April 21, 2005
Mail Stop 0407
Scott R. Silverman
Chairman and Chief Executive Officer
Applied Digital Solutions, Inc.
1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Re: Applied Digital Solutions, Inc.
Registration Statement on Form S-3
File No. 333-123567
Filed March 24, 2005
Dear Mr. Silverman:
We have reviewed your filing with respect to the terms of
the
offering and have the following comments. Where indicated, we
think
you should revise your document in response to these comments. If
you disagree, we will consider your explanation as to why our
comment
is inapplicable or a revision is unnecessary. Please be as
detailed
as necessary in your explanation. In some of our comments, we may
ask you to provide us with supplemental information so we may
better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
* * * * *
Form S-3
Selling Security Holders, page 16
1. In your response letter, please tell us whether any of the
selling
shareholders is a broker-dealer or an affiliate of a broker-
dealer.
2. DSD Holdings A/S, page 16. Your disclosure and Section 5.1 of
the
Stock Purchase Agreement indicate the purpose of the share
exchange
was to allow Digital Angel to use Applied Digital stock as
consideration for the acquisition of DSD Holdings A/S. In your
response letter, please explain to us why the parties structured
the
acquisition of DSD Holdings in this manner. In addition, please
expand your disclosure to explain how the $3.5 million value of
the
share exchange was calculated.
3. Innovative Circuits Arizona, Inc., page 17. Please expand
your
disclosure of the facts regarding the litigation and settlement
involving Innovative Circuits Arizona, Inc. Please provide us
with
copies of the settlement agreement with Innovative Circuits
Arizona.
We may have additional comments after reviewing the agreement.
4. From your disclosure and the legality opinion, it does not
appear
that the shares being registered for resale in connection with the
settlement of the Innovative Circuits Arizona litigation were
issued
prior to the filing of the registration statement. In your
response
letter, tell us why you believed it was appropriate to file a
registration statement registering the resale of the shares prior
to
their issuance. Also tell us whether and when you have issued the
38,000 shares to Messrs. Shano, Wiley, and Addison. In this
regard,
we note that the shares were to have been issued on or before
April
1, 2005. Clarify what you mean by your reference to a requirement
to
issue "registered shares" to Messrs. Shano, Wiley, and Addison.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert staff comments and the declaration
of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
Please contact Ted Yu at (202) 824-5684, Kathleen Krebs,
Special Counsel, at (202) 942-1977, or me at (202) 942-1990 with
any
questions.
Sincerely,
Larry Spirgel
Assistant Director
Cc: Harvey Goldman
Holland & Knight LLP
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Applied Digital Solutions, Inc.
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