UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---

FORM 10-Q

| | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the quarterly period ended June 30, 2002 | 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------- | 

OR

| | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the transition period from ____________ to ________________ | 
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Commission File No.: 0-22693

SYSCOMM INTERNATIONAL CORPORATION(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction ofincorporation or organization) | 11-2889809(I.R.S. EmployerIdentification No.)
|--------------------------------------------------------------------- | ---------------------------------------------

7 Kingsbridge Road, Fairfield, New Jersey 07004
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code:  (973) 227-8772

Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
      Yes [X]      No [  ]

The number of shares outstanding of each class of our common equity as of August 9,
2002 is as follows:

| | Class of Common EquityCommon Stock, par value $.01 | Number of Shares4,895,998
| | -------------------------------------------------- | -------------------------

SYSCOMM INTERNATIONAL CORPORATIONTABLE OF CONTENTS

|Item      | Description                                                                           | Page | 
|--------- | ------------------------------------------------------------------------------------- | ---- | 
|          | PART I  FINANCIAL INFORMATION                                                        |      | 
|1.        | Condensed Financial Statements                                                        |      | 
|          | Consolidated Condensed Balance Sheets                                                |      | 
|          | June 30, 2002 (unaudited) and September 30, 2001                                      | 3    | 
|          | Consolidated Condensed Statements of Operations                                      |      | 
|          | Three and Nine Months ended June 30, 2002 and 2001 (unaudited)                        | 4    | 
|          | Consolidated Condensed Statement of Stockholders Equity                             |      | 
|          | Nine Months ended June 30, 2002 (unaudited)                                           | 5    | 
|          | Consolidated Condensed Statements of Cash Flows                                      |      | 
|          | Nine Months ended June 30, 2002 and 2001 (unaudited)                                  | 6    | 
|          | Notes to Consolidated Condensed Financial Statements (unaudited)                      | 7    | 
|2.        | Managements Discussion and Analysis of Financial
Condition and Results of Operations | 10   | 
|3.        | Quantitative and Qualitative Disclosures About Market
Risk                            | 15   | 
|          | PART II  OTHER INFORMATION                                                           |      | 
|4.        | Submission of Matters to a Vote of Security Holders                                   | 16   | 
|6.        | Exhibits and Reports on Form 8-K                                                      | 16   | 
|          |                                                                                       |     
|SIGNATURE | 17                                                                                    |     
|EXHIBITS  | 18                                                                                    |     

2

PART I     FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED BALANCE SHEETS             
|(In thousands except par value)                   

---

|                                                                       |                                      | Assets |             |               |       |                    |        |        | 
|---------------------------------------------------------------------- | ------------------------------------ | ------ | ----------- | ------------- | ----- | ------------------ | ------ | ------ | 
|                                                                       |                                      |        |             | June 30, 2002 |       | September 30, 2001 |       
|Current Assets                                                         |                                      |        | (Unaudited) |               |       |                    |       
|Cash and cash equivalents                                              |                                      |        | $           | 5,377         |       | $                  | 1,811  |       
|Accounts receivable (net of allowance for doubtful accounts of         |                                      | 2,595  |             |               | 9,409 |                   
|                                                                       | $301 and $414)                       |        |             |               |       |                    |        |        | 
|Inventories                                                            |                                      |        |             | 453           |       |                    | 495    |       
|Notes receivable                                                       |                                      |        |             | 28            |       |                    | 87     |       
|Deferred tax asset                                                     |                                      |        |             | 171           |       |                    | 171    |       
|Other current assets                                                   |                                      |        |             | 240           |       |                    | 502    |       
|                                                                       |                                      |        |             |               |       |                    |        |       
|                                                                       | Total Current Assets                 |        |             |               | 8,864 |                    |        | 12,475 | 
|Property and Equipment, net                                            |                                      |        |             | 569           |       |                    | 3,177  |       
|Goodwill, net                                                          |                                      |        |             | 2,154         |       |                    | 2,154  |       
|Deferred Tax Asset                                                     |                                      |        |             | 980           |       |                    | 809    |       
|Other Assets                                                           |                                      |        |             | 441           |       |                    | 456    |       
|                                                                       |                                      |        |             |               |       |                    |        |       
|Total Assets                                                           |                                      |        | $           | 13,008        |       | $                  | 19,071 |       
|                                                                       |                                      |        |             |               |       |                    |        |       
|                                                                       |                                      |        |             |               |       |                    |        |        | 
|                                                                       | Liabilities and Stockholders' Equity |        |             |               |       |                    |       
|Current Liabilities                                                    |                                      |        |             |               |       |                    |        |       
|Current maturities of long-term debt and capital lease obligations     | $                                    | 17     |             | $             | 1,007 |                   
|Current amounts due to Parent Company                                  |                                      |        | 2,784       |               |       | 947                |       
|Accounts payable                                                       |                                      |        |             | 484           |       |                    | 4,850  |       
|Accrued expenses                                                       |                                      |        |             | 1,371         |       |                    | 1,177  |       
|                                                                       |                                      |        |             |               |       |                    |        |       
|Total Current Liabilities                                              |                                      |        |             | 4,656         |       |                    | 7,981  |       
|Note Payable - Parent Company                                          |                                      |        |             | -             |       |                    | 2,398  |       
|Long-Term Debt and Capital Lease Obligations, Net                      |                                      | 33     |             |               | 42    |                   
|                                                                       |                                      |        |             |               |       |                   
|                                                                       | Total Liabilities                    |        |             |               | 4,689 |                    |        | 10,421 | 
|                                                                       |                                      |        |             |               |       |                    |        |        | 
|Commitments and Contingencies                                          |                                      |        |             |               |       |                    |        |       
|Stockholders Equity                                                   |                                      |        |             |               |       |                    |        |       
|Preferred shares:                                                      |                                      |        |             |               |       |                    |        |       
|Authorized 5,000 shares, no par value; none issued                     |                                      |       |             |               |      |                   
|Common shares:                                                         |                                      |        |             |               |       |                    |        |       
|Authorized 80,000 shares of $.01 par value; 5,757 shares issued; 4,896 |                                      |        |             |               |       |                   
|shares outstanding                                                     |                                      | 58     |             |               | 58    |                   
|                                                                       |                                      |        |             |               |       |                    |        |        | 
|Additional paid-in capital                                             |                                      |        |             | 6,653         |       |                    | 6,653  |       
|Retained earnings                                                      |                                      |        |             | 2,526         |       |                    | 2,857  |       
|Treasury stock (carried at cost, 861 shares)                           |                                      | (918)  |             |               | (918) |                   
|                                                                       |                                      |        |             |               |       |                    |        |        | 
|                                                                       | Total Stockholders Equity           |        |             |               | 8,319 |                    |        | 8,650  | 
|                                                                       |                                      |        |             |               |       |                    |        |        | 
|Total Liabilities and Stockholders' Equity                             |                                      | $      | 13,008      |               | $     | 19,071             |       
|                                                                       |                                      |        |             |               |       |                    |        |        | 

|                                                                           |  
|-------------------------------------------------------------------------- | -
|See the accompanying notes to consolidated condensed financial statements. | 3

