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

As filed with the Securities and Exchange Commission on June 23, 2000
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------

Amendment No. 1 On
FORM 10-K/A

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
or
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________

Commission file number: 000-26020

APPLIED DIGITAL SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

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)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001
par value

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

At March 24, 2000, the aggregate market value of the voting and non-voting
stock held by non-affiliates of the registrant was approximately $523,124,000.

At March 24, 2000, 49,942,930 shares of Common Stock were outstanding.

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

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A amends the registrant's Annual Report
on Form 10-K for the year ended December 31, 1999 filed with the Securities and
Exchange Commission on March 30, 2000. This amendment replaces the information
previously incorporated by reference in Part III of the Form 10-K with the
actual text for Part III of the Form 10-K.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are as follows:

Name Age Position Position Held Since
- ---------------------- --------- -------------------------------------------- -------------------

Richard J. Sullivan 61 Chairman, Chief Executive Officer May 1993
Garrett A. Sullivan 65 Director, President, Chief Operating Officer March 1995
Richard S. Friedland 49 Director October 1999
Arthur F. Noterman 58 Director February 1997
Daniel E. Penni 52 Director March 1995
Angela M. Sullivan 42 Director April 1996
Constance K. Weaver 47 Director July 1998
Jerome C. Artigliere 46 Vice President, Treasurer April 1998
Michael E. Krawitz 30 Vice President April 1999
David A. Loppert 45 Vice President, Chief Financial Officer February 1997

Following is a summary of the background and business experience of the
directors and executive officers:

Richard J. Sullivan: Mr. Sullivan, age 61, was elected to the Board of
Directors, and named Chief Executive Officer, in May 1993. He was appointed
Secretary in March 1996. He is a member of the Compensation Committee of the
Board of Directors of the Company. Mr. Sullivan is currently Chairman of Great
Bay Technology, Inc. From August 1989 to December 1992, Mr. Sullivan was
Chairman of the Board of Directors of Consolidated Convenience Systems, Inc., in
Springfield, Missouri. He has been the Managing General Partner of The Bay
Group, a merger and acquisition firm in New Hampshire, since February 1985. Mr.
Sullivan was formerly Chairman and Chief Executive Officer of Manufacturing
Resources, Inc., an MRP II software company in Boston, Massachusetts, and was
Chairman and CEO of Encode Technology, a "Computer-Aided Manufacturing" Company,
in Nashua, New Hampshire from February 1984 to August 1986. Mr. Sullivan is
married to Angela M. Sullivan.

Garrett A. Sullivan: Mr. Sullivan, age 65, has been President of the
Company since March 1995. He was elected to the Board of Directors in August
1995. He was acting secretary of the Company from March 1995 to March 1996 and
acting Chief Financial Officer from March 1995 to February 1997. From 1993 to
1994 he was an Executive Vice President of Envirobusiness, Inc. From 1988 to
1993, he served as president and chief operating officer of two companies in the
electronics and chemical industries which were owned by Philips North America.
He was previously a partner in The Bay Group, a merger and acquisition firm in
New Hampshire, from 1988 to 1993. From 1981 to 1988, Mr. Sullivan was President
of Granada Hospital Group, Burlington, Massachusetts. He earned a Bachelor of
Arts degree from Boston University in 1960 and an MBA from Harvard University in
1962. Mr. Sullivan is not related to Richard J. Sullivan.

Richard S. Friedland: Mr. Friedland, age 49, was elected to the Board of
Directors in October 1999 and is Chairman of the Audit Committee and serves on

the Compensation Committee of the Board of Directors of the Company. He was
previously associated with General Instrument Corporation. During his 19-year
tenure, he held various executive positions, including Chief Financial Officer,
President and Chief Operating Officer. In 1995, he was appointed Chairman of the
Board and Chief Executive Officer. Mr. Friedland currently serves on the boards
of Tech-Sym Corporation, Zilog, Inc. and Video Network Communications, Inc., as
well as several development stage companies. He earned a Bachelor of Science
degree in Accounting from Ohio State University in 1972 and a Master of Business
Administration degree from Seton Hall University in 1985.

Arthur F. Noterman: Mr. Noterman, age 58, a Chartered Life Underwriter, has
served as a Director since February 1997, and serves on the Audit Committee of
the Board of Directors of the Company. An operator of his own insurance agency,
Mr. Noterman is a registered NASD broker affiliated with a Chicago, Illinois
registered broker/dealer. Mr. Noterman attended Northeastern University from
1965 to 1975 and obtained the Chartered Life Underwriters Professional degree in
1979 from The American College, Bryn Mawr, Pennsylvania.

