December 22, 2006



Barbara C. Jacobs
Assistant Director
Division of Corporation Finance
Securities and Exchange Commission
100 F Street NE
Washington, D.C.  20549

Re:      Alanco Technologies, Inc.
         Amendment No. 1 to Form S-3
         Filed on November 14, 2006
         File No. 333-137849

         Form 10-KSB/A for the fiscal year ended June 30, 2006
         File No. 0-09347

Dear Ms. Jacobs:

Alanco received your comment letter dated December 12, 2006 pertaining to a
review by the SEC of our Amendment No. 1 to Form S-3 filed on November 14, 2006.
In addition to the Form S-3, the comments referenced our Form 10-KSB indicated
above. We have filed a marked copy of our Amendment No. 2 to Form S-3 and our
Amendment No. 2 to Form 10-KSB modifying the documents as requested.

Presented below are the SEC comments specified in the December 12, 2006 letter
and, in bold italics, the Company's response or proposal to resolve the
deficiencies noted.

General

1.       Please be advised that pending comments relating to the Schedule 14A
         Proxy Statement must be resolved before we can act favorably upon a
         request for acceleration of the Form S-3.

We are aware that we must resolve pending comments to our Proxy Statement prior
to requesting acceleration of our Form S-3. The amended Proxy Statement in
response to the SEC's comments was filed on December 21, 2006, as well as
amendments to our Form 10-KSB and Form 10-QSB for the period ended September 30,
2006, which were also addressed in the SEC's October 11, 2006 comment letter
pertaining to our Proxy Statement.

Cover Page

2.       Please remove from the cover page the reference to the reverse split as
         the cover page disclosure must be limited to the requirements of Item
         501 of Regulation S-B. You may include this disclosure in the summary
         section or elsewhere in the prospectus, as appropriate.

We have moved the paragraph regarding the reverse split from the cover page to
the summary section.

Risk Factors, page 5

3.       Please refer to prior comments 3, which we reissue. We note your
         revisions to this section; however, the disclosure is still in need of
         revision. As previously indicated, each risk factor should begin with a
         subheading that succinctly characterizes the discussion that follows
         and specifically identifies the risk you wish to highlight. Please
         revise this section to provide descriptive risk factor subheadings for
         each discrete risk you identify. See sample comments #36 and #38 in
         Staff Legal Bulletin 7A, which is publicly available on our website at
         www.sec.gov, for guidance. In addition, please be sure to differentiate
         the heading of each risk factor from the body of the risk factor, such
         as by using bold text or capitalization.

We have revised the Risk Factors section of our Form S-3 to describe specific
risk factors as they relate to our particular business. While our printed copy
of the S-3 has the subheadings differentiated by using bold, italicized and
underlined format, our edgarized copy in ASCII format does not display these
differences. We have revised the Risk Factors section of our edgarized
submission to emphasize the subheadings with the use of all caps.



Form 10-K/A for the fiscal year ended June 30, 2006

Management's Discussion and Analysis of Financial Condition and Results of
Operations, page 8

4.       Please refer to prior comment 13 through 16. We note your revisions
         to this section; however, the revised disclosure is not responsive to
         the issues raised. For example, you state on page 10 that "State
         governments are considering ... applying for federal grants" under
         programs you list to finance the adoption of RFID technology. You
         suggest, though you do not explicitly state, that a reason for the drop
         in revenues in the RFID Technology segment is the high cost of the RFID
         technology, which customers are unable to finance. Has there been a
         change in the prices charged for your products and services such that
         they are surpassing your customers' purchasing ability? If not, why is
         purchasing power now a factor in the decrease in sales? Was the
         decrease in sales due instead to a decrease in volume sold? Your
         discussion of the complexity of the process and customers' ability to
         pay for the product does not directly address that you experienced a
         drop in sales over the prior year. What factors changed in fiscal year
         2006 from fiscal year 2005 or is the decrease part of a discernable
         trend from 2005 to 2006? It is still unclear from your disclosure why
         management believes sales in RFID technology dropped 23%.

