As Filed with the Securities and Exchange Commission on May 26, 2000
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
APPLIED DIGITAL SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
3661
(Primary Standard Industrial
Classification Code Number)
MISSOURI 43-1641533
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
(561) 366-4800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Garrett A. Sullivan
Applied Digital Solutions, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
(561) 366-4800
FAX: (561) 366-0002
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all correspondence to:
David I. Beckett, Esq. Denis P. McCusker, Esq.
Applied Digital Solutions, Inc. Bryan Cave LLP
400 Royal Palm Way, Suite 410 One Metropolitan Square
Palm Beach, Florida 33480 211 North Broadway, Suite 3600
(561) 366-4800 St. Louis, Missouri 63102-2750
FAX: (561) 366-0002 (314) 259-2000
FAX: (314) 259-2020
Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per aggregate offering registration fee
unit(1) price(1)
=================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value per share 1,709,493 shares $4.1156 $7,035,589 $1,857
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(c), the proposed offering price and registration fee
have been calculated on the basis of the average of the high and low
trading prices for the Common Stock for the five day period ended May 24,
2000 as reported on the Nasdaq National Market.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
================================================================================
The information in this preliminary prospectus is not complete and may change.
The Selling Shareholders may not sell these securities until the amendment to
the registration statement filed with the Securities and Exchange Commission is
effective. This preliminary prospectus is not an offer to sell these securities
and we are not soliciting any offer to buy these securities in any state where
the offer or sale is not permitted.
================================================================================
Subject to completion, Dated May 26, 2000
1,709,493 Shares
[GRAPHIC OMITTED]
Common Stock
-------------------------------------
This prospectus relates to 1,709,493 shares of our Common Stock, par value
$.001 per share, which will be sold at various times by the Selling Shareholders
listed in this prospectus starting on page 9. More information about the shares
is under "Description of Capital Stock."
The Selling Shareholders may sell the shares of Common Stock in one or more
transactions (which may include "block transactions") on the Nasdaq Stock
Market, in the over-the-counter market, in negotiated transactions or in a
combination of such methods of sales, at fixed prices which may be changed, at
market prices prevailing at the time of sales, at prices related to such
prevailing market prices or at negotiated prices.
Our shares are listed on the Nasdaq Stock Market under the symbol "ADSX."
On May 24, 2000, the last reported sale price of our Common Stock was $4.1563
per share. See "Price Range of Common Stock."
We will not receive any proceeds from shares sold by the Selling
Shareholders and we will bear all the expenses incurred in connection with
registering this offering of Common Stock.
The Selling Shareholders may sell the shares of Common Stock directly or
through underwriters, dealers or agents. They may also pledge some of the shares
of Common Stock. This prospectus also relates to any sale of shares of Common
Stock that might take place following any foreclosure of such a pledge. More
information about the way the Selling Shareholders may distribute the Common
Stock is under the heading "Plan of Distribution."
See the information under the heading "Risk Factors" starting on page 3,
which describes certain factors you should consider before purchasing the Common
Stock.
Our principal office is at 400 Royal Palm Way, Suite 410, Palm Beach,
Florida 33480, and our telephone number is (561) 366-4800.
-------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is [_____________], 2000.
<PAGE>
TABLE OF CONTENTS
About This Prospectus..........................................................2
Recent Developments............................................................2
Risk Factors...................................................................3
Our Business...................................................................7
Selling Shareholders...........................................................9
Description of Capital Stock..................................................10
Price Range of Common Stock...................................................10
Plan of Distribution..........................................................10
Legal Opinion.................................................................11
Experts.......................................................................11
Where You Can Find More Information About Us..................................11
Statements Regarding Forward-Looking Information..............................12
Unaudited Condensed Combined Pro Forma Financial Information..................13
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, the Selling Shareholders may, from time to time, sell
their shares of our common stock in one or more offerings. This prospectus
provides you with a general description of the Common Stock being offered. You
should read this prospectus together with additional information described under
the heading "Where You Can Find More Information About Us."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about us
and the securities offered under this prospectus. That registration statement
can be read at the Commission's offices mentioned under the heading "Where You
Can Find More Information About Us."
RECENT DEVELOPMENTS
On September 14, 1999, our subsidiary, IntelleSale.com, Inc., filed a
registration statement with the Securities and Exchange Commission in connection
with its proposed initial public offering (IPO). In addition to IntelleSale.com
selling primary shares, we expected to sell shares of IntelleSale.com's common
stock as a selling shareholder. On January 31, 2000, we announced a postponement
of the IPO of IntelleSale.com's common stock due to market conditions. Deferred
IPO fees have been capitalized in anticipation of completing the IPO within the
next fiscal year. On May 4, 2000, we announced that we had retained Prudential
Securities Incorporated to assist in pursuing strategic alternatives regarding
IntelleSale.com.
On March 3, 2000, we announced, and on April 24, 2000, we signed a
definitive merger agreement to acquire Destron Fearing Corporation, a Nasdaq
listed company trading under the stock symbol "DFCO". Destron Fearing is a
leading developer, manufacturer and marketer of a broad line of electronic and
visual identification devices for companion animals, livestock, laboratory
animals and wildlife. In this proposed transaction, we will issue 1.5 shares of
our common stock in exchange for each share of common stock of Destron Fearing.
The transaction is expected to close in July 2000, subject to a number of
conditions including the approval of both our and Destron Fearing's shareholders
and the approval of relevant government agencies. Under the agreement, Destron
Fearing would be merged into Digital Angel.net Inc., our wholly owned
subsidiary. This transaction will be accounted for under the purchase method of
accounting.