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS   
|(In thousands except per share data)(Unaudited)   

|                                             |   | For The Three Months |  |   | For The Nine Months | 
|-------------------------------------------- | - | -------------------- |  | - | ------------------- | 
|                                             |   | Ended June 30,       |  |   | Ended June 30,      | 
|                                             |   |                      |  |   |                     | 
|                                             |   | 2002                 |  |   | 2001                | 
|                                             |   |                      |  |   |                     | 
|Product revenue                              | $ | 4,127                |  | $ | 6,474               | 
|Service revenue                              |   | 668                  |  |   | 991                 | 
|                                             |   |                      |  |   |                     | 
|Total revenue                                |   | 4,795                |  |   | 7,465               | 
|                                             |   |                      |  |   |                     | 
|Cost of products sold                        |   | 3,412                |  |   | 5,992               | 
|Cost of services sold                        |   | 419                  |  |   | 477                 | 
|                                             |   |                      |  |   |                     | 
|Cost of products and services sold           |   | 3,831                |  |   | 6,469               | 
|                                             |   |                      |  |   |                     | 
|Gross profit                                 |   | 964                  |  |   | 996                 | 
|Selling, general and administrative expenses |   | 917                  |  |   | 1,306               | 
|Depreciation and amortization                |   | 68                   |  |   | 153                 | 
|                                             |   |                      |  |   |                     | 
|Loss from operations                         |   | (21)                 |  |   | (463)               | 
|Other (income) expense:                      |   |                      |  |   |                     | 
|Other income                                 |   | -                    |  |   | (29)                | 
|Interest expense                             |   | 45                   |  |   | 76                  | 
|                                             |   |                      |  |   |                     | 
|Loss before income tax expense (benefit)     |   | (66)                 |  |   | (510)               | 
|Income tax expense (benefit)                 |   | 6                    |  |   | (186)               | 
|                                             |   |                      |  |   |                     | 
|Net loss available to common stockholders    | $ | (72)                 |  | $ | (324)               | 
|                                             |   |                      |  |   |                     | 
|                                             |   |                      |  |   |                     | 
|Net loss per common share  basic            | $ | (0.01)               |  | $ | (0.07)              | 
|                                             |   |                      |  |   |                     | 
|Weighted average number of common            |   |                      |  |   |                     | 
|shares outstanding  basic                   |   | 4,896                |  |   | 4,696               | 
|                                             |   |                      |  |   |                     | 

|                                                                           |  
|-------------------------------------------------------------------------- | -
|See the accompanying notes to consolidated condensed financial statements. | 4

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES                                              
|------------------------------------------------------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months ended June 30, 2002
|(In Thousands)(Unaudited)                                                                       

|                            | Preferred Stock |  | Common Stock |        | AdditionalPaid-In Capital |        | Retained Earnings |   | Treasury Stock |  | Total Stockholder'sEquity
|--------------------------- | --------------- |  | ------------ | ------ | ------------------------- | ------ | ----------------- | - | -------------- |  | -------------------------
|                            | Number          |  |              | Amount |                           | Number |                   |   | Amount         |  |                          
|Balance, September 30, 2001 |                |  | $            |       |                           | 5,757  |                   | $ | 58             |  | $   6,653                
|Net loss                    |                 |  |              |        |                           |        |                   |   |                |  |                         
|                            |                 |  |              |        |                           |        |                   |   |                |  |                          
|Balance, June 30, 2002      |                |  | $            |       |                           | 5,757  |                   | $ | 58             |  | $   6,653                
|                            |                 |  |              |        |                           |        |                   |   |                |  |                          
|                            |                 |  |              |        |                           |        |                   |   |                |  |                          

|                                                                           |  
|-------------------------------------------------------------------------- | -
|See the accompanying notes to consolidated condensed financial statements. | 5

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES
|--------------------------------------------------
|CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS   
|(In thousands)(Unaudited)                         

---

|                                                                           | For The Nine MonthsEnded June 30, |        
|-------------------------------------------------------------------------- | --------------------------------- | -------
|                                                                           |                                   | 2002   
|Cash flows from operating activities                                       |                                   |        
|Net loss                                                                   | $                                 | (331)  
|Adjustments to reconcile net loss to cash provided by operating activities |                                   |        
|Depreciation and amortization                                              |                                   | 206    
|Deferred tax benefit                                                       |                                   | (171)  
|Change in assets and liabilities:                                          |                                   |        
|Decrease in accounts receivable                                            |                                   | 6,814  
|Decrease in inventories                                                    |                                   | 42     
|Decrease (increase) in other current assets                                |                                   | 262    
|Decrease in other assets                                                   |                                   | 15     
|Decrease in accounts payable and accrued expenses                          |                                   | (4,241)
|                                                                           |                                   |        
|Net cash provided by operating activities                                  |                                   | 2,596  
|                                                                           |                                   |        
|Cash flows from investing activities                                       |                                   |        
|Payments for costs of business acquisitions                                |                                   |       
|Payments for property and equipment                                        |                                   | (38)   
|Payments received on notes receivable                                      |                                   | 59     
|Proceeds from disposition of property and equipment                        |                                   | 2,440  
|                                                                           |                                   |        
|Net cash provided by (used in) investing activities                        |                                   | 2,461  
|                                                                           |                                   |        
|Cash flows from financing activities                                       |                                   |        
|Payments on long-term debt                                                 |                                   | (999)  
|Net payments on Parent Company line of credit                              |                                   | (492)  
|Sale of common stock                                                       |                                   |       
|Purchase of treasury stock                                                 |                                   |       
|                                                                           |                                   |        
|Net cash used in financing activities                                      |                                   | (1,491)
|                                                                           |                                   |        
|Net increase in cash and cash equivalents                                  |                                   | 3,566  
|                                                                           |                                   |        
|Cash and cash equivalents - beginning of period                            |                                   | 1,811  
|                                                                           |                                   |        
|Cash and cash equivalents - end of period                                  | $                                 | 5,377  
|                                                                           |                                   |        
|Supplemental Schedules of Noncash Financing Activities                     |                                   |        
|Acquisition of business:                                                   |                                   |        
|Notes payable issued for acquisition                                       | $                                 | -      

|                                                                           |  
|-------------------------------------------------------------------------- | -
|See the accompanying notes to consolidated condensed financial statements. | 6