Daniel E. Penni: Mr. Penni, age 52, has served as a Director since March
1995 and is Chairman of the Compensation Committee, and serves on the Audit
Committees of the Board of Directors of the Company. Since March 1998, he has
been an Area Executive Vice President for Arthur J. Gallagher & Co., an
insurance agency. He has worked in many sales and administrative roles in the
insurance business since 1969. He was President of the Boston Insurance Center,
Inc., an insurance agency, until 1988. Mr. Penni was founder and President of
BIC Equities, Inc., a broker/dealer registered with the NASD. Mr. Penni
graduated with a Bachelor of Science degree in 1969 from the School of
Management at Boston College.

Angela M. Sullivan: Ms. Sullivan, age 42, has served as a Director since
April 1996 and serves on the Compensation Committee of the Board of Directors of
the Company. From 1988 to the present, Ms. Sullivan has been a partner in The
Bay Group, a private merger and acquisition firm, President of Great Bay
Technology, Inc., and President of Spirit Saver, Inc. Ms. Sullivan earned a
Bachelor of Science degree in Business Administration in 1980 from Salem State
College. Ms. Sullivan is married to Richard J. Sullivan.

Constance K. Weaver: Ms. Weaver, age 47, was elected to the Board of
Directors in July 1998 and serves on the Compensation and Audit Committees of
the Board of Directors of the Company. From 1996 to the present, Ms. Weaver has
been Vice President, Investor Relations and Financial Communications for AT&T
Corporation. From 1995 through 1996 she was Senior Director, Investor Relations
and Financial Communications for Microsoft Corporation. From 1993 to 1995 she
was Vice President, Investor Relations, and from 1991 to 1993 she was Director
of Investor Relations, for MCI Communications, Inc. Ms. Weaver is a director of
Primark Corporation and the National Investor Relations Institute (NIRI). She
earned a Bachelor of Science degree from the University of Maryland in 1975.

Jerome C. Artigliere: Mr. Artigliere, age 46, joined a subsidiary of the
Company as President in January 1998, and was appointed Vice President of the
Company in April 1998, and Treasurer in December 1999. From 1996 to 1997 he was
Regional Vice President at General Electric Capital Corporation in Portsmouth,
NH. Prior to that, from 1994 to 1996 he was State Vice President at First
National Bank in Portsmouth, NH, a commercial bank subsidiary of Peoples
Heritage Bank of Portland, MA. He earned an undergraduate degree in finance from
Seton Hall University in 1977, and an MBA from Fairleigh Dickinson University in
1980.

Michael E. Krawitz: Mr. Krawitz, age 30, joined the Company as Assistant
Vice President and General Counsel in April 1999, and was appointed Vice
President and Assistant Secretary in December 1999. From 1994 to April 1999, Mr.
Krawitz was an attorney with Fried, Frank, Harris, Shriver & Jacobson in New

York. Mr. Krawitz earned a Bachelor of Arts degree from Cornell University in
1991 and a juris doctorate from Harvard Law School in 1994.

David A. Loppert: Mr. Loppert, age 45, joined the Company as Vice
President, Treasurer and Chief Financial Officer in February 1997. From 1996 to
1997, he was Chief Financial Officer of Bingo Brain, Inc. From 1994 to 1996, he
was Chief Financial Officer of both C.T.A. America, Inc., and Ricochet
International, L.L.C. Prior to that he was Senior Vice President, Acquisitions
and Due Diligence, of Associated Financial Corporation. Mr. Loppert started his
financial career with Price Waterhouse in 1978, in Johannesburg, South Africa,
before moving to their Los Angeles Office in 1980 where he rose to the position
of Senior Manager. He holds Bachelor degrees in both Accounting and Commerce, as
well as a Higher Diploma in Accounting, all from the University of the
Witwatersrand, Johannesburg. Mr. Loppert was designated a Chartered Accountant
(South Africa) in 1980.

Directorships

Ms. Weaver is a director of Primark Corporation. Mr. Friedland currently
serves on the boards of Tech-Sym Corporation, Zilog, Inc. and Video Network
Communications, Inc. No other directors hold directorships in any other company
which has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or subject to
the requirements of Section 15(d) of the Exchange Act or any company registered
as an investment company under the Investment Company Act of 1940.

Board Committees and Meetings

The Company has standing Audit and Compensation Committees of the Board of
Directors. The members of the committees are identified in the above-referenced
descriptions.

The Audit Committee recommends for approval by the Board of Directors a
firm of certified public accountants whose duty it is to audit the consolidated
financial statements of the Company for the fiscal year in which they are
appointed, and monitors the effectiveness of the audit effort, the Company's
internal and financial accounting organization and controls and financial
reporting. The audit committee held two meetings during 1999.

The Compensation Committee administers the Company's 1996 Non-Qualified
Stock Option Plan, the 1999 Flexible Stock Plan and the 1999 Employees Stock
Purchase Plan, including the review and grant of stock options to officers and
other employees under such plans, and recommends the adoption of new plans. The
Compensation Committee also reviews and approves various other Company
compensation policies and matters and reviews and approves salaries and other
matters relating to the executive officers of the Company. The Compensation
Committee reviews all senior corporate employees after the end of each fiscal
year to determine compensation for the subsequent year. Particular attention is
paid to each employee's contributions to the current and future success of the
Company along with their salary level as compared to the market value of
personnel with similar skills and responsibilities. The Compensation Committee
also looks at accomplishments which are above and beyond management's normal
expectations for their positions. The Compensation Committee met three times
during 1999.

The Board of Directors held 9 meetings during 1999 and acted by written
consent 46 times during 1999. During the year, all Directors attended 75% or
more of the Board of Directors' meetings and the Board Committees to which they
were assigned.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the officers and directors of
the Company and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and to furnish copies of all such reports to the Company.
The Company believes, based on its stock transfer records and other information
available to it, that all reports required under Section 16(a) were timely filed
during 1999.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain summary information concerning the
total remuneration paid in 1999 and the two prior fiscal years to the Company's
Chief Executive Officer and the Company's four other most highly compensated
executive officers.

Summary Compensation Table
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------------------- ---------------------- -------
Other
Annual Restricted All Other
Name and Compensa- Stock Options/ LTIP Compen-
Principal Position (1) Year Salary($) Bonus ($)(2) tion ($)(3) Awards($) SAR's (#)(4) Payouts (#) sation ($)
- ----------------------- ---- ---------- ------------ ----------- ---------- ------------ ----------- ----------

Richard J. Sullivan 1999 $ 457,500 $3,000,000 $ 9,115 -- 1,000,000 -- $ --
Chairman, CEO and 1998 $ 345,833 $ 180,000 $ 79,882 -- 1,500,000 -- $ --
Secretary 1997 $ 116,669 $ 140,000 $ 3,623 -- 1,000,000 -- $ --

Garrett A. Sullivan (5) 1999 $ 165,000 $1,500,000 $ 8,832 -- 500,000 -- $ --
Director, President 1998 $ 144,165 $ 90,000 $ 8,842 -- 475,000 -- $ --
and COO 1997 $ 105,499 $ 75,000 $ 811 -- 350,000 -- $ --

Jerome C. Artigliere (6) 1999 $ 98,726 $ 150,000 $ 1,938 -- 100,000 -- $ --
Vice President, 1998 $ 85,000 $ 25,000 $ 1,938 -- 50,000 -- $ --
Treasurer 1997 N/A N/A N/A N/A N/A N/A N/A

Michael E. Krawitz (7) 1999 $ 94,027 $ 150,000 $ 1,541 -- 125,000 -- $ --
Vice President 1998 N/A N/A N/A N/A N/A N/A N/A
1997 N/A N/A N/A N/A N/A N/A N/A

David A. Loppert (8) 1999 $ 150,000 $ 750,000 $ 19,775 -- 250,000 -- $ --
Vice President, 1998 $ 123,537 $ 40,000 $ 15,925 -- 285,000 -- $ --
Chief Financial Officer 1997 $ 64,423 $ 25,000 $ -- -- 150,000 -- $ --

<FN>
- ----------------------------
(1) No executive officer served pursuant to an employment contract through the
1996 fiscal year. See "Employment Contracts and Termination of Employment
and Change-In-Control Arrangements" below for agreements entered into
subsequent to December 31, 1996.

(2) The amounts in the Bonus column were discretionary awards granted by the
Compensation Committee in consideration of the contributions of the
respective named executive officers.

(3) Includes, in 1998 for Richard J. Sullivan, $73,394 reimbursed for the
payment of taxes. Prior to June 1997, Mr. Sullivan did not receive a salary
from the Company.