On March 22, 2000, we filed a shelf registration statement to sell, from
time to time, up to 3 million shares of our common stock. Proceeds from the sale
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will be used for general corporate purposes, including the funding of future
acquisitions. On April 5, 2000 we announced that we were postponing the offering
because of adverse market conditions.
On May 23, 2000, we announced that the letter of intent to acquire ATEC
Group, Inc. (ATEC), a Nasdaq listed company, had been terminated due to market
conditions. It had been announced on May 5, 2000, that we had signed a letter of
intent to acquire ATEC in an all stock transaction.
Effective as of April 1, 2000, we acquired 100% of Independent Business
Consultants, a network integration company based in Valley Village, California,
in a transaction accounted for under the purchase method of accounting.
RISK FACTORS
You should carefully consider the risk factors listed below. These risk
factors may cause our future earnings to be less or our financial condition to
be less favorable than we expect. You should read this section together with the
other information in, or incorporated herein by reference into, this prospectus.
Forward-Looking Statements and Associated Risk
This prospectus, including the information incorporated herein by
reference, contains "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. All such forward-looking information
involves risks and uncertainties and may be affected by many factors, some of
which are beyond our control. These factors include:
o our growth strategies,
o anticipated trends in our business and demographics,
o our ability to successfully integrate the business operations of
recently acquired companies, and
o regulatory, competitive or other economic influences.
Uncertainty of Future Financial Results
While we have been profitable for the last three fiscal years, future
financial results are uncertain. There can be no assurance that we will continue
to be operated in a profitable manner. Profitability depends upon many factors,
including the success of our various marketing programs, the maintenance or
reduction of expense levels and our ability to successfully coordinate the
efforts of the different segments of our business.
Future Sales of and Market for our Shares of Common Stock
As of May 24, 2000, there were 51,771,918 shares of Common Stock
outstanding. In addition, 503 shares of Common Stock are reserved for issuance
in exchange for certain exchangeable shares issued by our Canadian subsidiary.
Since January 1, 2000, we have issued an aggregate of 3,512,295 shares of Common
Stock, of which 751,581 shares of Common Stock were issued as earnout payments
in acquisitions, 45,925 shares were issued in exchange for the exchangeable
shares of our Canadian subsidiary and the exchangeable shares of our former
Canadian subsidiary, TigerTel Services Limited, 983,793 shares of Common Stock
were issued for acquisitions, 1,271,090 shares were issued upon the exercise of
options, 317,500 shares were issued upon the exercise of warrants, and 142,406
shares were issued under our Employee Stock Purchase Program.
We have effected, and will continue to effect, acquisitions or contract for
certain services through the issuance of Common Stock or our other equity
securities, as we have typically done in the past. In addition, we have agreed
to certain "price protection" provisions in prior acquisition agreements which
may result in additional shares of common stock being issued to selling
shareholders as of the effective date of the registration of the shares such
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selling shareholder previously received as consideration from us. Such issuance
of additional securities may be dilutive of the value of the Common Stock in
certain circumstances and may have an adverse impact on the market price of the
Common Stock.
Competition
Each segment of our business is highly competitive, and we expect that
competitive pressures will continue. Many of our competitors have far greater
financial, technological, marketing, personnel and other resources than us. The
areas which we have identified for continued growth and expansion are also
target market segments for some of the largest and most strongly capitalized
companies in the United States, Canada and Europe. There can be no assurance
that we will have the financial, technical, marketing and other resources
required to compete successfully in this environment in the future.
Risks Associated with Acquisitions and Expansion
We have engaged in a continuing program of acquisitions of other businesses
which are considered to be complementary to our lines of business, and we
anticipate that such acquisitions will continue to occur. Our total assets were
approximately $209.1 million as of March 31, 2000 and $229.0 million, $124.1
million, $61.3 million, $33.2 million and $4.1 million as of December 31, 1999,
1998, 1997, 1996 and 1995, respectively. Net operating revenue was approximately
$85.2 million and $51.6 million for the three months ended March 31, 2000 and
1999, respectively, and $336.7 million, $207.1 million, $103.2 million, $19.9
million and $2.3 million for the years ended December 31, 1999, 1998, 1997, 1996
and 1995, respectively. Managing these dramatic changes in the scope of our
business will present ongoing challenges to management, and there can be no
assurance that our operations as currently structured, or as affected by future
acquisitions, will be successful.
It is our policy to retain existing management of acquired companies, under
the overall supervision of our senior management. The success of the operations
of these subsidiaries will depend, to a great extent, on the continued efforts
of the management of the acquired companies.
We have entered into earnout arrangements with certain sellers under which
they are entitled to additional consideration for their interests in the
companies they sold to us. Under these agreements, assuming that all earnout
profits are achieved, we are contingently liable for additional consideration of
approximately $8.8 million in 2001, $3.0 million in 2002 and $2.0 million in
2004, of which $1.0 million would be payable in cash and $12.8 million would be
payable in stock.
We have entered into put options with the sellers of those companies in
which we acquired less than a 100% interest. These options require us to
purchase the remaining portion we do not own after periods ranging from four to
five years from the dates of acquisition at amounts per share generally equal to
10% to 20% of the average annual earnings per share of the subsidiary company
before income taxes for a two-year period ending on the effective date of the
put multiplied by a multiple ranging from four to five. In the second quarter of
1999, we entered into agreements to pay $3.9 million to acquire put options in
certain companies owned by our subsidiary, IntelleSale.com. In addition, based
upon current earnings, assuming all other put options were exercised, we are
contingently liable for an additional $6.3 million in the next two years.