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES  
|----------------------------------------------------
|NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|(In thousands, except per share data)(Unaudited)    

---

## 1.      Basis of Presentation

In the opinion of management,  the accompanying  unaudited consolidated condensed financial statements reflect
all adjustments,  consisting of normal recurring  accruals,  necessary to present fairly the financial  position of
SysComm International  Corporation ( the Company) and its wholly-owned  subsidiaries,  as of June 30, 2002, their
results of operations  for the three and nine months ended June 30, 2002 and 2001,  their changes in  stockholders'
equity for the nine months  ended June 30,  2002 and their cash flows for the nine  months  ended June 30, 2002 and
2001. Information included in the consolidated  condensed  balance sheet as of September 30, 2001 has been derived
from the audited  consolidated  balance  sheet  included in the  Company's  Annual Report on Form 10-K for the year
ended September 30, 2001(the  "10-K")  previously  filed with the Securities and Exchange  Commission ( the "SEC").
Pursuant  to the rules and  regulations  of the SEC,  certain  information  and  disclosures  normally  included in
financial  statements prepared in accordance with accounting  principles generally accepted in the United States of
America have been condensed or omitted from these  consolidated condensed financial  statements unless  significant  changes
have  taken  place  since  the  end  of the  most  recent  fiscal  year.  Accordingly,  these  unaudited  consolidated condensed
financial statements should be read in conjunction with the consolidated  financial statements,  notes
to consolidated financial statements and the other information in the 10-K.

The  consolidated  results of operations for the three and nine months ended June 30, 2002 are not necessarily
indicative of the results to be expected for the full year ending September 30, 2002.

Accounting Changes

Effective  October 1, 2001, the Company adopted  Statement of Financial  Accounting  Standard No. 142 Goodwill
and Other  Intangible  Assets (FAS 142).  FAS 142  requires  that  goodwill  and certain  intangibles  no longer be
amortized,  but  instead  tested for  impairment  at least  annually.  There was no  impairment  of  goodwill  upon
adoption of FAS 142.

Net loss and loss per share for the three and nine  months  ended  June 30,  2001,  adjusted  for the  assumed
exclusion of amortization expense from October 1, 2000, are as follows:

|                                                          |   | For The Three |       | For The Nine  |       
|--------------------------------------------------------- | - | ------------- | ----- | ------------- | ------
|                                                          |   | Months Ended  |       | Months Ended  |       
|                                                          |   | June 30, 2001 |       | June 30, 2001 |       
|                                                          |   |               |       |               |       
|Net loss:                                                 |   |               |       |               |       
|Net loss, as reported                                     |   | $             | (324) |               | $     
|Goodwill amortization                                     |   |               | 58    |               |       
|                                                          |   |               |       |               |       
|Net loss, as adjusted                                     |   | $             | (266) |               | $     
|                                                          |   |               |       |               |       
|Basic and diluted loss per common share:                  |   |               |       |               |       
|Net loss per share, basic and diluted, as reported        | $ | (0.07)        |       | $             | (0.16)
|Goodwill amortization                                     |   | 0.01          |       |               | 0.03  
|                                                          |   |               |       |               |       
|Net loss per common share, basic and diluted, as adjusted | $ | (0.06)        |       | $             | (0.13)
|                                                          |   |               |       |               |       

##### 2.     Principles of Consolidation

The  financial  statements  include  the  accounts  of the  Company  and its  wholly-owned  subsidiaries.  All
significant intercompany accounts and transactions have been eliminated in consolidation.

7

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES  
|----------------------------------------------------
|NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|(In thousands, except per share data)(Unaudited)    

---

##### 3.     Inventory

Inventory at June 30, 2002 and September 30, 2001 consists of:

| |                                       | June 30, |      | September 30, |  
| | ------------------------------------- | -------- | ---- | ------------- | -
| |                                       | 2002     |      | 2001          |  
| |                                       |          |      |               |  
| | Finished goods                        | $        | 546  |               | $
| | Allowance for excess and obsolescence |          | (93) |               |  
| |                                       |          |      |               |  
| |                                       | $        | 453  |               | $
| |                                       |          |      |               |  

##### 4.     Loss Per Share

As further  explained in Note 2 of the notes to the Company's audited financial statements included in the Company's Form 10-K
for the year ended September 30, 2001 previously filed with the SEC,  the Company presents basic
earnings  (loss) per share and, if  appropriate,  diluted  earnings per share in accordance  with the provisions of
Statement of Financial Standards No. 128,  Earnings per Share.

Since the  Company  had net losses for the three and nine  months  ended June 30,  2002 and 2001,  the assumed
effects of the  exercise of employee  stock  options  outstanding at June 30, 2002 and 2001 for the  purchase  of  5,070  and 3,159,
respectively,  would have been anti-dilutive.

## 5.      Mergers and Acquisitions

The following represents acquisitions which occurred in the first nine months of fiscal 2001:

|                                | Date of Acquisition | PercentAcquired | AcquisitionPrice | CashConsideration | Notes Issued | BusinessDescription                               
|------------------------------- | ------------------- | --------------- | ---------------- | ----------------- | ------------ | --------------------------------------------------
|First Quarter 2001 Acquisitions |                     |                 |                  |                   |              |                                                   
|InfoTech USA,Fairfield, NJ      | 12/15/2000          | 100%            | $4,550           | $1,900            | $2,652       | Systems integratorand networkingsolutions provider

On December  14,  2000,
the Company acquired  fifty-one  percent  (51%) of the  outstanding  shares of common stock of
InfoTech USA (formerly  Information  Products Center,  Inc.), a New Jersey corporation  (InfoTech),  from Applied
Digital  Solutions,  Inc.  (ADSX).  The purchase  price for the shares of InfoTech was $2,075,  payable $1,821 in
cash and $254 by  promissory  note. On December 15, 2000,  the Company acquired the  remaining  forty-nine  percent (49%) of
the  outstanding  shares of common stock of InfoTech for  approximately  $2,400,  payable by promissory  note.  The
purchase  price of  InfoTech  was  assigned  to the assets  acquired  and the  liabilities  assumed  based on their
estimated fair values at the acquisition date, which approximated  their book values,  using the purchase method of
accounting.  Based upon such  allocations,  the aggregate  purchase  price exceeded the estimated fair value of the
net assets  acquired  resulting  in goodwill  of  $2,339 in value,  which was being  amortized  on a
straight-line  basis over 10 years through  September 30, 2001.  On October 1, 2001,  the Company  adopted FAS 142,
which  resulted in no  impairment  of goodwill.  See Note 1 for further  description  of the effects of adoption of
FAS 142.