(4) Indicates number of securities underlying options.

(5) Mr. Sullivan was Acting Chief Financial Officer until February 1997.

(6) Mr. Artigliere began his employment with a subsidiary of the Company in
January, 1998 and was appointed an officer of the Company in April, 1998.

(7) Mr. Krawitz joined the Company in April 1999.

(8) Mr. Loppert was employed as Vice President, Treasurer, Chief Financial
Officer of the Company in February 1997.
</FN>

Option Grants in Last Fiscal Year

The following table contains information concerning the Company's grant of
Stock Options under the Company's 1999 Flexible Stock Plan and the 1996
Non-Qualified Stock Option Plan to the named executive officers during 1999:

Option Grants In Last Fiscal Year

Individual Grants
-------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise Grant Date
Options Employees in Price Present Value
Name Granted (#)(1) 1999 ($/Sh) Expiration Date ($) (2)
- -------------------- -------------- ------------ -------- --------------- -------------

Richard J. Sullivan 1,000,000 20.1% $ 2.03 May-05 $ 1,170,000
Garrett A. Sullivan 500,000 10.1% $ 2.03 May-05 $ 585,000
Jerome C. Artigliere 25,000 0.5% $ 2.76 January-05 $ 29,250
75,000 1.5% $ 2.03 May-05 $ 87,750
Michael E. Krawitz 50,000 1.0% $ 2.00 April-05 $ 58,500
25,000 0.5% $ 2.03 May-05 $ 29,250
50,000 1.0% $ 2.00 October-05 $ 58,500
David A. Loppert 250,000 5.0% $ 2.03 May-05 $ 292,500

<FN>
- ---------------
(1) Options granted under the 1996 Non-Qualified Stock Option Plan and the 1999
Flexible Stock Plan were granted at an exercise price equal to the greater
of the fair market value of the Company's common shares on the grant date
or $2.00. These options are exercisable over a five-year period beginning
with the first anniversary of the grant date.

(2) Based on the grant date present value of $1.17 per option share which was
derived using the Black-Scholes option pricing model in accordance with
rules and regulations of the Securities Exchange Commission and not
intended to forecast future appreciation of the Company's common share
price. The Black-Scholes model was used with the following assumptions:
dividend yield of 0%; expected volatility of 43.41%; risk-free interest
rate of 6.36%; and expected lives of 5 years.
</FN>

Option Exercises and Fiscal Year-End Values

The following table sets forth information with respect to the named
executive officers concerning the exercise of options during 1999 and
unexercised options held on December 31, 1999:

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

Number of Securities Value of Unexercised In-
Underlying Unexercised The-Money Options at Year
Exercised in 1999 Options at Year End 1999(#) End 1999 ($) (2)
--------------------------- ------------------------------ -------------------------
Shares
Acquired Upon Value
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------- --------------- ----------- ------------- ----------- -------------

Richard J. Sullivan -- $ -- 3,185,000 1,000,000 $ 11,726,762 $ 5,470,000
Garrett A. Sullivan 60,000 $ 350,780 915,000 500,000 $ 3,369,994 $ 2,735,000
Jerome C. Artigliere 50,000 $ 208,750 -- 100,000 $ -- $ 528,687
Michael E. Krawitz -- $ -- -- 125,000 $ -- $ 686,750
David A. Loppert 128,000 $ 719,581 307,000 250,000 $ 1,204,850 $ 1,367,500

<FN>
- -----------------------
(1) The values realized represents the aggregate market value of the shares
covered by the option on the date of exercise less the aggregate exercise
price paid by the executive officer, but do not include deduction for taxes
or other expenses associated with the exercise of the option or the sale of
the underlying shares.

(2) The value of the unexercised in-the-money options at December 31, 1999
assumes a fair market value of $7.50, the closing price of the Company's
Common Stock as reported on the Nasdaq Stock Market on December 31, 1999.
The values shown are net of the option exercise price, but do not include
deduction for taxes or other expenses associated with the exercise of the
option or the sale of the underlying shares.

</FN>

Compensation Pursuant to Plans

Cash and Stock Incentive Compensation Programs. To reward performance, the
Company provides its executive officers and its divisional executive officers
with additional compensation in the form of a cash bonus and/or stock awards. No
fixed formula or weighting is applied by the Compensation Committee to corporate
performance versus individual performance in determining these awards. The
amounts of such awards are determined by the Compensation Committee acting in
its discretion. Such determination, except in the case of the award for the
Chairman, is made after considering the recommendations of the Chairman and
President and such other matters as the Compensation Committee deems relevant.
The Compensation Committee, acting in its discretion, may determine to pay a
lesser award than the maximum specified. The amount of the total incentive is
divided between cash and stock at the discretion of the Compensation Committee.