Goodwill Write-off's Will Reduce Our Earnings
As a result of the acquisitions we have done through March 31, 2000, we
have approximately $65.7 million of goodwill, $24.4 million of which is
deductible for tax purposes, which is currently being amortized over 20 years at
the rate of approximately $3.5 million per year, which reduces our net income
and our earnings per share. In addition, future acquisitions may also increase
our existing goodwill and the amount of annual amortization, further reducing
net income and earnings per share. As required by Statement of Financial
Accounting Standards No. 121, we will periodically review our goodwill for
impairment, based on expected discounted cash flows. If we determine that there
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is such impairment, we would be required to write down the amount of goodwill
accordingly, which would also reduce our earnings.
Need for Additional Capital
We may require additional capital to fund growth of our current business as
well as to make future acquisitions. However, we may not be able to obtain
capital from outside sources. Even if we obtain capital from outside sources, it
may not be on terms favorable to us. Our current credit agreement with IBM
Credit Corporation may hinder our ability to raise additional debt capital. If
we raise additional capital by issuing equity securities, these securities may
have rights, preferences or privileges senior to those of our common
stockholders.
Dependence on Key Individuals
Our future success is highly dependent upon our ability to attract and
retain qualified key employees. We are organized with a small senior management
team, with each of our separate operations under the day-to-day control of local
managers. If we were to lose the services of any members of our central
management team, our overall operations could be adversely affected, and the
operations of any of our individual facilities could be adversely affected if
the services of the local managers should be unavailable. We have entered into
employment contracts with our key officers and employees and certain
subsidiaries. The agreements are for periods of one to ten years through June
2009. Some of the employment contracts also call for bonus arrangements based on
earnings.
Risks that the Value of Our Inventory May Decline
We purchase and warehouse inventory, much of which is refurbished or excess
personal computer equipment inventory of others. As a result, we assume
inventory risks and price erosion risks for these products. These risks are
especially significant because personal computer equipment generally is
characterized by rapid technological change and obsolescence. These changes
affect the market for refurbished or excess inventory equipment. Our success
will depend on our ability to purchase inventory at attractive prices relative
to its resale value and our ability to turn our inventory rapidly through sales.
If we pay too much or hold inventory too long, we may be forced to sell our
inventory at a discount or at a loss or write down its value, and our business
could be materially adversely affected.
Lack of Dividends on Common Stock; Issuance of Preferred Stock
We do not have a history of paying dividends on our Common Stock, and there
can be no assurance that such dividends will be paid in the foreseeable future.
Pursuant to certain restrictions under our Amended and Restated Term and
Revolving Credit Agreement dated as of July 30, 1999 with IBM Credit
Corporation, as amended, there are restrictions on the declaration and payment
of dividends. We intend to use any earnings which may be generated to finance
the growth of our businesses. Our Board of Directors has the right to authorize
the issuance of preferred stock, without further shareholder approval, the
holders of which may have preferences over the holders of the Common Stock as to
payment of dividends.
Possible Volatility of Stock Price
Our Common Stock is quoted on the Nasdaq Stock Market, which has
experienced and is likely to experience in the future significant price and
volume fluctuations which could adversely affect the market price of our Common
Stock without regard to our operating performance. In addition, we believe that
factors such as the significant changes to our business resulting from continued
acquisitions and expansions, quarterly fluctuations in our financial results or
cash flows, shortfalls in earnings or sales below expectations, changes in the
performance of other companies in our same market sectors and the performance of
the overall economy and the financial markets could cause the price of our
Common Stock to fluctuate substantially. During the 12 month period prior to May
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24, 2000, the price per share of our Common Stock has ranged from a high of
$18.00 to a low of $1.625.
Termination Payments
Our employment agreements with three of our executive officers include
"change of control" provisions, under which the employees may terminate their
employment within one year after a change of control, and be entitled to receive
specified severance payments and/or continued compensation payments for sixty
months. The employment agreements also provide that these executive officers are
entitled to supplemental compensation payments for sixty months upon termination
of employment, even if there is no change in control, unless their employment is
terminated due to a material breach of the terms of the employment agreement.
Also, the agreements for both Richard Sullivan and Garrett Sullivan provide for
certain "triggering events" which include a change in control, the termination
of Richard Sullivan's employment other than for cause, or if Richard Sullivan
ceases to hold his current positions with us for any reason other than a
material breach of the terms of his employment agreement. In that case, we would
be obligated to pay, in cash and/or in stock, $12.1 million and $3.5 million,
respectively, to Richard Sullivan and to Garrett Sullivan, in addition to
certain other compensation. Finally, the employment agreements provide for a
gross up for excise taxes which are payable by these executive officers if any
payments upon a change of control are subject to such taxes as excess parachute
payments.
Our obligations to make the payments described in this section could
adversely affect our financial condition or could discourage other parties from
entering into transactions with us which might be treated as a change in control
or triggering event for purposes of these agreements.
Digital Angel May Not be Able to Develop Products from its Unproven Technology
In December 1999, Digital Angel acquired the patent rights to a
miniature digital receiver named "Digital Angel (TM)." This technology is still
in the development stage. Digital Angel's ability to develop and commercialize
products based on its proprietary technology will depend on its ability to
develop its products internally on a timely basis or to enter into arrangements
with third parties to provide this function. If Digital Angel fails to develop
and commercialize products successfully and on a timely basis, it could have a
material adverse effect on Digital Angel's business, results of operations or
cash flows.
