Applied Digital Solutions to Acquire 80% Stake in E-commerce Infrastructure Venture With Connect Intelligence and Cisco Systems, Linked Into Global Crossing's Fiber Optic Network.

Business Editors/High Tech Writers

PALM BEACH, Fla.--(BUSINESS WIRE)--Oct. 4, 2000

Working with Connect Intelligence, Applied Digital will have a 25-year

exclusive right to use up to 70 high-speed, fiber optic circuits,

which link Dublin with the US and connect Dublin with Europe

Applied Digital Solutions, Inc. (NASDAQ: ADSX), a leading, single-source provider of e-business solutions, today announced that it has signed a letter of intent to acquire an 80% stake in an e-commerce venture sponsored by Connect Intelligence, a pan-European provider of e-infrastructure, Internet connectivity and enhanced Internet services.

Based in Ireland, Connect Intelligence has successfully completed a vetting procedure and has now been formally offered up to 70 high-speed fiber optic circuits from the Irish government's Department of Enterprise and Employment. The offering, part of the Irish government's e-commerce infrastructure initiative, grants Connect Intelligence and its partners exclusive rights to nearly one half of all circuits to and from the Republic of Ireland.

These Connect Intelligence circuits are part of the "Irish Loop" that connects into Global Crossing's (Nasdaq: GLBX) Pan-European and Transatlantic fiber optic network. Connect Intelligence will have a 25-year Indefeasible Right of Use (IRU) on these circuits, 16 of which link Dublin and the United States, while 34 connect Dublin and Europe. Cisco Systems (Nasdaq: CSCO) has agreed to participate in the Applied Digital-Connect Intelligence project by providing end-to-end project management of all network development.

In a prepared statement, Richard J. Sullivan, Chairman and CEO of Applied Digital Solutions, stated: "This is a remarkable opportunity for Applied Digital, one that we believe will build long-term shareholder value through profitable growth. This arrangement with Connect Intelligence will enable Applied Digital to build on our existing operations in the United Kingdom and expand our complement of e-business solutions under our ongoing strategy of enabling e-business through CTII(TM) (Computer Telephony Internet Integration). The European e-commerce market is booming right now. According to a recent Lehman Brothers report ('Nothing But Net'), e-commerce spending in Europe is expected to increase from about $50 billion this year to roughly $430 billion in 2003. That's a 140% annual growth rate, which would mean that Europe could soon account for one third of the global e-commerce market. This unique arrangement enables us to link up with proven networking and Internet infrastructure leaders like Cisco Systems and Global Crossing. As a result, we'll be able to expand our ability to serve the connectivity and enhanced e-commerce needs of our US-based customers while reaching out to potential new customers in Europe."

By entering into this venture with Connect Intelligence, Applied Digital is acknowledging the growing importance of providing customers with a reliable IT infrastructure as part of its effort to be a single-source provider of e-business solutions. According to Valerie Williamson, Vice President/General Manager of NetWorld+InterOp, having a reliable IT infrastructure is key to a company's e-business strategy. "Successful e-business," Williamson writes, "depends on reliable IT infrastructure. As e-business takes center stage, companies have to evolve their e-infrastructure and build strategic relationships with external partners to meet these new business initiatives. To survive, many companies are developing network strategies that integrate outsourced services as well as internal networks."

Connect Intelligence, a company founded by 20-year IT industry veteran Max Turpie, believes that large national and Pan-European enterprises in the financial services, media and e-commerce sectors increasingly depend on the Internet to conduct business, but they are constrained by the current unreliability, lack of security, slow performance and limited functions of the Internet. Through its arrangement with the Irish Government, Connect Intelligence has the opportunity to own and operate a fully serviced and supported private network throughout Europe, linked to the US with substantial total capacity of 10.8 Gigabits for use in its managed data traffic services.

This new venture allows Applied Digital and its customers to benefit from direct access to these advanced managed data services. Connect Intelligence plans to use its private, high capacity, Pan-European fiber optic based server network to provide its customers with a comprehensive suite of solutions that integrate content delivery, hosting, intelligent networking and application services. The primary services to be provided are:

--Connectivity Services: The Company will offer connectivity designed to deliver high availability and performance required by high-volume Internet operations;

--Web Hosting: The Company will offer a comprehensive suite of solutions to meet its customers current and future Web hosting needs;

--Application Hosting: Combining hosting capability with connectivity to provide businesses with "always on" capability for high content delivery and transaction sites;

The Applied Digital-Connect Intelligence venture plans to outsource the complete rollout of the network to Cisco Systems. Because the Applied Digital-Connect Intelligence venture will deploy a Cisco end-to-end network, the entire operation will have Cisco Powered Network (CPN) status. Having CPN status entitles the venture to differentiate its service offerings in association with Cisco's leadership position in the Internet networking industry.

More Background on European E-Commerce Growth

The Lehman Brothers report cited by Richard Sullivan also states that over the next four years there will be more than 100 million new European Internet users. That increase in Web usage will bring Europe into rough parity with the United States. In addition, a recent report by TeleGeography, Inc., a telecommunications industry research firm based in Washington, D.C., points out that until recently all of the Internet traffic exchanged between networks has been routed through the U.S., even when the traffic didn't originate from or stop at a U.S.-based destination. But that situation is changing. According to TeleGeography, there is now more bandwidth linking European cities to each other than there is between those cities and the United States. Also, of the Top Ten international routes, seven originate and terminate in Europe, while only three have connections to the U.S. Finally, TeleGeography reports that London has now overtaken New York as the largest international Internet hub.

About Applied Digital's CTII(TM) Initiative

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.

About Applied Digital Solutions, Inc.

Applied Digital Solutions is a leading-edge, single-source provider of e-business solutions. The Company differentiates itself in the marketplace by enabling e-business through Computer Telephony Internet Integration (CTII(TM)). With five-year revenue growth (from 1994 to 1998) of 64,012%, Applied Digital Solutions is ranked as the fifth fastest-growing technology company by Deloitte & Touche in its 1999 Technology Fast 500 listing. For more information, visit the company's web site at http://www.adsx.com .

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. The Company intends that 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.