8

|SYSCOMM INTERNATIONAL CORPORATION AND SUBSIDIARIES  
|----------------------------------------------------
|NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|(In thousands, except per share data)(Unaudited)    

---

Unaudited  pro forma results of operations  for the nine months ended June 30, 2001 are included  below.  Such
pro forma information assumes that the above transaction occurred as of October 1, 2000.

| |                                 |                                | 
| | ------------------------------- | ------------------------------ | 
| |                                 | Nine Months EndedJune 30, 2001 | 
| | Revenues                        | $  29,868                      | 
| | Net loss                        | $      (721)                   | 
| | Loss per common share  basic   | $     (0.15)                   | 
| | Loss per common share  diluted | $     (0.15)                   | 

## 6.     Change in
Control

On December 14, 2000, ADSX acquired  approximately 55% of our issued and outstanding common shares,  resulting
in a change in control of the Company.  ADSX  acquired the shares for $4,500 by issuing  approximately  1.7 million
shares of its common stock,  valued at  approximately  $2,750,  to the selling  shareholders and upon payment of an
aggregate amount of cash equal to approximately $1,750 to the selling shareholders.

## 7.     Income Tax Expense (Benefit)

The disproportionate provision for income tax
expense (benefit) for the three and nine months ended June 30, 2002 and 2001 was primarily attributable to prior period accruals for
state income taxes in 2002 and goodwill amortization in 2001.

8.      Sale of
Assets

On January 28, 2002,
the Company sold its 40,000 square foot facility  including  approximately 7.4 acres located at 20
Precision  Drive,  Shirley,  New York,  for a purchase price of $2,500.  The sale  generated cash of  approximately
$1,300 after repaying the related  mortgage and other  transaction  fees. The Company has centralized  all back office and
warehousing operations in its Fairfield, New Jersey location, which has become the new corporate headquarters.

## 9.      Potential
Merger

On July  22,  2002,  the  Company  entered  into a  non-binding  letter  of  intent  to  merge  with  VeriChip
Corporation,  a wholly-owned  subsidiary of Applied Digital Solutions,  Inc. Upon completion of the merger, Applied
Digital  Solutions will own more than 90% of the Company's issued and outstanding  common stock, as a result of the
issuance of additional  common shares to Applied  Digital  Solutions.  Applied  Digital  Solutions  currently  owns
approximately  53% of the Company's  issued and outstanding  common stock. The merger is subject to the approval of
the Company's  board of directors and  stockholders,  as well as our  completion of due diligence and obtaining all
required  governmental and third-party  consents,  including the consent of the Company's senior lender, IBM Credit
Corporation.  Accordingly,  the potential  merger with VeriChip  Corporation  remains subject to a variety of risks
and uncertainties, which may affect our ability to complete the transaction.

## 10.      Options
issued

On June 28, 2002 the Board of  Directors  approved a grant of  2,200,000  stock  options at an option price of
$0.28 (the fair market value of the Company's common stock on the date of grant) primarily to the officers and directors of the Company.  The options are  exercisable  June 28,
2003 and expire June 28, 2010.  Additionally,  the Board of  Directors  approved a grant of 375,000  stock  options
under the same terms to be used as employee incentives.

9

## ITEM 2.     
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This  discussion  should  be read in  conjunction  with  the  accompanying  consolidated  condensed  financial
statements  and  related  notes in Item 1 of this  report  as well as our  Annual  Report on Form 10-K for the year
ended September 30, 2001.  Certain  statements made in this report may contain  forward-looking  statements.  For a
description  of risks and  uncertainties  relating  to such  forward-looking  statements,  see the  Forward-Looking
Statements and Associated Risk section later in this Item.

RECENT
DEVELOPMENTS(in $'000 unless otherwise noted)

## Potential
Merger

On July 22,  2002,  we entered  into a non-binding letter of intent to merge with  VeriChip  Corporation,  a  wholly-owned
subsidiary of Applied Digital  Solutions,  Inc. Upon completion of the merger,  Applied Digital  Solutions will own
more than 90% of our issued and outstanding  common stock, as a result of the issuance of additional  common shares
to Applied  Digital  Solutions.  Applied  Digital  Solutions  currently  owns  approximately  53% of our issued and
outstanding  common  stock.  The merger is subject to the approval of our board of directors and  stockholders,  as
well as our  completion  of due  diligence  and  obtaining  all required  governmental  and  third-party  consents,
including  the  consent of our senior  lender,  IBM Credit  Corporation.  Accordingly,  the  potential  merger with
VeriChip  Corporation  remains  subject to a variety of risks and  uncertainties,  which may affect our  ability to
complete the transaction.

Sale of Assets

On January 28, 2002, we sold our 40,000 square foot facility  including  approximately 7.4 acres located at 20
Precision  Drive,  Shirley,  New York,  for a purchase price of $2,500.  The sale  generated cash of  approximately
$1,300 after repaying the related  mortgage and other  transaction  fees. We have  centralized  all back office and
warehousing operations in our Fairfield, New Jersey location, which has become our new corporate headquarters.

## Resignation of
Directors

On January 11,  2002  Garrett A.  Sullivan  retired and subsequently resigned as our  Chairman of the Board.  Our Board of
Directors  elected  Jerome C.  Artigliere to fill the vacancy  created on the Board of Directors as a result of Mr.
Sullivan's resignation.

On February 27, 2002,  Donald H. Swift resigned as our director.  Our Board of Directors is currently  seeking
a replacement to fill the vacancy left by Mr. Swift.

## New Chief
Executive Officer Appointed

On April 12, 2002, our Board of Directors  named Kevin  McLaughlin as Chief Executive  Officer  replacing Anat
Ebenstein.  Additionally, the Board of Directors appointed Kevin McLaughlin to the Board of Directors.

## Vice President
of Sales and Marketing Resigned

On February 8, 2002, John C.  Spielberger  resigned as our Vice President of Sales and Marketing.  We are in
the process of seeking a  replacement  for his position.  Mr.  Spielberger  was the account  manager for two of our
major accounts and while we continue to work with these accounts,  we could  experience a temporary  adverse affect
on our sales volume.

## Director of Sales

On June 24, 2002, we hired Robert C. Bellis as our new Director of Sales.  Mr. Bellis brings with him over 22 years of sales
and industry related experience.