Year 2000 Compliance
We have not experienced any significant Year 2000 related problems. During
1998 and 1999, we implemented a company wide program to ensure that we would be
compliant prior to the Year 2000 failure dates. We did not experience problems
on either January 1, 2000 or February 29, 2000. However we cannot make any
assurances that unforeseen problems may not arise in the future.
Software Sold to Consumers. During 1998 and 1999 we identified what we
believe to be all potential Year 2000 problems with any of the software products
we develop and market. However, management believes that it is not possible to
determine with complete certainty that all Year 2000 problems affecting our
software products have been identified or corrected due to the complexity of
these products. In addition, these products interact with other third party
vendor products and operate on computer systems which are not under our control.
For non-compliant products, we have provided and are continuing to provide
recommendations as to how an organization may address possible Year 2000 issues
regarding that product. Software updates or other solutions are available for
most, but not all, known issues. Such information is the most currently
available concerning the behavior of our products and is provided "as is"
without warranty of any kind. However, variability of definitions of
"compliance" with the Year 2000 and of different combinations of software,
firmware and hardware could possibly lead to lawsuits against us. The outcome of
any such lawsuits and the impact on us are not estimable at this time.
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We do not believe that the Year 2000 problem has had or will continue
to have a material adverse effect on our business, results of operations or cash
flows. The estimate of the potential impact on our financial position, overall
results of operations or cash flows for the Year 2000 problem could change in
the future. Our ability to achieve Year 2000 compliance and the level of
incremental costs associated therewith, could be adversely impacted by, among
other things, the availability and cost of programming and testing resources,
vendors' ability to modify proprietary software, and unanticipated problems
identified in the ongoing compliance review. The discussion of our efforts, and
management's expectations, relating to Year 2000 compliance are forward-looking
statements.
OUR BUSINESS
General
Applied Digital Solutions, Inc. is a leading edge, single-source provider
of e-business solutions. We differentiate ourselves in the marketplace by
enabling e-business through Computer Telephony Internet Integration (CTII(TM)).
Beginning in the fourth quarter of 1998 and continuing into 2000, we reorganized
to refocus our strategic direction, organizing into four core business groups:
Telephony, Network, Internet and Applications. With CTII, we provide the full
range of services and skills companies need to conduct business online. Through
our four integrated business groups, we design and deploy complete,
front-to-back, web-enabled e-business systems, all with a single point of
contact for the customer.
We currently operate in the United States, Canada and the United Kingdom.
We are a Missouri corporation and were incorporated on May 11, 1993. Our
principal office is located at 400 Royal Palm Way, Suite 410, Palm Beach,
Florida 33480, and our phone number is (561) 366-4800.
The majority of our current operations are the result of acquisitions
completed during the last five years. Our net operating revenue was
approximately $85.2 million and $51.6 million for the three months ended March
31, 2000 and 1999, respectively, and $336.7 million, $207.1 million, $103.2
million, $19.9 million and $2.3 million for the years ended December 31, 1999,
1998, 1997, 1996 and 1995, respectively. Since 1995 we have completed 42
acquisitions. Management analyzes each acquisition opportunity using criteria
including profitability over a two to three year period, the strength of the
acquiree's balance sheet, the strength of its customer base and the experience
of its management team. Since January 1, 2000, we have completed one
acquisition.
Business Divisions
Beginning in the fourth quarter of 1998 and continuing into 2000, we
reorganized into six operating segments to more effectively and efficiently
provide integrated communications products and services to a broad base of
customers. During the second quarter of 1999, several adjustments were made to
the composition of the Telephony, Internet and Non-core divisions to better
align the strengths of the respective divisions with the objectives of those
divisions. In October 1999, we disposed of the main business units comprising
our Communication Infrastructure division and dissolved this group.
Core Business
Our primary businesses, other than IntelleSale.com, the Non-Core Business
Group, and Digital Angel, are now organized into four business divisions:
o Telephony -- implements telecommunications and Computer Technology
Integration (CTI) solutions for e-business. We integrate a wide range of
voice and data solutions from communications systems to voice over Internet
Protocol and Virtual Private Networking (VPN). We provide complete design,
project management, cable/fiber infrastructure, installation and ongoing
support for the customers we support. On December 30, 1999, we sold our
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interest in our Canadian subsidiary, TigerTel, Inc. to concentrate our
efforts on our domestic CTI solutions.
o Network -- is a professional services organization dedicated to delivering
quality e-business services and support to our client partners, providing
e-business infrastructure design and deployment, personal computer network
infrastructure for the development of local and wide area networks as well
as site analysis, configuration proposals, training and customer support
services.
o Internet -- equips our customers with the necessary tools and support
services to enable them to make a successful transition to implementing
e-business practices, Enterprise Resource Planning (ERP) and Customer
Relationship Management (CRM) solutions, website design, and application
and internet access services to customers of our other divisions.
o Applications -- provides software applications for large retail application
environments, including point of sale, data acquisition, asset management
and decision support systems and develops programs for portable data
collection equipment, including wireless hand-held devices. It is also
involved in the design, manufacture and support of satellite communication
technology including satellite modems, data broadcast receivers and
wireless global positioning systems for commercial and military
applications.
IntelleSale.com
IntelleSale.com, Inc. sells refurbished and new computer equipment and
related components online, through its website at www.IntelleSale.com, and
through other Internet companies, as well as through traditional channels, which
includes sales made by IntelleSale.com's sales force.
