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Filed by Applied Digital Solutions, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Applied Digital Solutions, Inc.
Commission file No. 000-26020
APPLIED DIGITAL SOLUTIONS, INC. AND DESTRON FEARING CORPORATION AMEND
MERGER AGREEMENT
Palm Beach, FL and South St. Paul, MN, May 26, 2000 - Applied Digital
Solutions, Inc. (Nasdaq:ADSX) and Destron Fearing Corporation (Nasdaq SmallCap:
DFCO) announced they have signed an amendment to their definitive merger
agreement. The amendment modifies the exchange ratio for the merger, eliminates
the right of either party to terminate the agreement due to an increase or
decrease in the price of Applied Digital Solutions' common stock and prohibits,
without Destron Fearing's consent, Applied Digital Solutions from entering into
an acquisition agreement with any other public company prior to the earlier to
occur of the completion of the merger or the termination of the merger
agreement. Under the merger agreement executed by the parties on April 25, 2000,
Applied Digital Solutions will acquire Destron Fearing in a tax-free exchange of
common stock in a merger of Destron Fearing with Digital Angel.net Inc., a
wholly owned subsidiary of Applied Digital Solutions. The combined companies
will do business under the Digital Angel.net Inc. name.
Under the terms of the amendment, Destron Fearing stockholders will
receive 1.50 shares of Applied Digital Solutions stock for every share of
Destron Fearing. Under the amendment to the merger agreement, no further
adjustments will be made to the exchange ratio due to changes in the price of
Applied Digital Solutions' common stock. After the completion of the merger,
Destron Fearing stockholders will own an estimated 28% of the common stock of
Applied Digital Solutions, excluding shares of common stock issuable upon the
exercise of options and warrants of Destron Fearing assumed in the merger.
The amendment to the merger agreement also eliminates the right of
Applied Digital Solutions or Destron Fearing to terminate the merger agreement
if the price of Applied Digital Solutions' common stock moves above or below
certain price thresholds. Prior to the amendment, either party had the right to
terminate the merger agreement if the average closing price of the Applied
Digital Solutions' common stock was above $24.00 per share or below $6.00 per
share for a certain period prior to closing.
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Additionally, the amendment to the merger agreement prohibits Applied
Digital Solutions or its subsidiaries from entering into an agreement to
acquire, without the consent of Destron Fearing, all or substantially all of the
capital stock or the assets of any other public company. This prohibition will
remain in effect until the earlier to occur of the completion of the merger or
the termination of the merger agreement.
Applied Digital Solutions and Destron Fearing believe these amendments
were necessary in light of recent market volatility and the decrease in the
price of the common stock of both companies. The amended merger agreement,
which has already been approved by Boards of Directors of Applied Digital
Solutions and Destron Fearing, is subject to approval by Applied Digital
Solutions shareholders and Destron Fearing stockholders, as well as regulatory
review, including Hart-Scott-Rodino. Pending these approvals, the completion of
the deal is expected at the beginning of the third quarter of this year. No
assurance can be given that this agreement will result in a transaction.
ABOUT APPLIED DIGITAL SOLUTIONS
Applied Digital Solutions is a leading-edge, single-source provider of
e-business solutions. The company differentiates itself in the marketplace by
enabling e-business through Computer Telephony Internet Integration (CTII(TM)).
With five-year revenue growth (from 1994 to 1998) of 64,012%, Applied Digital
Solutions was ranked as the fifth fastest-growing technology company by
Deloitte & Touche in its 1999 Technology Fast 500 listing. For more
information, visit the company's web site at http://www.adsx.com.
ABOUT DIGITAL ANGEL
In December of 1999, Applied Digital Solutions announced that it had acquired
the patent rights to a miniature digital transceiver - which it has named
Digital Angel - implantable within the human body that could be used for a
variety of purposes, such as providing a tamper-proof means of identification
for enhanced e-commerce security, locating lost or missing individuals,
tracking the location of valuable property and pets, and monitoring the medical
conditions of at-risk patients. The implantable device sends and receives data
and can be continuously tracked by GPS (Global Positioning Satellite)
technology. For more information about Digital Angel, visit
www.digitalangel.net.
ABOUT DESTRON FEARING CORPORATION
Destron Fearing Corporation has been in the animal identification business
since 1945. For over 50 years, Destron Fearing has developed, manufactured and
marketed a broad range of individual animal identification products. The
company owns patents worldwide in microchip technology and is a leader in the
world evolution of radio frequency animal identification. For more information
about Destron Fearing Corporation, visit the company's web site at:
www.destronfearing.com.
Applied Digital Solutions, its directors, executive officers and employees may
be soliciting proxies from Applied Digital Solutions shareholders in favor of
the merger. Information concerning Applied
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Digital Solutions' participants in the solicitation was filed with the SEC
under Rule 425 on May 9, 2000. In addition, Destron Fearing, its directors,
executive officers and employees may be soliciting proxies from Destron Fearing
stockholders in favor of the merger. Information concerning Destron Fearing's
participants in the solicitation was filed with the SEC under Rule 425 on May
8, 2000.
Statements about Applied Digital Solutions' and Destron Fearing's future
expectations, including future revenues and earnings, and all other statements
in this document other than historical facts are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, Section 21E of
the Securities Exchange Act of 1934, and as that term is defined in the Private
Litigation Reform Act of 1995. Applied Digital Solutions and Destron Fearing
intend that such forward-looking statements involve risks and uncertainties and
are subject to change at any time, and Applied Digital Solutions' and Destron
Fearing's actual results could differ materially from expected results. Applied
Digital Solutions and Destron Fearing undertake no obligation to update
forward- looking statements to reflect subsequently occurring events or
circumstances.
CONTACT: Applied Digital Solutions, Inc.
Ovations International Inc.
Matthew Cossolotto, 914/245-9721
[email protected] or
ADS Investor Relations
Robert Jackson, 303/707-1468
Fax: 303/703-8250
[email protected]
Destron Fearing Corporation
BlueFire Partners
1300 Fifth Street Towers, 150 S. 5th Street
Minneapolis, Minnesota 55402
Doug Ewing or Tom Langenfeld, (612) 371-0000 or
Destron Fearing Corporation
Thomas Patin, (651) 455-1621
490 Villaume Avenue
South St. Paul, Minnesota 55075
# # #
Applied Digital Solutions and Destron Fearing will be filing a joint
proxy statement/prospectus and other relevant documents concerning the merger
with the United States Securities and Exchange Commission (the "SEC"). WE URGE
INVESTORS TO READ THE
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JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED
WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be
able to obtain the documents free of charge at the SEC's website, www.sec.gov.
In addition, documents filed with the SEC by Applied Digital Solutions will be
available free of charge from Applied Digital Solutions at 400 Royal Palm Way,
Suite 410, Palm Beach, Florida 33480; Attention: Kay Langsford, Vice President
of Administration, Telephone (561) 366-4800. READ THE JOINT PROXY
STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
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