Stockprowler.com | 8/27/00

Again, just a reminder to those that didn't see the change last week… the Stockprowler Report is moving to a new day and time, Sunday at 7 PM EST. It is apparent from the e-mail we receive that most readers prefer getting the report on Sunday so that they may have time to digest the information presented and do their own DD. Last week's pick DSLN surged 176% intraweek before closing out the week up 104% on news of a deal with IBM… Earlier picks POPM and MOOR jumped 71% and 62% intraweek respectively on good news…

Stockprowler's pick this week is…

Applied Digital Solutions, Inc. (NasdaqNM: ADSX)

Corporate Web site: http://www.adsx.com/frontpage/
Shares Outstanding: 50.4 million
Public Float: 42.8 million
Insider Ownership: 15%
Institutional Ownership: (39) 6%
Market Capitalization: $194 million
Closing Price Friday: $3.84

As more and more companies enter the e-business arena, they are discovering that launching a successful online enterprise can be daunting. Many require expert assistance in creating total, beginning-to-end solutions. To meet that growing need, Palm Beach, Florida based Applied Digital Solutions has developed an Application Service Provider model that goes beyond most ASP offerings. The Applied Digital Solutions model is a Managed Applications Provider (MAP) that builds the infrastructure and deploys and manages the applications for vertical operations in general business, agribusiness, retail and education. Applied Digital Solutions assists customers from the inception phase to implementation as well as providing ongoing support. The Company provides specialized applications (both commercially available and proprietary), hardware and hosting, as well as consulting and support services.

Applied Digital Solutions has successfully focused its strategic direction and organized the company into four core business groups: Internet, Telephony, Network and Applications. As part of this successful transformation, the company has positioned itself as a leading-edge provider of Computer Telephony Internet Integration (CTII) services. This CTII focus differentiates Applied Digital Solutions in the e-business solutions marketplace. With CTII, Applied Digital provides the full range of services and skills that companies need to conduct business online. Through its four integrated business groups, Applied Digital designs and deploys complete, front-to-back, web-enabled e-business systems -- all with a single point of contact for the customer.

On August 15, 2000 Applied Digital announced that it has acquired New York-based WebNet Services, Inc., a premier Internet service provider, network integrator and website developer. Commenting on the acquisition, Applied Digital's Chairman and CEO, Richard J. Sullivan said: "We're delighted to add WebNet Services to the Applied Digital family for a number of reasons. First, we'll be expanding the range of information technology solutions that we provide to e-business customers across the globe, especially in the areas of Web design and implementation, software development and customization, and network design and implementation. Second, WebNet's expertise in all of these areas - especially the fact that it brings a Microsoft Practice component to our service offerings - further strengthens our position as the one company that truly provides the full range of services and skills companies need to conduct business online. And third, by adding WebNet's considerable skills and experience in website development and application hosting, we immediately extend our capabilities as an ASP. Of course, in all of these areas WebNet fits perfectly into our overall strategic goal of enabling e-business through Computer Telephony Internet Integration (CTII)."

In addition to the strengths that WebNet Services brings to Applied Digital's business model, CEO Sullivan also noted that WebNet will serve as a prime ASP location for hosting and managing data and services related to Applied Digital's revolutionary Digital Angel™ technology. Still under development, Digital Angel is a miniature, digital transceiver expected to be bonded closely to the body or implanted just under the skin. It is anticipated that the device will be able to send and receive data regarding the location and medical condition of at-risk patients, locate lost or missing individuals or household pets, track endangered wildlife, assist in the management of livestock and other farm-related animals, pinpoint the location of valuable stolen property, find lost airline baggage and postal packages, help to manage the commodity supply chain, prevent the unauthorized use of firearms, and provide a tamper-proof means of identification for enhanced e-commerce security. In addition, this technology could be a giant step toward eliminating the anguish and suffering associated with human abduction/kidnapping.

Recently, the company announced that it will host a special event in New York City this coming October to demonstrate an operational prototype of its revolutionary Digital Angel™ technology. Richard Sullivan, CEO stated: "This technology relates directly to the exploding wireless marketplace. We'll be demonstrating for the first time ever that wireless telecommunications systems and bio-sensor devices - capable of measuring and transmitting critical body function data - can be successfully linked together with GPS technology and integrated with the Internet. This is a gigantic leap forward, one that also links directly to our Computer Telephony Internet Integration CTII™ strategic focus. At its heart, Digital Angel involves integrating the very same communications technologies into a working system. We'll soon be ready to move ahead to the production-design phase of Digital Angel geared to specific marketplace applications." Given the wide range of Digital Angel's potential applications, there is little doubt that the technology will enable Applied Digital and its partners to tap into a multi-billion dollar market via various licensing arrangements, Web-enabled wireless services and data transactions handled by Applied Digital's ASP (Application Service Provider) center.