The Non-Core Business Group
This group is comprised of seven individually managed companies whose
businesses are as follows:
o Gavin-Graham Electronic Products is a custom manufacturer of electrical
products, specializing in digital and analog panelboards, switchboards,
motor controls and general control panels. The company also provides custom
manufacturing processes such as shearing, punching, forming, welding,
grinding, painting and assembly of various component structures.
o Ground Effects, Ltd., based in Windsor, Canada, is a certified manufacturer
and tier one supplier of standard and specialized vehicle accessory
products to the automotive industry. The company exports over 80% of the
products it produces to the United States, Mexico, South America, the Far
East and the Middle East.
o Hopper Manufacturing Co., Inc. remanufactures and distributes automotive
parts. This primarily includes alternators, starters, water pumps,
distributors and smog pumps.
o Innovative Vacuum Solutions, Inc. designs, installs and re-manufactures
vacuum systems used in industry.
o Americom, STC Netcom and ACT Leasing are all involved in the fabrication,
installation and maintenance of microwave, cellular and digital personal
communication services towers.
We have previously announced our intention to divest, in the ordinary
course of business, these non-core businesses at such time and on such terms as
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our Board of Directors determines advisable. There can be no assurance that we
will divest of any or all of these businesses or as to the terms of any
divestiture transaction.
Growth Strategy
Our objective is to continue to grow each of our core operating segments
internally and through acquisitions, both domestically and abroad. Our strategy
has been, and continues to be, to invest in and acquire businesses that
complement and add to our existing business base. We have expanded significantly
through acquisitions in the past and continue to do so. Our financial results
and cash flows are substantially dependent on not only our ability to sustain
and grow existing businesses, but to continue to grow through acquisition. We
expect to continue to pursue our acquisition strategy in 2000 and future years,
but there can be no assurance that management will be able to continue to find,
acquire, finance and integrate high quality companies at attractive prices.
SELLING SHAREHOLDERS
The following table sets forth information regarding the ownership of our
Common Stock by the Selling Shareholders and the shares being offered under this
prospectus.
We have issued the shares from time to time in various acquisition
transactions. The registration of these shares has been effected pursuant to
agreements entered into by us with the Selling Shareholders.
The percentage owned prior to and after the offering reflects the
outstanding common shares at the time of the registration statement. The amount
and percentage owned after the offering assumes the sale of all of the Common
Stock being registered on behalf of the Selling Shareholders.
<TABLE>
<CAPTION>
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Ownership Prior to the Number of Shares Ownership After
Selling Shareholder Offering Offered Hereby the Offering
-------- --------------- ------------
Shares % Shares %
------ - ------ -
<S> <C> <C> <C> <C> <C>
Kerry G. Burst.................. 48,333 * 48,333 (1) -- *
Jeff Francis.................... 143,916 * 143,916 (2) -- *
John Vaughn..................... 143,916 * 143,916 (2) -- *
Capital Alliance................ 15,149 * 15,149 (2) -- *
Robert W. Munson................ 120,080 * 120,080 (3) -- *
Enrica Carroll.................. 120,080 * 120,080 (3) -- *
Scott A. Lines.................. 74,335 * 74,335 (3) -- *
Susan S. Lines.................. 45,745 * 45,745 (3) -- *
Chuck Sword..................... 40,027 * 40,027 (3) -- *
Michael Wayne Breindel.......... 450,219 * 450,219 (4) -- *
Douglas Marlin.................. 431,060 * 431,060 (4) -- *
Kevin Barker.................... 76,633 * 76,633 (4) -- *
--------- --------- ---
Total 1,709,493 1,709,493 --
========= ========= ===
<FN>
-------------------------
* Represents ownership of less than one percent.
(1) Represents shares issued in connection with the 1999 earnout payment due
under the terms of the acquisition agreement between us and Americom Group,
Inc., dated as of June 4, 1998.
(2) Represents shares issued in connection with the 1999 earnout payment due
under the terms of the acquisition agreement between us and Port
Consulting, Inc., dated as of May 20, 1999.
(3) Represents shares issued in connection with the first earnout payment due
under the terms of the acquisition agreement between us and STR, Inc. dated
as of June 30, 1999.
(4) Represents shares issued under the Agreement and Plan of Merger between us
and Independent Business Consultants d/b/a Creative Computer Consultants
Firm effective as of April 1, 2000.
</FN>
</TABLE>
9
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our Second Restated Articles of Incorporation authorize the issuance of up
to 80,000,000 shares of our Common Stock and up to 5,000,000 shares of preferred
stock (the "Preferred Stock"). The Preferred Stock may be issued from time to
time and on such terms as are specified by our Board of Directors, without
further authorization from our shareholders.
As of May 24, 2000, there were 51,771,918 shares of our Common Stock
outstanding. In addition, 503 shares of Common Stock are reserved for issuance
in exchange for the exchangeable shares in our Canadian subsidiary.
As of May 24, 2000 there were 918,200 issued and outstanding warrants to
purchase shares of our Common Stock at a weighted average exercise price of
$4.69 per share and options held by our employees to purchase 11,165,900 shares
of our Common Stock at a weighted average exercise price of $2.20 per share. All
of the warrants are currently exercisable. Of the outstanding options, 9,231,850
are now exercisable at a weighted average exercise price of $3.04 per share, and
the rest become exercisable at various times over the next three years.
PRICE RANGE OF COMMON STOCK
Our Common Stock trades on the Nasdaq Stock Market(R) under the symbol
"ADSX." The following table sets forth the high and low sale prices of the
Common Stock as reported by the Nasdaq for each of the quarters since the
beginning of 1998.
