Applied Digital Comments on Recent Stock Activity.

DELRAY BEACH, Fla. -- Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, commented today on recent trading activity in its common stock. The Company knows of no business condition or other reason that its stock price has declined by approximately 17% since May 1st.

"The movement in the stock price is particularly frustrating in light of the progress Applied Digital has made, financially, operationally and technologically," said Scott R. Silverman, Applied Digital's Chairman and Chief Executive Officer. "Since 2003, we have seen stockholder's equity increase from a deficit of $(36.1) million at January 1, 2003 to a positive $64.8 million at March 31, 2006, we have seen gross margins improve from 35.8% in the first quarter of 2003 to 43.1% for the last quarter, we have obtained clearance from the FDA to market the VeriChip product for medical applications, we have generated significant penetration among hospitals which have agreed to adopt that system, we have seen that our majority-owned subsidiary Digital Angel (AMEX: DOC) has continued to grow revenue and improve operations as it pursues large-market opportunities in areas such as avian flu, mad cow disease, livestock tracking and the companion pet markets. Shareholders sell for a variety of reasons, but we know of no connection between the recent sales and the performance or prospects of the Company. In fact, with a strong balance sheet with over $20 million in cash and cash equivalents as of March 30th, and significantly improved operating results, prospects for the Company remain strong."

About Applied Digital - "The Power of Identification Technology"

Applied Digital develops innovative identification and security products for consumer, commercial, and government sectors worldwide. The Company's unique and often proprietary products provide identification and security systems for people, animals, the food supply, government/military arena, and commercial assets. Included in this diversified product line are RFID applications, end-to-end food safety systems, GPS/Satellite communications, and telecomm and security infrastructure, positioning Applied Digital as the leader in identification technology. Applied Digital is the owner of a majority position in Digital Angel Corporation (AMEX:DOC).

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.