For 2000, the Committee has authorized a bonus pool of up to $10 million
upon the sale by the Company of at least $100 million of Company assets (other
than transactions in the ordinary course of business).

Stock Options Granted under the 1996 Non-Qualified Stock Option Plan and
the 1999 Flexible Stock Plan. The 1996 Non-Qualified Stock Option Plan and the
1999 Flexible Stock Plan are long-term plans designed to link rewards with
shareholder value over time. Stock options are granted to aid in the retention
of employees and to align the interests of employees with shareholders. The
value of the stock options to an employee increases as the price of the
Company's stock increases above the fair market value on the grant date, and the
employee must remain in the Company's employ for the period required for the
stock option to be exercisable, thus providing an incentive to remain in the
Company's employ.

These Plans allow grants of stock options to all employees of the Company,
including executive officers. Grants to executive officers of the Company and to
officers of the Company's subsidiaries are made at the discretion of the
Compensation Committee. The Compensation Committee may also make available a
pool of options to each subsidiary to be granted at the discretion of such
subsidiary's president.

Other than as otherwise disclosed herein, the Company has no plans pursuant
to which cash or non-cash compensation was paid or distributed during the last
fiscal year, or is proposed to be paid or distributed in the future, to the
individuals described above.

Compensation of Directors

Prior to the fourth quarter of 1998, non-employee directors of the Company
received a fee of $250 per meeting, for their attendance at meetings of the
Company's Board of Directors. Beginning in the fourth quarter of 1998, the
non-employee director compensation was changed to fixed quarterly fees in the
amount of $5,000 per non-employee director. In addition, non-employee directors
receive a quarterly fee in the amount of $1,000 for each committee on which they
are a member. Reasonable travel expenses are reimbursed when incurred.
Individuals who become directors of the Company are automatically granted an
initial option to purchase 25,000 shares of Common Stock on the date they become
directors. Each of such options is granted pursuant to the Company's 1996
Non-Qualified Stock Option Plan or the 1999 Flexible Stock Plan on terms and
conditions determined by the Board of Directors. In addition, the following
options were granted to directors in 1999: Richard S. Friedland - 125,000 at
$2.00 in October 1999 and 25,000 at $2.375 in November 1999; Arthur F. Noterman,
Daniel E. Penni and Constance K. Weaver each - 125,000 in May 1999 at $2.03 and
25,000 each at $2.375 in November 1999; and Angela M. Sullivan - 125,000 at
$2.03 in May 1999. In addition, each of Messrs. Friedland, Noterman, Penni and
Weaver received a Bonus of $75,000. Directors who are not also executive
officers are not eligible to participate in any other benefit plan of the
Company.

Compensation Committee Interlocks and Insider Participation

Richard J. Sullivan, the Chief Executive Officer of the Company, is a
member of the Compensation Committee.

Employment Contracts and Termination of Employment and Change-In-Control
Arrangements

The Company, or its subsidiary, has entered into an employment agreement
with the following named executive officers:

Base
Name Length Commencing Salary
----------------- ---------- --------------- -------------

Richard J. Sullivan 5 Years(1) March 1, 2000 $ 450,000 (2)
Garrett A. Sullivan 5 Years(1) March 1, 2000 $ 165,000
Jerome C. Artigliere 3 Years January 5, 1998 $ 100,000 (3)
Michael E. Krawitz 5 Years April 12, 1999 $ 130,000
David A. Loppert 5 Years(1) March 1, 2000 $ 150,000

---------------------------------
<FN>
(1) Automatically renewed for successive additional one-year terms on each
anniversary.

(2) Provides for a minimum annual bonus of $140,000.

(3) Effective as of February 1, 1999.