High Low
---- ---
1998
----
First Quarter................ 5 1/2 4 1/32
Second Quarter............... 4 7/8 3 1/8
Third Quarter ............... 3 1/2 1 9/16
Fourth Quarter .............. 5 1/2 1 17/32
1999
----
First Quarter................ 4 3/16 2
Second Quarter............... 3 1/2 2
Third Quarter................ 3 3/8 1 11/16
Fourth Quarter............... 16 1 5/8
2000
----
First Quarter................ 11 3/16 3 1/2
Second Quarter (through
May 24, 2000)......... 10 1/4 3 3/4
Holders
As of May 24, 2000, there were 1,354 holders of record of our Common Stock.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the shares offered hereby in one or more
transactions (which may include "block" transactions) on the Nasdaq Stock
Market, in the over-the-counter market, in negotiated transactions or in a
combination of such methods of sales, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the shares directly to purchasers, or may
sell to or through agents, dealers or underwriters designated from time to time,
and such agents, dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchaser(s) of the shares of our Common Stock for whom they may act as agent or
to whom they may sell as principals, or both. The Selling Shareholders may also
pledge certain of the shares of our Common Stock from time to time, and this
prospectus also relates to any sale of shares of our Common Stock that might
take place following any foreclosure of such a pledge. The Selling Shareholders
10
<PAGE>
and any agents, dealers or underwriters that act in connection with the sale of
the shares of our Common Stock might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any discount or commission
received by them and any profit on the resale of the shares as principal might
be deemed to be underwriting discounts or commissions under the Securities Act.
We will receive no portion of the proceeds from the sale of the shares and
will bear all of the costs relating to the registration of this offering (other
than any fees and expenses of counsel for the Selling Shareholders). Any
commissions, discounts or other fees payable to a broker, dealer, underwriter,
agent or market maker in connection with the sale of any of the shares will be
borne by the Selling Shareholders.
LEGAL OPINION
Bryan Cave LLP, St. Louis, Missouri, as our counsel, has issued an opinion
as to the legality of the Common Stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Applied Digital Solutions, Inc.
(formerly, Applied Cellular Technology, Inc.) for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. The consolidated financial
statements for the year ended December 31, 1997 incorporated in this Prospectus
by reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of Rubin, Brown,
Gornstein & Co. LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The consolidated financial statements incorporated in this Prospectus by
reference to the Current Report on Form 8-K/A of Applied Digital Solutions, Inc.
(formerly, Applied Cellular Technology, Inc.) dated August 12, 1999, have been
so incorporated in reliance on the report of Di Pesa & Company, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the Commission's public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at Northeast Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents by writing to the Commission and paying a duplicating charge.
Please call the Commission at 1-800-732-0330 for further information on the
operation of its public reference rooms in other cities. The Commission also
makes our filings available to the public on its Internet site (http:\\
www.sec.gov). Quotations relating to our Common Stock appear on the Nasdaq
National Market, and such reports, proxy statements and other information
concerning us can also be inspected at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Commission allows us to "incorporate by reference" information from
other documents that we file with them, which means that we can disclose
important information by referring to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information we file later with the Commission will automatically update and
supersede this information. We incorporate by reference into this prospectus the
documents listed below, and any future filings we make with the Commission under
11
<PAGE>
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior
to the termination of this offering:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1999;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
3. Our Current Report on Form 8-K/A filed on August 12, 1999; and
4. Our Registration Statement on Form 8-A filed on May 5, 1995,
registering our Common Stock under Section 12(g) of the Exchange Act,
including any amendments or reports filed for the purpose of updating such
description.
To the extent that any statement in this prospectus is inconsistent with
any statement that is incorporated by reference and that was made on or before
the date of this prospectus, the statement in this prospectus shall control. The
incorporated statement shall not be deemed, except as modified or superseded, to
constitute a part of this prospectus or the registration statement. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete and, in each instance, we refer you to the
copy of each contract or document filed as an exhibit to the registration
statement.
We will provide you with copies of any of the documents incorporated by
reference into this prospectus (other than exhibits attached to those documents,
unless such exhibits are specifically incorporated by reference into the
information incorporated herein), without charge. Please direct your written or
oral request to Applied Digital Solutions, Inc., 400 Royal Palm Way, Suite 410,
Palm Beach, Florida 33480; Attention: Kay Langsford, Vice President of
Administration (telephone: (561) 366-4800).
We have not authorized anyone to give any information or to make any
representation concerning this offering except the information and
representations which are contained in this prospectus or which are incorporated
by reference in this prospectus. If anyone gives or makes any other information
or representation, you should not rely on it. This prospectus is not an offer to
sell, or a solicitation of an offer to purchase, any securities other than those
to which it relates, nor does it constitute an offer to sell or a solicitation
of an offer to purchase by any person in any circumstances in which an offer or
solicitation is unlawful. You should not interpret the delivery of this
prospectus or any sale made hereunder as an indication that there has been no
change in our affairs since the date of this prospectus. You should also be
aware that the information in this prospectus may change after this date.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This document and the documents incorporated in this document by reference
contain forward-looking statements within the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 with respect to our financial
condition, results of operations and business. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions identify forward-looking statements. These forward-looking
statements are not guarantees of future performance and are subject to certain
risks and uncertainties that could cause actual results to differ materially
from the results contemplated by the forward-looking statements. The section
entitled "Risk Factors" that appears in this prospectus describe some, but not
all, of the factors that could cause these differences.
12
<PAGE>
UNAUDITED CONDENSED COMBINED
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma information set forth below gives effect to the
acquisition of Bostek, Inc. and Affiliate and the financing of that acquisition
as if it had occurred on January 1, 1999.
