UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 21, 2004
APPLIED DIGITAL SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 000-26020 43-1641533
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
1690 SOUTH CONGRESS AVENUE, SUITE 200
DELRAY BEACH, FLORIDA 33445
(Address of principal executive offices)
561-805-8000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
/ / Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
Item 1.01 - Entry into a Material Definitive Agreement
On October 21, 2004, Applied Digital Solutions, Inc. (the "Company")
sold 2.5 million shares (the "Shares") of its common stock, par value $0.01
per share, in a private placement to an institutional investor, Satellite
Strategic Finance Associates, LLC ("SSFA") under a Securities Purchase
Agreement (the "Agreement"). The purchase price for the Shares was based on
the average daily volume weighted-average market price of the Company's
common stock for the period of five trading days beginning on Wednesday,
October 13, 2004, and ending on and including Tuesday, October 19, 2004,
which average was $3.61 per share. The Agreement provides SSFA with a Series
C Warrant, which is exercisable into an additional 1.5 million shares (the
"Series C Warrant Shares") of the Company's common stock at an exercise
price equal to 120% of the purchase price of the Shares. The Series C
Warrant may be exercised at any time, at SSFA's option, until the 150th day
following the effective date of the registration statement registering the
Series C Warrant Shares. The Agreement also provides for a Series D Warrant,
which is exercisable into 666,667 shares (the "Series D Warrant Shares") of
the Company's common stock at an exercise price equal to 140% of the
purchase price of the Shares. The Series D Warrant may be exercised at any
time beginning on the one-year anniversary of the issue date and expiring on
the sixth anniversary of such issue date. The exercise price of the Series C
Warrant Shares and the Series D Warrant Shares is $4.33 and $5.05 per share,
respectively. The proceeds from the sale of the Shares were approximately
$9.0 million. The Company previously entered into a similar transaction with
SSFA in April 2004.
The offer and sale of these securities by the Company to SSFA is
exempt from the registration requirements of the Securities Act of 1933. The
Company has agreed to effect the registration of the Shares, Series C
Warrant Shares and Series D Warrants Shares pursuant to the Registration
Rights Agreement attached hereto as Exhibit 10.4.
The Securities Purchase Agreement, the form of the Series C Warrant,
the form of the Series D Warrant and the Registration Rights Agreement are
included herein as exhibits.
SECTION 3 - SECURITIES AND TRADING SECURITIES
Item 3.02 - Unregistered Sales of Equity Securities
The following table lists the unregistered securities sold by the
Company on October 21, 2004, to SSFA under the Agreement, as more fully
described above in Section 1. These securities were issued for cash. These
securities were issued without registration in reliance upon the exemption
provided by Section 4(2) of the Securities Act of 1933, as amended, or Rule
506 of Regulation D promulgated thereunder.
AGGREGATE AMOUNT NUMBER OF NUMBER OF
NAME/ENTITY/NATURE DATE OF SALE OF CONSIDERATION PERSONS NOTE ISSUED FOR COMMON SHARES
======================================================================================================================
Satellite Strategic Finance Private
Associates, LLC October 21, 2004 $9,025,000 1 (1) Offering 2,500,000
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Total 2,500,000
=========
<FN>
(1) Represents shares issued in connection with an offer and sale of the
Company's common stock in a private placement under the terms of the
Agreement, which transaction was exempt from registration pursuant to
Section 4(2) of the Securities Act or Rule 506 of Regulation D
promulgated thereunder. The transaction documents included an
acknowledgment that the sale was not registered, that the purchaser was
acquiring the shares for investment and not for resale, and that the
purchaser acknowledged that the shares must be held until registered or
transferred in another transaction exempt from registration. In
addition, certificates representing the shares were legended to
indicate that they were restricted. In addition to the number of shares
listed in this table, the Company has also granted to SSFA warrants to
acquire an aggregate of 2,166,667 shares of the Company's common stock
as more fully discussed above in Section 1.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 - Financial Statements and Exhibits
(c) Exhibits.
As discussed in Item 1.01 of this Report, the following exhibits
are furnished as part of this Current Report on Form 8-K:
Exhibit No. Description
10.1 Securities Purchase Agreement between Applied Digital
Solutions, Inc. and Satellite Strategic Finance
Associates, LLC, dated as of October 21, 2004
10.2 Form of Series C Warrant to Purchase Common Stock of
Applied Digital Solutions, Inc., in favor of Satellite
Strategic Finance Associates, LLC dated October 21, 2004
10.3 Form of Series D Warrant to Purchase Common Stock of
Applied Digital Solutions, Inc., in favor of Satellite
Strategic Finance Associates, LLC dated October 21, 2004
10.4 Registration Rights Agreement between Applied Digital
Solutions, Inc. and Satellite Strategic Finance
Associates, LLC dated as of October 21, 2004
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APPLIED DIGITAL SOLUTIONS, INC.
(Registrant)
Date: October 22, 2004 By: Evan C. McKeown
/s/ Evan C. McKeown
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Number Description
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10.1 Securities Purchase Agreement between Applied Digital
Solutions, Inc. and Satellite Strategic Finance
Associates, LLC, dated as of October 21, 2004
10.2 Form of Series C Warrant to Purchase Common Stock of
Applied Digital Solutions, Inc., in favor of Satellite
Strategic Finance Associates, LLC dated October 21, 2004
10.3 Form of Series D Warrant to Purchase Common Stock of Applied
Digital Solutions, Inc., in favor of Satellite Strategic
Finance Associates, LLC dated October 21, 2004
10.4 Registration Rights Agreement between Applied Digital
Solutions, Inc. and Satellite Strategic Finance Associates,
LLC dated as of October 21, 2004