closing Date. No unexpired waiver of the applicable statute of limitations with
respect to any taxable year has been executed by Arraid. There are no tax
examinations or audits underway involving Arraid.

                  3.18 No Sales or Conveyance Tax Due. No sales, use or other
transfer or conveyance taxes are or will become payable by any of the parties to
this Agreement as a consequence of the execution, delivery or performance of
this Agreement or any of the Additional Agreements (as hereinafter defined),
other than taxes based upon the net income of the parties.

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                  3.19 Insurance. There are no material claims, actions, suits
or proceedings arising out of or based upon any policies of insurance covering
Arraid, its assets or operations, and, to the knowledge of Sellers and Arraid,
no basis for any such material claim, action, suit or proceeding exists. There
are no notices of any pending or threatened terminations or substantial premium
increases with respect to any of such policies, and Arraid is in compliance with
all conditions contained therein.

                  3.20     Compliance With Laws.

                  (a) Arraid is in full compliance with and operates its
business in accordance with all laws, rules and regulations applicable to or
affecting it or the conduct of its business and has secured all governmental
licenses, permits and approvals necessary to its business.

                  (b) Other than sales tax licensing and approvals to do
business, no government licenses, permits or appraisals are otherwise issued to
or relied upon by Arraid to conduct its business.

                  3.21 Litigation. Except for the lawsuit involving Arraid
Properties, LLC, there is no action, suit, arbitration, proceeding or
investigation pending or threatened against Arraid before any court or
administrative agency, nor does Alanco know or have any reason to know of any
basis for any such action, proceeding or investigation. Except with respect to
the Arraid Properties, LLC matter, neither Alanco nor Arraid has received any
opinion or memorandum or legal advice or notice from legal counsel to the effect
that it is likely, from a legal standpoint, that it will incur any liability
which may be material to its business.

                  3.22 Full Disclosure; No Misrepresentation. Alanco has fully
provided Anderson with all the information which Anderson has requested for
deciding whether to enter into this Agreement. Neither this Agreement nor any
certificate or Schedule or other information furnished by or on behalf of the
Alanco pursuant to this Agreement contains any untrue statement of a material
fact or, when this Agreement and such certificates, Schedules and other
information are taken in their entirety, omits to state a material fact
necessary to make the statements contained herein or therein not misleading.

         4.0 Representations and Warranties of Anderson. Anderson represents and
warrants to Alanco as follows, and acknowledges and confirms that Alanco is
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Alanco or on its behalf:

                  4.1. Authorization. Anderson has all the requisite legal power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement, when executed and delivered,
shall constitute a legal, valid and binding obligation of Anderson, enforceable
in accordance with its terms.

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                  4.2 Compliance with Other Instruments. Anderson will not be,
as a result of the execution, delivery or performance of this Agreement, in
violation of or default under any provision of any instrument or contract to
which they are a party, or of any provision of any federal or state judgment,
writ, decree, order, statute, rule, or governmental regulation applicable to
Anderson.

         5.0 Agreement Expenses. Each of the parties shall bear their own
expenses in connection with the transactions covered or contemplated by this
Agreement (except that none of the expenses of Alanco shall be allocated to
Arraid). Each of the parties represent each to the other parties that each has
had no dealings with any broker, finder or other party concerning Anderson's
purchase of the Shares. Each party hereby agree to indemnify and hold the other
parties harmless from all loss, cost, damage or expense (including reasonable
attorney's fees) incurred by the another party as a result of any claim arising
out of the acts of the indemnifying party (or others on its behalf) for a
commission, finder's fee or similar compensation made by any broker, finder or
any party who claims to have dealt with such party. The representations and
warranties contained in this section shall survive the Closing.

         6.0 Closing. The closing ("Closing") shall occur upon the date hereof
(the "Closing Date"). The Closing shall constitute the acts which take place on
the Closing Date by which the transactions contemplated by this Agreement are
consummated. Notwithstanding the foregoing, the effective date of the
transaction for accounting purposes shall be the close of business on August 31,
2006, so that the recording of all items of income, expense or capital occurring
prior to said time shall be made as Arraid owned by Alanco, and such items
occurring after said time shall be make as Arraid owned by Anderson. Any funds
transferred to or from Arraid since August 31, 2006 shall be reimbursed by the
appropriate party to the other party as reasonably determined by them.

         7.0      Closing Documents.  On the Closing Date, the parties shall
exchange documents as follows:

                  7.1      Delivery by Alanco. Alanco shall deliver to Anderson:

                  (a) A copy of the resolutions duly adopted by the Board of
Directors of Alanco authorizing and approving the execution, delivery and
performance of this Agreement, and the execution and delivery of any and all
other documents and agreements contemplated hereunder, certified by an
appropriate officer of Alanco.

                  (b) An assignments of the Shares to Anderson.

                  (c) Such further instruments or documents as Anderson or their
counsel may reasonably request to assure the effective carrying out of the
transactions contemplated hereby.

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                  7.2. Delivery by Anderson. Anderson shall deliver to Alanco:

                  (a) A document evidencing a credit in the amount of the
Purchase Price against the monies owed by Alanco to Anderson under the existing
credit facility.

                  (g) Such further instruments or other documents as Alanco or
its counsel may reasonably request to assure the effective carrying out of the
transactions contemplated hereby.

                  7.3. Form of Closing Documents. All closing documents shall be
in form and substance reasonably satisfactory to counsel for the respective
parties.
                  7.4 Additional Documents. The parties further agree that at
any time subsequent to the Closing Date, they will, upon request and at the
expense of the requesting party, do, execute, acknowledge and deliver, or cause
to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, conveyances, powers of attorney or assurances as may be
required for the better assigning, transferring, granting, conveying and
assuring to the parties any of the transactions contemplated herein.

         8.0      Post-Closing Agreements.

                  8.1      Employee Matters.  Funds necessary to cover any
shortfall in available cash to cover payroll expenses for the month of September
2006 shall be advanced to Arraid by Alanco to be reimbursed by Anderson.

                  8.2 Employee Insurance carry until replaced. Alanco shall
maintain the Arraid employees on its health insurance policies until Arraid has
arranged for replacement insurance, for up to sixty days following the date
hereof. Any cost to Alanco for such insuracne shall be reimbursed by Arraid or
Anderson.

         9.0      Indemnification.

                  9.1 By Alanco. Alanco agrees to pay, protect and defend and
does hereby indemnify, and hold harmless Anderson, and their heirs, successors
and assigns, against and in respect to any claims, losses, expenses, obligations
and liabilities, including reasonable attorney's fees, which arise or result
from or relate to any breach of or failure by Alanco to perform any of their
warranties, representations, guarantees, commitments, covenants, or conditions
under this Agreement. Counsel employed to defend Anderson hereunder shall be
reasonably satisfactory to Anderson. In addition, and not by way of any
limitation of the foregoing, Alanco agrees to pay, protect and defend and does
hereby indemnify, and hold harmless Anderson, and their heirs, successors and
assigns, against and in respect to any claims, losses, expenses, obligations and
liabilities, including reasonable attorney's fees, which arise or result from or
relate to that certain litigation among Arraid, Alanco, Arraid Properties, LLC,
and others in the Superior Court of the State of Arizona, County of Maricopa,
being case No. CV 2003-013999, or any appeals or subsequent actions or matters
relating thereto.

                                       8


                  9.2 By Anderson. Anderson agrees to pay, protect and defend
and hereby indemnifies and holds harmless Alanco and its officers, directors,
successors and assigns, against and in respect to any claims, losses, expenses,
costs, obligations and liabilities, including reasonable attorney's fees, which
Alanco may incur or suffer by reason of a breach of or failure by Anderson to
perform any of its warranties, representations, guarantees, commitments or
covenants in this Agreement. Counsel employed to defend Alanco hereunder shall
be reasonably satisfactory to Alanco.