Those attending the event in New York City will see a working, multimedia demonstration of Digital Angel's technological building blocks. A miniature sensor device -- smaller than a grain of rice and equipped with a tiny antenna -- will capture and wirelessly transmit a person's vital body-function data, such as body temperature or pulse, to an Internet-integrated ground station. In addition, the antenna will also receive information regarding the location of the individual from the GPS satellite. Both sets of data -- medical information and location -- will then be wirelessly transmitted to the ground station and made available on Web-enabled desktop, laptop or wireless devices. This demonstration represents the first time these technologies have been united into one functioning system. Dr. Peter Zhou, President and Chief Scientist at Applied Digital's Digital Angel subsidiary commented: "I'm particularly excited about Digital Angel's ability to save lives by remotely monitoring the medical conditions of at-risk patients and providing emergency rescue units with the person's exact location. I also see great potential for Digital Angel in the area of 'location-aware' e-commerce. This is a whole new wireless and Web-enabled frontier in which a purchaser's actual location is integral to making a successful sale or providing a valuable, location-critical service."

On March 3, 2000, announced that it has signed a letter of intent to acquire Destron Fearing Corporation (NASDAQ:DFCO), a leading developer, manufacturer and marketer of a broad line of electronic and visual identification devices for companion animals, livestock, laboratory animals, fish and wildlife. Under the agreement, Destron Fearing would be merged into Digital Angel.net Inc., a subsidiary of Applied Digital Solutions. Destron Fearing's CEO, Randolph K. Geissler, would become Chairman and CEO of Digital Angel.net Inc. Commenting on the proposed acquisition, Applied Digital Solutions' Chairman and CEO, Richard J. Sullivan said, "Clearly, Destron Fearing is a highly successful and respected company in the animal monitoring arena. The fact that it's a leader in electronic monitoring technologies fits right in with our focus on e-business-to-business solutions. We're particularly excited about the potential for embedding Destron Fearing and Digital Angel.net's data and technologies into the ASP (Application Service Provider) strategy we announced recently. By leveraging the experience and knowledge of Destron Fearing's seasoned management team," Sullivan continued, "we'll strengthen Digital Angel.net Inc.'s ability to realize the full potential of the Digital Angel(TM) technology we announced last December. By pooling the talents and resources of these two teams, we believe Digital Angel.net Inc., could achieve a market value in excess of $1 billion in a short period of time." Approval of the proposed merger is anticipated to take place at an adjourned meeting of Destron Fearing Corp. shareholders on Sept. 7, 2000.

For the three months ended June 30, 2000, revenue for the core group for the second quarter of 2000 grew $11.0 million, or 48.5%, and EBITDA jumped $1.8 million, or 360%, over the first quarter of 2000. Excluding the positive effects of acquisitions, revenue for the core group grew $3.2 million, or 14.1%, and EBITDA climbed $300,000, or 60%, for the second quarter of 2000 versus the first quarter of 2000. Total revenue for the six-month period ended June 30, 2000 was $149.0 million, up $24.5 million or 19.7% from revenue of $124.5 million in the same period in 1999. Included in 1999's six-month revenue is $30.3 million from companies subsequently disposed. Total revenue for the three-month period ended June 30, 2000 was $63.8 million, down $9.1 million or 12.5% from revenue of $72.9 million in the same period in 1999. Included in 1999's revenue is $17.6 million from companies subsequently disposed. Total EBITDA for the six-month period ended June 30, 2000, excluding the one-time non-recurring charge of $17.0 million was a loss of $(4.0) million compared to $6.9 million in the same period in 1999. Total EBITDA for the three-month period ended June 30, 2000, excluding the one-time, non-recurring charge of $17.0 million amounted to a loss of $(4.9) million, compared to $4.5 million in the same period in 1999.

Market Guide analysts project a 5 year sales growth of 301% for Applied Digital Solutions, Inc. Recently, Deloitte & Touche ranked the company as the 5th fastest growing technology company in its 1999 Technology Fast 500 listing. ADSX closed up 5/32 Friday at 3 27/32 on very heavy volume.

Good trading… Stockprowler