10

BUSINESS
DESCRIPTION(in $'000 unless otherwise noted)

We are a Delaware  corporation  incorporated in 1997. Through our two wholly-owned  subsidiaries,  Information
Technology Services,  Inc. and InfoTech USA, Inc. (formerly  Information Products Center, Inc.), which was acquired
in December  2000, we provide  professional  services in the area of systems  integration,  information  technology
(IT)  procurement  and logistics,  and technology  strategy.  Doing business as "InfoTech",  we provide  integrated
eBusiness  strategy and  technology  implementation  services on a regional basis to enterprise and small to medium
businesses  who want to fully leverage  eBusiness  technologies  as part of their overall  business  strategy.  Our
service  offering  includes  technology  strategy and due diligence  consulting,  systems  architecture and design,
application and technology  infrastructure  deployment,  enterprise security, IT product procurement and logistics,
and provisioning.  Our services are designed to improve a client's  competitive and financial position and increase
efficiency  through the development of pragmatic and innovative  business  strategies enabled by the integration of
emerging and existing technologies.

As  described  in Notes 5 and 6 of the consolidated  condensed  financial  statements  included in Item 1, on
December 14, 2000,  Applied  Digital  Solutions,  Inc.  acquired  approximately  55% of our issued and  outstanding
common  shares,  resulting  in a change in control.  Simultaneously,  we acquired  from Applied  Digital  Solutions
fifty-one  percent  (51%) of the  outstanding  shares of common stock of InfoTech  USA. The purchase  price for the
shares of InfoTech USA was $2,075,  payable  $1,821 in cash and $254 by  promissory  note. On December 15, 2000, we
acquired the  remaining  forty-nine  percent (49%) of the  outstanding  shares of common stock of InfoTech USA. The
purchase price for the shares of InfoTech USA was approximately $2,400, payable by promissory note.

## RESULTS OF
OPERATIONS

We operate in a highly  competitive  industry,  which in turn places constant  pressures on maintaining  gross
profit margins.  Many of our sales are high volume equipment  sales,  which produce lower than average gross profit
margins, but are often accompanied by a service arrangement that yields higher than average gross profit margins.

The following table sets forth,  for the periods  indicated,  the percentage  relationship to total revenue of
certain items in our consolidated condensed statements of operations.

|                                             | Relationship to Revenue | 
|-------------------------------------------- | ----------------------- | 
|                                             | Three Months Ended      | 
|                                             | June 30,                | 
|                                             |                         | 
|                                             | 2002                    | 
|                                             | %                       | 
|Product revenue                              | 86.1                    | 
|Service revenue                              | 13.9                    | 
|                                             |                         | 
|Total revenue                                | 100.0                   | 
|                                             |                         | 
|Cost of products sold                        | 71.2                    | 
|Cost of services sold                        | 8.7                     | 
|                                             |                         | 
|Total cost of products and services sold     | 79.9                    | 
|                                             |                         | 
|Gross profit                                 | 20.1                    | 
|Selling, general and administrative expenses | 19.1                    | 
|Depreciation and amortization                | 1.4                     | 
|                                             |                         | 
|Loss from operations                         | (0.4)                   | 
|Other income                                 | (0.0)                   | 
|Interest expense                             | 1.0                     | 
|                                             |                         | 
|Loss before income tax expense (benefit)     | (1.4)                   | 
|Income tax expense (benefit)                 | 0.1                     | 
|                                             |                         | 
|Net loss available to common stockholders    | (1.5)                   | 
|                                             |                         | 

Three Months Ended June 30, 2002 Compared to the Three Months Ended June 30, 2001(in $'000 unless otherwise noted)

Revenue  for the third  quarter  of 2002  decreased  $2,670,  or 35.8%,  to $4,795  from  $7,465 for the third
quarter of 2001.  The  decrease in revenue was a result of a soft market in both product  sales and service  sales.
Additionally,  we made a decision in April 2002 to exit the lower  margin  mid-range  platform  computer  equipment
business  and to focus our efforts on the higher  margin  Intel based  products  and  related  technical  services.
Sales of the mid-range  platform  computer  equipment  represented  approximately 50% of our product sales in 2001.
Product  revenue  for the three  months  ended June 30,  2002  decreased  $2,347,  or 36.3%,  and  service  revenue
decreased $323, or 32.6%, over the same period last year.

11

Gross  profit was $964 for the  quarter  ended June 30, 2002 a slight  decrease  of $32, or 3.2%,  compared to
$996 in the third  quarter of 2001.  Product  gross profit  percentage  increased to 17.3% in the third  quarter of
2002  compared to 7.4% in 2001.  The increase in product  gross profit  percentage in the third quarter of 2002 was
due to a  reduced  number of lower  margin  sales to major  customers  and  dollars  received  from  manufacturers.
Another  contributing  factor was our  decision to exit the lower  margin  mid-range  platform  computer  equipment
business and focus our efforts on the higher  margin Intel based  products.  Service  gross profit and gross profit
percentage  fell in the  third  quarter  of 2002.  The  service  gross  profit  percentage  was 37.3% for the third
quarter of 2002  compared to 51.9% in the third  quarter of 2001 mainly due to  underutilization  of our  technical
staff.

Selling,  general and  administrative  expenses were $917 for the quarter  ended June 30, 2002,  down $389, or
29.8%,  from the $1,306  reported  for the same period last year.  The  reduction in expense was  primarily  due to
headcount  reduction,  the  elimination of expenses  related to the Shirley,  New York facility,  which was sold in
January 2002, and other cost control programs.

Depreciation and amortization  expense for the current quarter was $68, a decrease of $85, or 55.6%,  over the
$153 for the quarter ended June 30, 2001.  The decrease was  primarily  due to the adoption of FAS 142,  which took
effect  October 1, 2001.  The  adoption  of FAS 142  requires  the  testing of  goodwill  for  impairment  at least
annually  eliminating  the need for monthly  amortization  of  goodwill.  Accordingly,  the  goodwill  amortization
associated  with the  acquisition of InfoTech USA was not recorded  during the current  fiscal year.  Additionally,
depreciation on the land,  building and equipment of our Shirley  facility ceased September 30, 2001 as a result of
management's  decision  to cease use of that  facility  and offer it for sale.  The  assets  were  impaired  in the
fourth  quarter of 2001 when we  determined  that the net book value of the land,  building,  and  equipment  to be
offered  for sale  exceeded  its fair value,  less costs to sell.  The  carrying  value of these  assets,  prior to
impairment,  was  approximately  $2.5  million.  At the time the expected  sales  proceeds  were  estimated at $2.4
million.  This resulted in an asset  impairment of $95 being charged to operations in the fourth  quarter of fiscal
year 2001.