The pro forma adjustments do not reflect any operating efficiencies and
cost savings which may be achievable with respect to the combined companies. The
pro forma adjustments do not include any adjustments to historical sales for any
future price changes nor any adjustments to selling and marketing expenses for
any future operating changes.
The following information is not necessarily indicative of the
operating results that would have occurred had the merger been consummated on
January 1, 1999. You should read the unaudited condensed combined pro forma
statement of operations and the accompanying notes together with the historical
financial statements of Bostek, Inc. and Affiliate and Applied Digital
Solutions, Inc. and Subsidiaries, including the notes thereto, both of which
have been incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
For the year ended December 31, 1999
(In thousands, except per share data)
Applied Bostek, Inc. Applied
Digital and Affiliate Digital
Solutions, Inc. Historical Solutions, Inc.
Historical (1/1/1999- Pro Forma Pro Forma
12/31/1999 5/31/1999)(A) Adjustments 12/31/1999
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net operating income $ 336,741 $ 33,400 $ 370,141
Cost of goods sold 241,790 29,596 271,386
-------------------------------------------------------------------
Gross profit 94,951 3,804 98,755
Selling, general and administrative expenses (90,416) (3,424) (93,840)
Depreciation and amortization (9,687) (10) (447) (B) (10,144)
Restructuring and unusual costs (2,550) - (2,550)
Gain on sale of subsidiary 20,075 - 20,075
Interest income 616 - 616
Interest expense (3,842) (151) (352) (C) (4,345)
-------------------------------------------------------------------
Income before provision for income taxes,
minority interest and extraordinary loss 9,147 219 (799) 8,567
Provision for income taxes 3,160 74 (298) (D) 2,936
-------------------------------------------------------------------
Income before minority interest and
extraordinary loss 5,987 145 (501) 5,631
Minority interest 395 - - 395
-------------------------------------------------------------------
Income before extraordinary loss $ 5,592 $ 145 $ (501) $ 5,236
===================================================================
Earnings per common share - basic
Income before extraordinary loss $ 0.12 N/A N/A $ 0.11
Earnings per share - diluted
Income before extraordinary loss $ 0.11 N/A N/A $ 0.10
Weighted average number of common
shares outstanding - basic 46,814 N/A N/A 46,814
Weighted average number of common
shares outstanding - diluted 50,086 N/A N/A 50,086
</TABLE>
13
<PAGE>
The unaudited condensed combined pro forma statement of operations for the year
ended December 31, 1999 gives effect to the consolidated results of operations
for the year ended December 31, 1999 as if the acquisition of Bostek, Inc. and
Affiliate occurred on January 1, 1999.
PRO FORMA ADJUSTMENTS TO THE UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 ARE AS FOLLOWS:
(A) Represents the historical unaudited condensed combined results of Bostek,
Inc. and Affiliate for the five months ended May 31, 1999. Bostek, Inc. and
Affiliate was acquired by Applied Digital Solutions, Inc. effective
June 1, 1999.
(B) The $447 increase in depreciation and amortization expense represents the
estimated amount of goodwill amortization expense to be recorded for the
five month period from January 1, 1999 to May 31, 1999, assuming straight
line amortization of the $21,458 of goodwill related to the Bostek, Inc.
and Affiliate acquisition over a twenty year period.
(C) The $352 increase in interest expense represents the increase to interest
expense for the five month period from January 1, 1999 to May 31, 1999
associated with debt issued in connection with the purchase of Bostek, Inc.
and Affiliate, based upon borrowing the $10,055 paid to the sellers at
closing, at a 8.41% interest rate.
(D) The adjustment to the provision for income taxes results from providing for
taxes at a 40% rate (net federal and state) against the pre-tax pro-forma
adjustments.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses (other than underwriting
discounts and commissions), which other than the SEC registration fee are
estimates, payable by the Registrant in connection with the sale and
distribution of the shares registered hereby**:
SEC Registration Fee .................................... $ 1,857
Accounting Fees and Expenses............................. 10,000*
Legal Fees and Expenses.................................. 10,000*
Miscellaneous Expenses................................... 8,143*
--------
Total ....................................... $ 30,000*
========
- -------------
* Estimated
** The Selling Shareholders will pay any sales commissions or underwriting
discount and fees incurred in connection with the sale of shares
registered hereunder.
Item 15. Indemnification of Directors and Officers.
Sections 351.355(1) and (2) of The General and Business Corporation Law of
the State of Missouri provide that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, except that, in the case of an action or suit by or in the right
of the corporation, the corporation may not indemnify such persons against
judgments and fines and no person shall be indemnified as to any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation,
unless and only to the extent that the court in which the action or suit was
brought determines upon application that such person is fairly and reasonably
entitled to indemnity for proper expenses. Section 351.355(3) provides that, to
the extent that a director, officer, employee or agent of the corporation has
been successful in the defense of any such action, suit or proceeding or any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred in connection with
such action, suit or proceeding. Section 351.355(7) provides that a corporation
may provide additional indemnification to any person indemnifiable under
subsection (1) or (2), provided such additional indemnification is authorized by
the corporation's articles of incorporation or an amendment thereto or by a
shareholder-approved bylaw or agreement, and provided further that no person
shall thereby be indemnified against conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct or which
involved an accounting for profits pursuant to Section 16(b) of the Exchange
Act.
The bylaws of the Registrant provide that the Registrant shall indemnify,
to the full extent permitted under Missouri law, any director, officer, employee
or agent of the Registrant who has served as a director, officer, employee or
agent of the Registrant or, at the Registrant's request, has served as a
II-1
<PAGE>
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to such provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
(a) The undersigned issuer hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration statement
(or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such information
in this registration statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palm Beach, State of Florida, on May 25, 2000.
