Digital Angel Corporation Signs New Multi-Year Agreement with Schering-Plough.

Company Expects Significant Increases in Microchip Sales to Schering-Plough

SO. ST. PAUL, Minn. -- Digital Angel Corporation (AMEX: DOC) has signed a multi-year exclusive distribution agreement with Schering-Plough Home Again LLC, a wholly owned subsidiary of Schering-Plough Corporation (NYSE: SGP), to provide electronic identification microchips and scanners as part of the HomeAgain[TM] Proactive Pet Recovery Network, Digital Angel announced today. Schering-Plough's new network, which markets the complete Digital Angel electronic pet identification system under the brand name HomeAgain[TM], is the nation's first comprehensive system to assist in the search for lost pets.

"The need to identify and track companion animals is profound particularly after a major event such as Hurricane Katrina," said Kevin McGrath, CEO and President of Digital Angel. "One in three pets becomes lost during his or her lifetime and without proper identification 90 percent never return home. This indicates a significant need for a microchip-based proactive recovery service. This renewed partnership with Schering-Plough, using our patented radio frequency identification (RFID) implantable microchips, will help us continue to serve pet owners and the expanding pet health product market in the United States."

The new agreement with Schering-Plough replaces a contract signed in 2004. The agreement is necessitated by significant and positive changes in the Schering-Plough business model for the HomeAgain system. Currently, more than 100 million pets in the United States are not micro-chipped or enrolled in a recovery service.

McGrath commented, "We anticipate a significant increase in the number of pets micro-chipped as Schering-Plough launches its new HomeAgain business model. Through May 2007, Schering-Plough has already committed to purchase more microchips than it purchased in all of 2006. We believe 2007 microchip unit sales to Schering-Plough will be significantly above last year's sales."

Digital Angel has been a pioneer in pet identification. The company has developed and manufactured a series of RFID products for pets including microchips, readers and non-surgical injection systems for 15 years.

Schering-Plough launched the new HomeAgain network in January. The advanced pet-tracking system begins with an implantable microchip, a safe and permanent form of identification. When a registered pet is found and scanned, the pet can be traced back to his or her owner through the national database. Additionally, within minutes of a missing pet report being filed with a 24-hour, seven day-a-week emergency call center, dispatchers notify area shelters and veterinary clinics and share information such as the pet's description and a photo. More than 4 million pets in the United States have been implanted with a HomeAgain microchip, resulting in more than 300,000 successful recoveries.

Digital Angel is a leader in implantable RFID microchips for livestock, equine, fish and pets. The advanced technology company also manufactures aircraft and personal locator tracking beacons for many of the world's top military forces.

About Digital Angel Corporation

Digital Angel Corporation (www.DigitalAngelCorp.com) develops and deploys sensor and communications technologies that enable rapid and accurate identification, location tracking, and condition monitoring of high-value assets. Applications for the Company's products include identification and monitoring of humans, pets, fish, poultry and livestock through its patented implantable microchips; location tracking and message monitoring of vehicles and aircraft in remote locations through systems that integrate GPS and geosynchronous satellite communications; and monitoring of asset conditions such as temperature and movement, through advanced miniature sensors. Digital Angel Corporation is majority-owned by Applied Digital Inc. (Nasdaq:ADSX).

The statements in this press release that are not strictly historical, are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are intended to be covered by the safe harbors created by these sections. The forward-looking statements are subject to risks and uncertainties and the actual results that the Company achieves may differ materially from these forward-looking statements due to such risks and uncertainties, including, but not limited to, that Applied Digital Inc. owns 55.4% of the Company's common stock, that new accounting pronouncements regarding expensing of share based compensation may impact the Company's future results of operations, the Company may continue to incur net losses, infringement by third parties on the Company's intellectual property or development of substantially equivalent proprietary technology by the Company's competitors could negatively impact the Company's business, domestic and foreign government regulation and other factors could impair the Company's ability to develop and sell its products in certain markets, the Company relies on sales to government contractors for its animal identification and search and rescue beacon products, and any decline in the demand by these customers for such products could negatively affect the Company's business, the Company depends on a single production arrangement for its patented syringe-injectable microchips, and the loss of or any significant reduction in the production could have an adverse effect on the Company's business, technological change could cause the Company's products to become obsolete, the loss of one of the Company's principal customers could negatively impact the Company's net revenue, the Company's earnings will decline if the Company writes off goodwill and other intangible assets, options and warrants outstanding and available for issuance may adversely affect the market price of the Company's common stock, currency exchange rate fluctuations could have an adverse effect on the Company's sales and financial results, the Company depends on a small team of senior management. A detailed statement of risks and uncertainties is contained in the Company's reports to the Securities and Exchange Commission, including in particular the Company's Form 10-K for the fiscal year ended December 31, 2005. Investors and stockholders are urged to read this document carefully. The Company can offer no assurances that any projections, assumptions or forecasts made or discussed in this release will be met, and investors should understand the risks of investing solely due to such projections. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release.