Other  income  for the third  quarter  of 2002 was $0  compared  to $29 in 2001,  down $29,  or  100.0%.  The
decrease was  primarily a result of  miscellaneous  credits that were booked in 2001.  Interest  expense was $45 in
2002  compared to $76 in 2001, a decrease of $31, or 40.8%.  The decrease in interest  expense was primarily due to
the elimination of the mortgage  interest  associated with the Shirley,  New York facility that was sold in January
2002.

Loss  before  income  taxes for the third  quarter  of 2002 decreased $444 to $66  compared  to a loss of $510 in 2001,
an 87.1% improvement over the same period last year.  The
improved  results were  largely due to the efforts made to reduce  selling,  general and  administrative  expenses.
Our  effective  tax rate for the third  quarter of 2002 was 9% compared  to 36.5% in 2001.  The rate change was due
to the  adjustment  of prior period state income tax accruals.  Income taxes expense was $6 in the
third quarter of 2002 compared to an income tax benefit of $186 for the same quarter last year.

Our net loss for the quarter  ended June 30,  2002 decreased $252 to $72  compared to a net loss of $324 in 2001, a
77.8% improvement over the same period last year.

Nine Months Ended June 30, 2002 Compared to the Nine Months Ended June 30, 2001(in $'000 unless otherwise noted)

Revenue for the nine months ended June 30, 2002 decreased  $3,493,  or 14.5%,  to $20,641 from $24,134 for the
same period  last year.  The  decrease  was mainly due to very soft  market  conditions  during the first and third
quarter of fiscal  year 2002.  Additionally,  we made a decision in April 2002 to exit the lower  margin  mid-range
platform  computer  equipment  business  and to focus our efforts on the higher  margin  Intel based  products  and
related technical  services.  Sales of the mid-range platform computer equipment  represented  approximately 50% of
our sales in 2001.  Product  revenue  for the nine months  ended June 30,  2002  decreased  $3,321,  or 15.3%,  and
service revenue decreased $172, or 7.2%, over the same period last year.

Gross  profit was $3,242 for the nine months  ended June 30,  2002  compared to $4,323 a decrease of $1,081 or
25.0%.  Gross  profit  percentage  was 15.7% in 2002  compared to 17.9% in 2001.  The  decrease in gross profit and
gross profit  percentage  was due to a combination  of a soft market and high volume lower margin  product sales to
major  customers in the second quarter of fiscal year 2002.  Another  contributing  factor was our decision to stop
selling the lower margin  mid-range  platform  computer  equipment and focus our efforts on the higher margin Intel
based  products.  Product  gross  profit was $2,210 for the nine months  ended June 30, 2002  compared to $2,952 in
2001,  a decrease  of $742,  or 25.1%.  Product  gross  profit  percentage  was 12.0% in 2002  compared to 13.6% in
2001.  Service  gross  profit  decreased  $339,  or 24.7%,  to $1,032 in 2002 from  $1,371  for the same  period in
2001.

12

Selling,  general and  administrative  expenses  were $3,328 for the nine months  ended June 30,  2002,  down
$1,483 or 30.8%,  from  $4,811 for the same  period  last year.  The  reduction  in expense  was  primarily  due to
headcount reduction,  the elimination of expenses  related to the Shirley,  New York facility,  which was sold in January 2002,
and other cost control programs.

Depreciation  and  amortization  expense for the nine months  ended June 30, 2002 was $206, a decrease of $195
or 48.6% over the $401 for the same period last year.  The decrease was  primarily  due to the adoption of FAS 142,
which took effect  October 1, 2001.  The adoption of FAS 142 requires  the testing of goodwill  for  impairment  at
least annually eliminating the need for monthly amortization of goodwill.  Accordingly,  the goodwill  amortization
associated  with the  acquisition of InfoTech USA was not recorded  during the current  fiscal year.  Additionally,
depreciation on the land,  building and equipment of our Shirley  facility ceased September 30, 2001 as a result of
management's  decision  to cease use of that  facility  and offer it for sale.  The  assets  were  impaired  in the
fourth  quarter of 2001 when we  determined  that the net book value of the land,  building,  and  equipment  to be
offered  for sale  exceeded  its fair value,  less costs to sell.  The  carrying  value of these  assets,  prior to
impairment,  was  approximately  $2.5  million.  At the time the expected  sales  proceeds  were  estimated at $2.4
million.  This resulted in an asset  impairment of $95 being charged to operations in the fourth  quarter of fiscal
year 2001.

Other  income was $1 for the nine months ended June 30,  2002,  down $74, or 98.7%,  from $75 the same period
last year.  The  decrease  was  primarily  a result of  miscellaneous  credits  that were booked in the nine months
ended 2001.  Interest  expense was $205 in 2002 compared to $199 in 2001,  an increase of $6 or 3.0%.  The increase
in interest  expense was  primarily due to the debt  associated  with the  acquisition  of InfoTech USA in December
2000. This was largely offset by the  elimination of the mortgage  interest  associated with the Shirley,  New York
facility that was sold in January 2002.

Loss before income taxes for the nine months ended June 30, 2002  decreased  $517 to $496 compared
to $1,013 in 2001, a 51.0% improvement over the same period last year.
The  improvement  in  operating  results  before  income  taxes was  primarily  due to  reduced
selling,  general and  administrative  expenses.  The benefit of the reduced  expenses was somewhat offset by lower
gross profit in the first nine months of 2002  compared to 2001.  Our  effective tax rate for the nine months ended
June 30, 2002 was 33.3% compared to 23.5% in 2001.

Our net loss for the nine months  ended June 30, 2002  decreased  $444 to $331 compared to $775 in 2001, a 57.3% improvement
 over the same period last year.  The improvement was  primarily  due to
substantially  reduced selling, general and administrative  expenses,  however this was somewhat  offset by lower gross profit in 2002  compared to
2001.

Liquidity and
Capital Resources(in $'000 unless otherwise noted)

Our current  ratios at June 30, 2002 and September 30, 2001 were 1.9 and 1.6,  respectively.  Working  capital
at June 30,  2002 was  $4,208,  a  decrease  of $286 from the  $4,494 at  September  30,  2001.  The  decrease  was
primarily  a result of the  $2,398  loan due to Applied  Digital  Solutions  on  December  15,  2002,  moving  from
long-term to current.  This was largely  offset by the sale of the facility in Shirley,  New York in January  2002.
The sale resulted in net proceeds of  approximately  $1,300 and eliminated the current portion of the mortgage that
was due on the facility.