</FN>

In 1997, the Company entered into employment agreements with Richard J.
Sullivan, Chairman; Garrett A. Sullivan, President; and David A. Loppert, Chief
Financial Officer. These agreements were amended and restated effective March 1,
2000. Such employment agreements, as amended and restated, include certain
"change of control" provisions. Upon a change of control all unvested stock
options become immediately exercisable. Also, at the employee's option, he may
terminate his employment under the agreement at any time within one year after
such change of control. The Company shall pay to the employee a severance
payment equal to the maximum amount which would not result in such payment being
an excess parachute payment as defined in the Internal Revenue Code of 1986, as
amended (the "Code") which would be subject to an excise tax. Additionally, upon
termination of employment for any reason other than for breach under the
agreement, each of Garrett Sullivan and David Loppert shall be entitled to
receive from the Company 60 equal monthly payments of 8.333% of his compensation
from the Company over the 12-month period for which his compensation was the
greatest, and Mr. Richard Sullivan shall receive 60 monthly payments of $37,500
each. These payments are reduced by any severance payments. Such employment
agreements also provide that, if any payments from the Company are subject to
the excise tax described above, the Company will make a gross up payment in an
amount which covers the excise tax due plus the excise and income taxes payable
on the gross up payment. Mr. Richard Sullivan's agreement provides that he may
elect to receive a percentage of his salary for each 12-month period in the
Company's Common Stock. For the twelve-month period commencing July 1, 1999, Mr.
Sullivan did not elect to receive any of his compensation in stock. In addition,
the Company agreed to transfer to Richard Sullivan certain other property valued
at approximately $0.5 million upon his relocation to the Palm Beach, Florida
area. The Company would also be required to make a gross up payment that covers
all U.S. federal and state income taxes payable by Mr. Sullivan, if any, as a
result of the transfer.

Additionally, the agreements for both Richard Sullivan and Garrett Sullivan
provide for certain "triggering events" which include a change in control of the
Company, the termination of Richard Sullivan's employment other than for a
material breach of the terms of his employment agreement, or if Richard Sullivan
ceases to hold his current positions with the Company for any reason other than
a material breach of the terms of his employment agreement. Within ten days of
the occurrence of a triggering event, the Company shall pay, in cash or in
stock, or in a combination thereof, $12.1 million and $3.5 million,
respectively, to Richard Sullivan and to Garrett Sullivan.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ownership of Equity Securities in the Company

The following table sets forth information regarding beneficial ownership
of the Company's Common Stock by each director and by each executive officer
named in the Summary Compensation Table and by all the directors and executive
officers as a group as of December 31, 1999:

Aggregate Number Of Percent of
Shares Beneficially Outstanding
Name Owned (1) Shares
- -------------------------------- ------------------------- -------------

Richard J. Sullivan 3,975,223 (2) 8.2%
Garrett A. Sullivan 915,000 1.9%
Richard S. Friedland -- *
Arthur F. Noterman 270,000 *
Daniel E. Penni 584,065 1.2%
Angela M. Sullivan 860,974 (2) 1.8%
Constance K. Weaver 143,000 *
Jerome C. Artigliere 25,000 *
Michael E. Krawitz 57,200 *
David A. Loppert 352,000 *
All Directors and Executive
Officers as a Group (14 Persons) 7,303,655 15.1%

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

* Represents less than 1% of the issued and outstanding shares of Common
Stock of the Company.
<FN>
(1) This table includes presently exercisable stock options. The following
directors and executive officers hold the number of exercisable options set
forth following their respective names: Richard J. Sullivan - 3,185,000;
Garrett A. Sullivan - 915,000; Arthur F. Noterman - 225,000; Daniel E.
Penni - 225,000; Angela M. Sullivan - 225,000; Constance K. Weaver -
135,000; Jerome C. Artigliere - 25,000; Michael E. Krawitz - 50,000; David
A. Loppert - 307,000; and all directors and executive officers as a group -
5,380,000.

(2) Includes 263,797 shares owned by The Bay Group and 367,177 shares owned by
Great Bay Technology, Inc. The Bay Group is controlled by Richard J.
Sullivan and Angela M. Sullivan. Great Bay Technology, Inc. is controlled
by Richard J. Sullivan, Angela M. Sullivan and Stephanie Sullivan.
</FN>

The following table sets forth information concerning warrants to purchase
shares of the Company's Common Stock which are owned beneficially by directors
and the named executive officers of the Company individually and as a group as
of December 31, 1999:

Class of Number of Percent of Exercise Price
Name Warrants Warrants (1) Class Per Share
- ---------------------------- -------- ------------ ----------- --------------