Please note our revisions to the Results of Operations section regarding
revenues in the RFID Technology segment under Item 6. Management's Discussion
and Analysis of Financial Condition and Results of Operations. We have revised
our Form 10-KSB in response to your prior Comment 13 to indicate that through
meetings with various state governments who are potential buyers of our RFID
technology, the state governments are expressing interest in obtaining funding
for our product through various grant programs.

As our revision states, revenue for 2005 for the RFID Technology segment was
primarily composed of one single installation. There were no significant RFID
installations in fiscal 2006, resulting in the 23% drop in revenue. The
reduction in revenue was due to a decrease in volume of products sold. We do not
believe this decrease is a trend, but rather due to the slow, lengthy process to
complete a sale.

We have not expressed in our Form 10-KSB that the reason for the drop in
revenues is due to the high cost of the RFID technology, but rather that it has
been our experience that government sales require a lengthy procurement process
to complete a sale. We have not made any significant change in the pricing of
our product. It is not the high cost of the product that delays purchases, but
rather a matter of the state governments prioritizing their purchasing
decisions. We believe the addition of grant money available to state governments
for use in funding a TSI PRISM RFID system will enhance future sales
opportunities.

We believe that through our disclosure in the Form 10-KSB we have adequately
explained to the reader the reason for the decline in revenues from the RFID
Technology segment from 2005 to 2006, while at the same time reaching a balance
between informing the reader and maintaining control of competitive information.

5.       We reissue prior comment 14. In response to our comment inquiring about
         how the product mix changed, you added merely that they changed to
         "higher margin products." This added language does not respond to our
         comments regarding the reasons for the change and is vague as to the
         nature of the changes made. Please explain what products were dropped
         from the mix and what higher margin products were added and the reasons
         for these changes.

We have revised our Form 10-KSB under Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations in response to your
comments to indicate that there was no significant change in the product mix.
The gross margin only increased by 1.1%. As explained in the Form 10-KSB, our
Data Storage segment is constantly changing the product mix to meet customer
demands. Again, we believe there should be a balance between informing the
reader and providing competitive information regarding margins for particular
products.


6.       Throughout this section, you refer to two or more factors that
         contributed to the reported financial result or material changes over
         the reported periods. Revise to quantify the amount of the financial
         result or changes contributed by each of the factors or events that you
         identify as they relate to revenues, cost of revenues and gross profit,
         sales and marketing, research and development and general and
         administrative. As one example only, quantify the factors you cite as
         reasons for the increase in operating loss on page 10, namely
         "increased operating losses in the RFID Technology segment and a
         reduction in operating income in the Data Storage segment, offset by a
         decrease in corporate expenses." Quantify all offsetting factors as
         well. See Section III.D of SEC Release 33-6835.

We have made revisions throughout Item 6. Management's Discussion and Analysis
of Financial Condition and Results of Operations of our Form 10-KSB to quantify
financial changes and factors contributing to those changes.

Liquidity and Capital Resources

7.       Please refer to prior comment 17. Tell us whether you have entered into
         a definitive agreement with respect to the $4 million debt financing,
         which you indicate "was expected to be completed by September 30,
         2006." If it has not been completed and you do not currently have
         sufficient cash funds to complete the year, please revise the risk
         factor disclosure in the pending registration statement to provide
         specific information regarding the number of months your current cash
         resources will fund operations, how much additional capital you will
         require to complete the year.

We have revised the Liquidity and Capital Resources section of our Form10-KSB to
indicate that the agreement with respect to the $4 million debt financing was
completed on September 28, 2006. Included in the section is Management's
assessment as to the future capital requirements of the Company.

If you have any questions, please contact John Carlson directly at 480-505-4869
or Adele Mackintosh directly at 480-505-4857.

Sincerely,

/s/ John A. Carlson                                  /s/ Adele L. Mackintosh

John A. Carlson                                      Adele L. Mackintosh
Executive VP and CFO                                 Corporate Secretary