Technology breakthrough is expected to create growth opportunities with new marketplace applications

New Patent (#6,400,338) for “Passive Integrated Transponder Tag with Unitary Antenna Core” builds on the Company’s “keystone” implantable microchip patent (#5,211,129) – Worldwide patents pending

SO. ST. PAUL, MN, OCT. 3 -- Digital Angel Corporation (AMEX: DOC) announced today that it has been granted a United States patent for its next-generation, enhanced-performance implantable microchip. The subdermal, radio frequency identification (RFID) technology is expected to find a wide range of new marketplace applications. Worldwide patents are pending for this implantable microchip breakthrough.

The next-generation microchip significantly improves the performance of the Company’s existing subdermal chip, extending the range of the radio signal emitted by the chip and increasing the speed at which the information on the chip can be read by the Company’s proprietary scanners. These performance enhancements are expected to open up growth opportunities with a variety of new marketplace applications for the implanted microchip.

In essence, the technological advance involves a revolutionary and proprietary new “unitary core” design. This proprietary “unitary core” frees up more space within the surrounding tube for a bigger, more powerful antenna, which substantially increases the range of the chip’s radio signal. The new design improvement also yields a doubling in the chip’s magnetic field, which helps to open up new applications – such as doorway-type, walk-through scanners – required for a variety of security-related, building-access applications.

Commenting on the new patent, Randolph K. Geissler, CEO of Digital Angel Corporation, stated: “This is a major breakthrough for the Company, for our customers, and for our shareholders. A real tribute to our microchip R&D engineers, this patent builds on our leadership in the implantable microchip industry. We invented and pioneered this technology, and we continue to lead through the ownership of various patents and proprietary technologies surrounding the subdermal microchip. The new design and enhanced performance will open up exciting applications and growth opportunities for Digital Angel Corporation and its customers.”

The new patent builds on the Company’s underlying “keystone” patent for its implantable RFID microchip. The technological advance will become the enhanced-performance platform for the Company’s entire line of implantable microchips. The new design – which has the added benefit of making the microchip more susceptible to an automated production process – is the result of a three-year research and development effort. The new, automated manufacturing process will enable the Company to cost-effectively increase production capacity to meet ever-growing demand, especially with regard to emerging marketplace applications.

The next-generation, patented microchips will be included in production runs beginning in the fourth quarter of 2002. The new subdermal chips are fully compatible with the Company’s proprietary scanners so animal shelters and veterinary clinics will not need to replace their existing scanners. The performance of those scanners will be enhanced due to the improved RFID chip technology.

The new proprietary chip’s extended range and enhanced magnetic field will expand its utility in various animal applications, including certain fish-related applications. Some salmon species, for example, have been officially declared an endangered species in the Pacific Northwest region of the United States. In response, the U.S. Department of Energy has recognized the need for more efficient identification and research programs for salmon migratory patterns. Digital Angel’s next-generation chip will assist in this effort. Digital Angel pioneered the first microchip system, enabling the government to begin migratory tracking of microchipped salmon through U.S. waterways.

The “unitary core” microchips should also aid in the adoption of the Company’s livestock tracking and identification systems. The enhanced performance of the implantable RFID chips will simplify the data-collection (scanning) process while making the systems more cost-effective to install and easier to maintain in this very demanding market.

About Digital Angel Corporation

On March 27, 2002 Digital Angel Corporation completed a merger with Medical Advisory Systems, Inc., which for two decades has operated a 24/7, physician-staffed call center in Owings, Maryland. Prior to the merger, Digital Angel Corporation was a 93% owned subsidiary of Applied Digital Solutions, Inc. (Nasdaq: ADSX), which now is the beneficial owner of a majority position in the Company. Digital Angel™ technology and patents represent the first-ever combination of advanced sensors and Web-enabled wireless telecommunications linked to Global Positioning Systems (GPS). By utilizing advanced sensor capabilities, Digital Angel will be able to monitor key functions – such as ambient temperature and physical movement – and transmit that data, along with accurate emergency location information, to a ground station or monitoring facility. The Company also invented, manufactures and markets implantable identification microchips the size of a grain of rice for use in companion pets, fish, and livestock. Digital Angel Corporation owns patents for its inventions in applications of the implantable microchip technology for animals and humans. For more information about Digital Angel Corporation, visit www.digitalangel.net

Statements about the company’s future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time, and the company’s actual results could differ materially from expected results. The company undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances.