-Caveat Lector-

Eight people injected with silicon chips

Copyright © 2002 Tribune Media Services

By DAVID STREITFELD, Los Angeles Times

(June 7, 2002 11:35 a.m. EDT) - Eight people recently have been injected with
silicon chips, making them scannable just like a jar of peanut butter in the
supermarket checkout line.

The miniature devices, about the size of a grain of rice, were developed by a
Florida company. They will be targeted to families of Alzheimer's patients -
one of the fastest-growing groups in American society - as well as others who
have complicated medical histories. "It's a safety precaution," explained Nate
Isaacson. The retired building contractor entered his Fort Lauderdale doctor's
office on May 10 as an 83-year-old with Alzheimer's.

He left it a cyborg, a man who is also a little bit of a computer.

The chip was put in Isaacson's upper back, effectively invisible unless a hand-
held scanner is waved over it. The scanner uses a radio frequency to energize
the dormant chip, which then transmits a signal containing an identification
number. Information about Isaacson is cross-referenced under that number in a
central computer registry.

Emergency room personnel, for instance, could find out who Isaacson is and
where he lives. They'd know that he is prone to forgetfulness, that he has a
pacemaker and is allergic to penicillin.

"You never know what's going to happen when you go out the door," said
Isaacson's wife, Micki. "Should something happen, he's never going to remember
those things."

Applied Digital Solutions Inc., the maker of what it calls the VeriChip, says
that it will soon have a prototype of a much more complex device, one that is
able to receive GPS satellite signals and transmit a person's location.

It's a prospect deeply unsettling to privacy advocates, no matter how voluntary
the process may initially appear.

"Who gets to decide who gets chipped?" asked Marc Rotenberg, executive director
of the Electronic Privacy Information Center. "Parents will decide that their
kids should be implanted, or maybe their own aging parents. It's an easier way
to manage someone, like putting a leash on a pet."

Applied Digital, which says it has a waiting list of 4,000 to 5,000 people who
want a VeriChip, plans to operate a "chipmobile" that visits Florida senior
citizen's centers. An estimated 4 million people in the United States have
Alzheimer's, with more than 10 percent of them in Florida.

Jeffrey and Leslie Jacobs and their teenage son Derek, whose "chipping" was a
national media event, don't have problems with dementia. The Boca Raton, Fla.,
family has a mixture of ailments and interests: Jeffrey has been treated for
Hodgkin's disease and suffers from other conditions for which he takes 16
medications, while Derek is allergic to certain antibiotics. Mostly, though,
he's a computer buff who considers the procedure nifty. As for Leslie, she's
merely hoping to feel more secure in an insecure world.

A third group who had the simple outpatient procedure done are executives of
Applied Digital, a publicly traded company based in Palm Beach. Even their
publicist did it.

Getting chipped is easy. Making it more useful than a piece of body art will be
harder.

"There are a lot of practical issues here, as well as ethical and privacy
issues," said Mark Pafford, associate executive director of the Alzheimer's
Association's Southeast Florida chapter. "If it were me, I would use something
tried and proven, like a ID bracelet or a necklace that has an 800 number. This
VeriChip seems like it would inhibit someone being returned home in a timely
fashion. Who knows how to look under someone's skin?"

Applied Digital says that nearly all the major hospitals in the West Palm Beach
area will be equipped with the scanners. Yet St. Mary's Medical Center, a major
trauma center approached at random by a reporter, said no one had contacted
that hospital.

Isaacson's family says he has a bracelet. He also has a wallet with an ID.

"The VeriChip is more of a 'God forbid,'" said Sherry Gottlieb, Isaacson's
daughter. "You feel you have to have it, but hope you never need it."

Applied Digital is charging $200 for a chip, plus a $10 monthly fee to store
the information. As the first patients, Isaacson and the Jacobses are getting
their VeriChips for free, but that's the only financial consideration they are
receiving.

Isaacson's doctor, while agreeing to perform the insertion, has some qualms
about it. He consented to be interviewed but asked that his name not be
revealed. While protests against the VeriChip have been minimal, neither the
doctor nor Applied Digital are eager to see demonstrations. A few religious
groups say the chips are "the mark of the Beast" referred to in the Bible.

"I think this is going to be the cutting edge of the future, because quick
information saves lives," Isaacson's doctor said. "I get calls 24 hours a day
informing me that a patient has had a stroke or a heart attack and is in the
hospital. I have to go to my office, get the chart and then go to the hospital.
All that takes time, while the patient is being treated with limited
information."

And yet this family practitioner doesn't see himself chipping any youthful
patients. While he believes the procedure is safe and the chip can always be
removed, he's worried about long-term liability. "You do something to a young
person, you may be responsible for years afterwards. He may be carrying this
chip for 70 or 80 years."

Long before then - by the end of the year, in fact - the next generation of
devices will be tested.

An embedded chip with GPS capabilities would be slightly larger than a quarter
and require actual surgery to implant. Unlike the VeriChip, it also would
require Food and Drug Administration approval. That will slow down its U.S.
introduction.

"We believe we have solved the battery issue, which leaves the question of an
antenna that can transmit through skin tissue," said Keith Bolton, Applied
Digital's chief scientist. The devices will be powered by lithium ion
batteries, which can be charged remotely from outside the body.

Applied Digital says it has already received considerable interest in the
VeriChip from both commercial and government sources in Brazil and Mexico, and
expects the embedded system to be big wherever there is a big threat of
kidnapping.

The prospect of such sales is no doubt one reason Applied Digital stock, which
traded as low as 11 cents in the last year, recently rose by over 20 percent to
about $2.40.

Corporate insiders were sellers of the stock before the recent run-up, which
might indicate a lack of faith in the company's viability. The stock closed
Wednesday at 89 cents, up 1 cent, on Nasdaq.

Applied Digital is heavily indebted but says it will have actual earnings this
quarter before interest, taxes and depreciation are accounted for.

------------------------
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