         10.0 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any benefits to any person (including, without limiting the
generality of the foregoing, any present or former employee of Arraid) or
corporation or other entity, other than the parties hereto, and this Agreement
shall be for the sole and exclusive benefit of the parties hereto.

         11.0 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the successors, heirs, executors, administrators and
permitted assigns of the parties hereto. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other
parties.

         12.0 Notices. Any notice or demand to be given by any party shall be
given in writing and delivered in person; by courier service during days other
than legal holidays; by facsimile transmission between 8:00 a.m. and 5:00 p.m.,
local time of the recipient; or by certified mail, postage prepaid, to the
recipient at their respective addresses set forth below. Any such notices or
demands shall be deemed effective on the date of receipt if delivered in person,
by courier service or by facsimile transmission posting, and three business days
following posting if mailed by certified mail, provided, however, any notice
sent by facsimile transmission shall be given by overnight delivery or other
personal delivery on the next business day. Any recipient may change its addres
for notices by notice given in accordance herewith.

         (a) If to Anderson:

                  Donald E. Anderson
                  Rebecca E. Andeson.
                  11804 North Sundown Drive
                  Scottsdale, AZ 85260
                  (Facsimile Number (480) 998-5296)

         (b) If to Alanco:

                  Alanco Technologies, Inc.
                  15575 North 83rd Way, Suite 3
                  Scottsdale, AZ 85260
                  Atttn: Robert R. Kauffman, President
                  (Facsimile Number (602) 607-1515)

         13.0 Severability. In the event any covenant, condition or other
provision of this Agreement is held to be invalid or unenforceable by a final
judgment of a court of competent jurisdiction, then such covenant, condition or
other provision shall be automatically terminated and performance thereof


                                       9


waived, and such invalidity or unenforceability shall in no way affect any of
the other covenants, conditions or provisions hereof, and the parties hereto
shall negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.

         14.0 Entire Agreement. This Agreement and the Additional Agreements
contain all of the terms agreed upon by the parties with respect to the subject
matter hereof and thereof and there are no representations or understandings
between the parties except as provided herein and therein. This Agreement may
not be amended or modified in any way except by a written amendment to this
Agreement duly executed by the parties.

         15.0 Waiver. No waiver of a breach of, or default under, any provision
of this Agreement shall be deemed a waiver of such provision or of any
subsequent breach or default of the same or similar nature or of any other
provision or condition of this Agreement.

         16.0 Applicable Law. This Agreement shall be governed by and construed
(both as to validity and performance) and enforced in accordance with the laws
of the State of Arizona.

         17.0 Attorneys' Fees. In any action brought to enforce the provisions
of this Agreement, the prevailing party shall be entitled to recover its
attorneys' fees and costs as determined by the court and not the jury.

         18.0 Equitable Relief. The parties agree that the remedies at law for
any breach of the terms of this Agreement are inadequate. Accordingly, the
parties consent and agree that an injunction may be issued to restrain any
breach or alleged breach of such provisions. The parties agree that terms of
this Agreement shall be enforceable by a decree of specific performance. Such
remedies shall be cumulative and not exclusive, and shall be in addition to any
other remedies which the parties may have at law or in equity.

          19.0 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument. No party shall be bound until
each party has signed at least one (1) such counterpart.


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.

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ALANCO TECHNOLOGIES, INC.
an Arizona corporation

By: /s/ Robert R. Kauffman, President
    ---------------------------------
        Robert R. Kauffman, President


/s/ Donald E. Anderson
------------------------------------------
    DONALD E. ANDERSON

/s/ Rebecca E. Anderson
------------------------------------------
    REBECCA E. ANDERSON

Trustees of the Anderson Family Trust,
UTA dated December 20, 1993


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