Richard J. Sullivan (2) Class K 250,000 100.0% $ 5.31
Class S 376,700 100.0% $ 2.00
Garrett A. Sullivan -- -- -- --
Richard S. Friedland -- -- -- --
Arthur F. Noterman -- -- -- --
Daniel E. Penni -- -- -- --
Angela M. Sullivan (2) Class K 250,000 100.0% $ 5.31
Class S 376,700 100.0% $ 2.00
Constance K. Weaver -- -- -- --
Jerome C. Artigliere -- -- -- --
Michael E. Krawitz -- -- -- --
David A. Loppert -- -- -- --
All Directors and Executive Class K 250,000 100.0% $ 5.31
Officers as a Group Class S 376,700 100.0% $ 2.00
(14 Persons)

- ---------------------
<FN>
(1) Pursuant to Rule 13d-3 under the Exchange Act, beneficial ownership of a
security consists of sole or shared voting power (including the power to
vote or direct the voting) and/or sole or shared investment power
(including the power to dispose or direct a disposition) with respect to a
security whether through a contract, arrangement, understanding,
relationship or otherwise. Unless otherwise indicated, each person
indicated above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to applicable
community property laws.

(2) Represents warrants owned by Great Bay Technology, Inc. Great Bay
Technology, Inc. is controlled by Richard J. Sullivan, Angela M. Sullivan
and Stephanie Sullivan.

</FN>

Principal Shareholders

Set forth in the table below is information as of December 31, 1999 with
respect to persons known to the Company (other than the directors and executive
officers shown in the preceding table) to be the beneficial owners of more than
five percent of the Company's issued and outstanding Common Stock:

Number of Shares
Name and Address Beneficially Owned Percent Of Class
- ----------------------------- ------------------ ----------------

None

Changes in Control

There are no arrangements, known to the Company, including any pledge by
any person of securities of the Company, the operation of which may at a
subsequent date result in a change of control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Indebtedness of Management

Garrett A. Sullivan, the Company's President, had executed two promissory
notes in favor of the Company; one in the amount of $75,000, bearing interest at
7% per annum, and one in the amount of $102,216.19, which was non-interest
bearing and was repayable from the proceeds of the sale of any shares of Common
Stock Mr. Sullivan received upon exercise of warrants or options. Both notes
were repaid in full by Mr. Sullivan in 1999.

Daniel E. Penni, a member of the Company's Board of Directors, has executed
a revolving line of credit promissory note in favor of Applied Digital Solutions
Financial Corp., a subsidiary of the Company, in the amount of $450,000. The
promissory note is payable on demand, with interest payable monthly on the
unpaid principal balance at the rate equal to one percentage point above the
base rate announced by State Street Bank and Trust Company (which interest rate
shall fluctuate contemporaneously with changes in such base rate). As of April
10, 2000, $425,000 had been advanced under this note.

David A. Loppert, the Company's Chief Financial Officer, has executed a
promissory note in favor of the Company in the amount of $260,000. The
promissory note is non-interest bearing and was executed as consideration for
the purchase by Mr. Loppert of 100,000 shares of the Company's Common Stock. As
of April 10, 2000, $90,000 was outstanding.

Earnout Agreements

The Company has entered into earnout arrangements with certain sellers of
companies in which the Company acquired an interest under which the sellers are
entitled to additional consideration for their interests in the companies they
sold to the Company. Under these agreements, assuming that all earnouts are
achieved, the Company is contingently liable for additional consideration
amounting to approximately $2.7 million based on achieved 1999 results,
approximately $12.7 million based on agreements coming due in 2000 and achieved
2000 results, approximately $7.1 million based on achieved 2001 results,
approximately $1.8 million based on achieved 2002 results and approximately $2
million based upon achieved 2004 results.

Put Options

The Company has entered into put options with the sellers of those
companies in which the Company acquired less than a 100% interest. These options
require the Company to purchase the remaining portion the Company does 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 company before income taxes for, generally, a two-year period
ending on the effective date of the put multiplied by a multiple ranging from
four to five. The Company has entered into agreements to acquire for
approximately $3.9 million, put options in certain subsidiaries of the Company's
subsidiary, IntelleSale.com. In addition, based upon current earnings, assuming
all other put options were exercised, the Company is contingently liable for
approximately an additional $6.9 million in the next two years.

Employment Agreements

At the time the Company acquires a particular company, the Company
generally enters into employment agreements with the key sellers/officers of the
acquired company. The agreements are for periods of one to ten years, and some
provide for bonus arrangements based on the earnings of the subsidiary.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 in the city of Palm
Beach, State of Florida, on June 23, 2000.