Cash provided by operating  activities in the first nine months of 2002 was $2,595  compared to $4,970 of cash
provided by  operating  activities  in the first nine months of 2001.  The cash  provided by  operating  activities
during 2002 and 2001 was largely a result of  reductions  in accounts  receivable  and was  somewhat  offset by the
reductions in accounts  payable and accrued  expenses,  and operating  losses incurred during the nine months ended
June 30, 2002 and 2001.  The large  reduction in accounts  receivable was a result of lower sales volume during the
third  quarter  of 2002  compared  to the  sales  volume  at the end of the  September  30,  2001  period,  and the
collection of large accounts  receivable  balances that resulted from the high sales volume in September  2001. The
reductions in accounts payable, stemmed from payments made to our suppliers.

13

Cash  provided by investing  activities  was $2,462 for the nine months  ended June 30, 2002  compared to cash
used in investing  activities of $2,055 in 2001.  The cash provided by investing  activities for 2002 was primarily
due to the  sale of the  facility  in  Shirley,  New  York.  The use of cash in  investing  activities  in 2001 was
primarily to acquire our interest in InfoTech USA.

Net cash used in  financing  activities  was $1,491 and  $1,093 in 2002 and 2001,  respectively.  The net cash
used in  financing  activities  in 2002 was a  combination  of paying off the  mortgage  on the  Shirley,  New York
facility  and  InfoTech  USA paying  down its line of credit to  Applied  Digital  Solutions.  The net cash used in
financing  activities  in 2001 was  primarily  due to  InfoTech  USA paying  down its line of credit  with  Applied
Digital Solutions.

Under our financing  arrangement with IBM Credit  Corporation,  as of June 30, 2002, we were able to borrow up
to 85% of our eligible  accounts  receivable and 100% of our eligible  inventory,  up to a maximum of $3,350. As of
June 30, 2002,  interest on the  outstanding  borrowings  for IBM Credit  Corporation  were payable  monthly at the
prime rate, or prime rate plus 6.5% should we fail to meet certain  collateral  requirements.  As of June 30, 2002,
there were no borrowings  outstanding under the IBM Credit Corporation facility.  Additionally,  advances under our
Agreement for Wholesale  Financing from IBM Credit  Corporation  totaling $468 and $3,179 were included in accounts
payable at June 30,  2002 and  September  30,  2001,  respectively,  and were offset  against  the  maximum  credit
available at that time from IBM Credit Corporation.

In May 1999,  Applied Digital  Solutions  entered into a Term and Revolving  Credit  Agreement with IBM Credit
Corporation.  The IBM  Agreement,  as amended and  restated on March 27,  2002,  provides  for interest at 17%. The
IBM  Agreement  contains  standard  covenants  relating  to Applied  Digital  Solutions'  financial  position  and
performance,  as well as  restrictions  on Applied Digital  Solutions'  declaration  and payment of dividends.  In
addition,  Applied  Digital  Solutions'  shares  of our  common  stock  are  pledged  as  collateral  for  the IBM
Agreement.  The  exercise by IBM Credit  Corporation  of its rights with  respect to those  shares upon an event of
default  could  result in a change of  control  of us.  IBM  Credit  Corporation  has a  security  interest  in our
receivables  and inventory,  up to the amount  advanced from Applied  Digital  Solutions  under the line of credit.
The loan bears interest at the same rate as paid by Applied Digital Solutions.  The loan,  including  interest,  is
repayable  as funds are  available.  Applied  Digital  Solutions  is unable to borrow  additional  amounts from IBM
Credit  Corporation,  or other  lenders,  under  the  terms of the IBM  Agreement.  In  addition,  Applied  Digital
Solutions is under no  obligation to advance any funds to us. Due to these  circumstances,  future  borrowings  may
not be available from Applied Digital Solutions.

We  continue  to seek a new  credit  facility  to  adequately  serve  our  future  financing  needs.  Previous
negotiations  with a  major  finance  company  have  been  terminated,  and  we are  currently  in the  process  of
identifying and obtaining  proposals from other  financial  institutions.  Applied Digital  Solutions has continued
to work with us to obtain a new credit facility;  however,  any change in financing  arrangements  will require the
consent  of IBM Credit  Corporation.  There can be no  assurance  that we will be  successful  in  obtaining  a new
credit  facility or that the  consent of IBM Credit  Corporation  will be given.  Our  inability  to have access to
such financing at reasonable costs may adversely impact our ability to finance future growth.

We believe that our present  Agreement  for  Wholesale  Financing  with IBM Credit  Corporation,  current cash
position,  projected  positive cash flow and financing  provided by other credit parties will be sufficient to fund
our operations and capital expenditures for at least twelve months.

On December 15, 2001, a payment of $254 was due to Applied  Digital  Solutions on a promissory note related to
the  acquisition  of InfoTech  USA. The payment was not made and the interest  rate has  increased  from 8% to 11%.
Additionally,  a payment of $2,398 is due December 15, 2002 to Applied Digital  Solutions on a promissory note also
related to the  acquisition  of  InfoTech  USA.  We may be unable to pay this note  without  additional  sources of
financing.  If we are unable to pay the note on its due date,  we will seek to  renegotiate  its terms with Applied
Digital Solutions.

## FORWARD-LOOKING
STATEMENTS AND ASSOCIATED RISK

Certain statements in this report, constitute  "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 the Private  Securities
Litigation  Reform Act of 1995.  We intend  that such  forward-looking  statements  be subject to the safe  harbors
created  thereby.  Such  forward-looking  statements  involve  known and  unknown  risks,  uncertainties  and other
factors  which may cause our actual  results,  performance  or  achievements  to be materially  different  from any
future  results,  performance  or  achievements  expressed  or implied  by such  forward-looking  statements.  Such
factors  include,  among  others,  the  following:  our  continued  ability to sustain our growth  through  product
development and future business  acquisitions;  the successful  completion and integration of future  acquisitions;
the ability to hire and retain key personnel;  the continued  development of our  technical,  sales,  marketing and
management  capabilities;  relationships  with and dependence on third-party  suppliers;  anticipated  competition;
uncertainties  relating  to  economic  conditions  where we  operate;  uncertainties  relating  to  government  and
regulatory policies;  uncertainties  relating to customer plans and commitments;  rapid technological  developments
and  obsolescence in the industries in which we operate and compete;  potential  performance  issues with suppliers
and customers;  governmental  export and import  policies;  global trade policies;  worldwide  political  stability
and  economic  growth;  the  highly  competitive  environment  in  which  we  operate;   potential  entry  of  new,
well-capitalized  competitors  into our  markets;  our  ability to maintain  available  sources of  financing;  and
changes in our capital structure and cost of capital.  The words believe,  expect,  anticipate,  intend and
plan and similar  expressions  identify  forward-looking  statements.  Readers are  cautioned  not to place undue
reliance on these forward-looking statements, which speak only as of the date the statement was made.