APPLIED DIGITAL SOLUTIONS, INC.
By: /S/ DAVID A. LOPPERT
---------------------------------
David A. Loppert, Vice President,
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Garrett A. Sullivan and David A. Loppert, and each of them (with full power to
each of them to act alone), the true and lawful attorney in fact and agent for
the undersigned, to act on behalf of and in the name of the undersigned in
connection with this Registration Statement, including the authority to sign any
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with exhibits and any and all other documents filed with
respect thereto, with the Securities and Exchange Commission (or any other
governmental or regulatory authority), and each such person ratifies and
confirms all that said attorneys in fact and agents may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board of
Directors, Chief Executive
/S/ Richard J. Sullivan Officer and Secretary (Principal May 25, 2000
- ------------------------- Executive Officer)
(Richard J. Sullivan)
/S/ Garrett A. Sullivan President and Director (Principal May 25, 2000
- ------------------------- Operating Officer)
(Garrett A. Sullivan)
Vice President, Chief Financial
/S/ David A. Loppert Officer May 25, 2000
- -------------------------
(David A. Loppert)
/S/ Lorraine M. Breece Chief Accounting Officer May 25, 2000
- -------------------------
(Lorraine M. Breece)
/S/ Richard S. Friedland Director May 25, 2000
- -------------------------
(Richard S. Friedland)
/S/ Arthur F. Noterman Director May 25, 2000
- -------------------------
(Arthur F. Noterman)
/S/ Daniel E. Penni Director May 25, 2000
- -------------------------
(Daniel E. Penni)
/S/ Angela M. Sullivan Director May 25, 2000
- -------------------------
(Angela M. Sullivan)
/S/ Constance K. Weaver Director May 25, 2000
- -------------------------
(Constance K. Weaver)
II-3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 Second Restated Articles of Incorporation of the Registrant
(incorporated herein by reference to Exhibit 4.1 to the
Registrant's Post-Effective Amendment No. 1 on Form S-1 to
Registration Statement (Form S-3 File No. 333-64605) filed with
the Commission on June 24, 1999)
4.2 Amended and Restated Bylaws of the Registrant dated March 31,
1998 (incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-3 (File No.
333-51067) filed with the Commission on April 27, 1998)
5.1 Opinion of Bryan Cave LLP regarding the validity of the Common
Stock
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Rubin, Brown, Gornstein & Co. LLP
23.3 Consent of Di Pesa & Company
23.4 Consent of Bryan Cave LLP (included on Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
II-4
Exhibit 5.1
BRYAN CAVE LLP
ONE METROPOLITAN SQUARE
211 N. BROADWAY, SUITE 3600
ST. LOUIS, MISSOURI 63102-2750
(314) 259-2000
FACSIMILE: (314) 259-2020
DENIS P. MCCUSKER INTERNET ADDRESS
Direct Dial Number [email protected]
(314) 259-2455
May 26, 2000
Board of Directors
Applied Digital Solutions, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
Ladies and Gentlemen:
We are acting as counsel for Applied Digital Solutions, Inc., a
Missouri corporation (the "Company"), in connection with the preparation and
filing of a Registration Statement on Form S-3 (the "Registration Statement")
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended. The Registration Statement relates to 1,709,493 shares of the Company's
common stock, $.001 par value per share.
In connection herewith, we have examined and relied without independent
investigation as to matters of fact upon such certificates of public officials,
such statements and certificates of officers of the Company and originals or
copies certified to our satisfaction of the Registration Statement, the Articles
of Incorporation and By-laws of the Company as amended and now in effect,
proceedings of the Board of Directors of the Company and such other corporate
records, documents, certificates and instruments as we have deemed necessary or
appropriate in order to enable us to render this opinion. In rendering this
opinion, we have assumed the genuineness of all signatures on all documents
examined by us, the due authority of the parties signing such documents, the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
Based upon and subject to the foregoing, it is our opinion that the
1,709,493 shares of common stock of the Company covered by the Registration
Statement are legally issued, fully paid and non-assessable shares of common
stock of the Company.
This opinion is not rendered with respect to any laws other than the
laws of the State of Missouri, and the Federal law of the United States. We
hereby consent to the reference to our name in the Registration Statement under
the caption "Legal Opinion" and further consent to the filing of this opinion as
Exhibit 5.1 to the Registration Statement.
Very truly yours,
/S/ BRYAN CAVE LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Applied Digital Solutions, Inc. (formerly, Applied
Cellular Technology, Inc.) of our report dated March 3, 2000, relating to the
financial statements and financial statement schedule which appears in Applied
Digital Solutions, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/S/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
St. Louis, Missouri
May 26, 2000
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Applied Digital Solutions, Inc. (formerly, Applied
Cellular Technology, Inc.) of our report dated February 24, 1998 relating to the
financial statements and financial statement schedule which appear in Applied
Digital Solutions, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/S/ RUBIN, BROWN, GORNSTEIN & CO. LLP
Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
May 26, 2000
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Applied Digital Solutions, Inc. (formerly, Applied
Cellular Technology, Inc.) of our report dated April 6, 1999 (except for Note
13, which is as of June 4, 1999) relating to the financial statements of Bostek,
Inc. and Affiliate, which appears in Applied Digital Solutions, Inc.'s amended
current report on Form 8-K/A dated August 12, 1999. We also consent to the
references to us under the headings "Experts" in such Registration Statement.
/S/ DI PESA & COMPANY
- ---------------------
Di Pesa & Company
Certified Public Accountants
May 26, 2000