APPLIED DIGITAL SOLUTIONS, INC

By: /S/ DAVID A. LOPPERT
------------------------------------------
David A. Loppert, Vice President,
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

Chairman of the Board of
Directors, Chief Executive
Officer and Secretary
/S/ RICHARD J. SULLIVAN (Principal Executive Officer) June 23, 2000
- ------------------------------------------------
(Richard J. Sullivan)

/S/ GARRETT A. SULLIVAN President and Director
- ------------------------------------------------ (Principal Operating Officer)
(Garrett A. Sullivan) June 23, 2000

Vice President, Chief
Financial Officer
/S/ DAVID A. LOPPERT June 23, 2000
- ------------------------------------------------
(David A. Loppert)

/S/ LORRAINE M. BREECE Chief Accounting Officer June 23, 2000
- ------------------------------------------------
(Lorraine M. Breece)

/S/ RICHARD S. FRIEDLAND Director June 23, 2000
- ------------------------------------------------
(Richard S. Friedland)

/S/ DANIEL E. PENNI Director June 23, 2000
- ------------------------------------------------
(Daniel E. Penni)

/S/ ARTHUR F. NOTERMAN Director June 23, 2000
- ------------------------------------------------
(Arthur F. Noterman)

/S/ ANGELA M. SULLIVAN Director June 23, 2000
- ------------------------------------------------
(Angela M. Sullivan)

/S/ CONSTANCE K. WEAVER Director June 23, 2000
- ------------------------------------------------
(Constance K. Weaver)

LIST OF EXHIBITS
(Item 14 (c))

Exhibit
Number Description
------- -----------

4.1 Second Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (Form S-3 File No.
333-64605) filed with the Commission on June 23, 1999)

4.2 Amended and Restated Bylaws of the Company dated March 31, 1998
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (File No.
333-51067) filed with the Commission on April 27, 1998)

10.1* 1996 Non-Qualified Stock Option Plan of Applied Cellular
Technology, Inc., as amended through June 13, 1998 (incorporated
herein by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8 filed with the Commission on December 2,
1999 (Commission File Number 333-11294))

10.2* Applied Digital Solutions, Inc. 1999 Employees Stock Purchase
Plan, as amended through September 23, 1999 (incorporated herein
by reference to Exhibit 10.1 to the Company's Registration
Statement on Form S-8 (File No. 333-88421) filed with the
Commission on October 4, 1999)

10.3* Applied Digital Solutions, Inc. 1999 Flexible Stock Plan
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (File No. 333-
92327) filed with the Commission on December 8, 1999)

10.4 Credit Agreement between Applied Digital Solutions, Inc. and
State Street Bank and Trust Company dated as of August 25, 1998
(incorporated herein by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q filed with the
Commission on November 16, 1998 (Commission File Number
000-26020))

10.5 First Amendment to Credit Agreement between Applied Digital
Solutions, Inc. and State Street Bank and Trust Company dated as
of February 4, 1999 (incorporated by reference to Exhibit 10.3
the Company's Annual Report on Form 10-K filed with the
Commission on March 31, 1999 (Commission File Number 000-26020))

10.6 Amended and Restated Term and Revolving Credit Agreement, dated
July 30, 1999, between the Company and IBM Credit Corporation
(incorporated by reference to Exhibit 99.1 to the Company's
Quarterly Report on Form 10-Q filed with the Commission on
August 16, 1999 (Commission File Number 000-26020))

10.7 Amendment No. 1 to the Amended and Restated Term and Revolving
Credit Agreement dated as of September 29, 1999 among the
Company, and certain of its affiliates, and IBM Credit
Corporation, and certain of its affiliates (incorporated herein
by reference to Exhibit 16 to the Company's Current Report on
Form 8-K/A filed with the Commission on October 5, 1999
(Commission File Number 000-26020)

10.8* Richard J. Sullivan Employment Agreement**

10.9* Garrett A. Sullivan Employment Agreement**

10.10* David A. Loppert Employment Agreement**

16.1 Letter from Rubin, Brown, Gornstein & Co., LLP ("RBG")
concurring with the statements made by the Company in the Form
8-K report concerning RBG's resignations as the Company's
principal accountant (incorporated herein by reference to
Exhibit 16 to the Company's Current Report on Form 8-K filed
with the Commission on November 4, 1998 (Commission File Number
000-26020)

21.1 List of Subsidiaries of Applied Digital Solutions, Inc.**

23.1 Consent of PricewaterhouseCoopers LLP

23.2 Consent of Rubin, Brown, Gornstein & Co. LLP

27.1 Financial Data Schedule**

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

** Previously filed.