14

## ITEM 3.     
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We presently do not use any derivative  financial  instruments  to hedge our exposure to adverse  fluctuations
in interest rates,  foreign  exchange  rates,  fluctuations  in commodity  prices or other market risks,  nor do we
invest in speculative  financial  instruments.  For Information  Technology  Services,  Inc.,  borrowings under the
financing  agreement with IBM Credit  Corporation  are at zero percent  interest for the first 30 days,  thereafter
the interest rate is the prime rate plus 6.5%.  For InfoTech USA,  borrowings  under the financing  agreement  with
IBM Credit  Corporation  are at zero percent  interest for the first 10 days,  thereafter  the interest rate is the
prime rate plus 6.5%.  Our interest  income is sensitive to changes in the general level of U. S.  interest  rates,
particularly since the majority of our investments are in short-term investments.

Due to the  nature of our  borrowings  and our  short-term  investments,  we have  concluded  that there is no
material market risk exposure and, therefore, no quantitative tabular disclosures are required.

15

## PART II         OTHER
INFORMATION

##### ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The information called for by this item has previously been reported under Item 4 of Part II to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, which we filed on May 15, 2002.

## ITEM 6.     
EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits (listed by
numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).

(b)       Reports on Form 8-K.

| | We
filed a Report on Form 8-K dated August 1, 2002, announcing a change in our
independent accountants from Rubin, Brown, Gornstein & Co. LLP to J.H. Cohn
LLP.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

16

# SIGNATURE

Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the  registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

|                         | SYSCOMM INTERNATIONAL CORPORATION
|------------------------ | ---------------------------------
|Dated:   August 14, 2002 | By:                              
|                         |                                  

EXHIBITS

|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1           |  | Stock Purchase Agreement by and between Applied Digital Solutions, Inc. and John H.
Spielberger,  Catherine  Spielberger  and Bearpen Limited  Partnership,  dated November 13, 2000
(incorporated  herein by reference to Exhibit 2.1 to the  Company's  Current  Report on Form 8-K
filed with the  Commission on December 22, 2000, as amended by the Company's  Current  Report on
Form 8-K/A filed with the Commission on February 9, 2001).                
|2.2           |  | Amendment No. 1 to Stock Purchase Agreement by and between Applied Digital  Solutions,  Inc. and
John H. Spielberger,  Catherine Spielberger and Bearpen Limited Partnership,  dated December 14,
2000  (incorporated  herein by reference to Exhibit 2.2 to the Company's  Current Report on Form
8-K filed with the  Commission on December 22, 2000, as amended by the Company's  Current Report
on Form 8-K/A filed with the Commission on February 9, 2001).
|2.3           |  | Stock Purchase Agreement by and between the Company and Applied Digital  Solutions,  Inc., dated
November 13, 2000  (incorporated  herein by reference  to Exhibit 2.3 to the  Company's  Current
Report on Form 8-K filed with the  Commission  on December 22, 2000, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on February 9, 2001).                                                                                  
|2.4           |  | Addendum to Stock Purchase Agreement by and between the Company  Corporation and Applied Digital
Solutions,  Inc.,  dated December 14, 2000  (incorporated  herein by reference to Exhibit 2.4 to
the  Company's  Current  Report on Form 8-K filed with the  Commission  on December 22, 2000, as
amended by the Company's  Current  Report on Form 8-K/A filed with the Commission on February 9,
2001).                                                       
|2.5           |  | Stock Purchase Agreement by and between the Company and Applied Digital  Solutions,  Inc., dated
December 15, 2000  (incorporated  herein by reference  to Exhibit 2.5 to the  Company's  Current
Report on Form 8-K filed with the  Commission  on December 22, 2000, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on February 9, 2001).                                                                                  
|3.1           |  | Amended and Restated  Certificate of Incorporation, as amended on March 22, 2002                                                                                                                                                                                                                                                                                                                                                                                 
|3.2           |  | Amended and Restated By-Laws  (incorporated  herein by reference to Exhibit 3.2 to the Company's
Registration  Statement on Form S-1 (File No.  333-25593) filed with the Commission on April 22,
1997)                                                                                                                                                                                                                                                          
|10.1          |  | Agreement for Wholesale  Financing  (Security  Agreement),  dated November 27, 2000, between the
Company's  subsidiary,  Information  Technology  Services,  Inc.,  and  IBM  Credit  Corporation
(incorporated  by reference to Exhibit 10.2 to the Company's  Annual Report on Form 10-K for the
fiscal year ended September 30, 2000 filed with the Commission on December 29, 2000)                                                                          
|10.2          |  | Agreement for  Wholesale  Financing  (Security  Agreement),  dated January 5, 2001,  between the
Company's  subsidiary,  Information  Technology  Services,  Inc.,  and  IBM  Credit  Corporation
(incorporated by reference to the Company's  Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001 filed with the Commission on August 13, 2001)                                                                                                   
|10.3*         |  | 1998 Incentive Stock Option Plan, as Amended  (incorporated herein by reference to Exhibit 99 to
the Company's definitive Proxy Statement filed with the Commission on December 27, 1999)                                                                                                                                                                                                                                                                        
|10.4*         |  | 1999  Employee  Stock  Purchase  Plan  (incorporated  herein by  reference  to  Exhibit A to the
Company's definitive Proxy Statement filed with the Commission on December 28, 1998)                                                                                                                                                                                                                                                                            
|10.5*         |  | 2001  Flexible  Stock Plan  (incorporated  herein by  reference  to  Exhibit A to the  Company's
definitive Proxy Statement filed with the Commission on February 28, 2001)                                                                                                                                                                                                                                                                                      
|10.6          |  | Collateralized  Guaranty dated May 23, 2001 between the Company,  its subsidiaries,  Information
Technology  Services,  Inc. and Information  Products Center,  Inc., and IBM Credit  Corporation
(incorporated by reference to the Company's  Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001 filed with the Commission on August 13, 2001)                                                                                                   
|10.7          |  | Contract  of Sale - Office,  Commercial  and  Multi-Family  Residential  Premises by and between
SysComm  International  Corporation  and Parr  Research and  Marketing,  Inc.  (incorporated  by
reference  to the  Company's  Current  Report on Form 8-K dated  January 28, 2002 filed with the
Commission on February 12, 2002)                                                                                                                              
|10.8          |  | Third  Amended and Restated  Term Credit  Agreement  dated March 1, 2002 between  Applied  Digital  Solutions,
Inc.,  Digital  Angel Share Trust and IBM Credit  Corporation  (incorporated  by  reference  to Exhibit 10.2 to the
Applied Digital Solutions, Inc.'s Current Report on Form 8-K filed with the Commission on March 8, 2002)                                                                                                                      

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|* |  | Management contract or compensatory plan.
|- |  | -----------------------------------------