UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
13d-2(a)
(Amendment No. 3)
Digital Angel Corporation
(formerly Medical Advisory Systems, Inc.)
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(Name of Issuer)
Common Stock - $0.005 par value
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(Title of Class of Securities)
58449P 10 1
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(CUSIP Number)
Jerome C. Artigliere
Applied Digital Solutions, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
Tel: (561) 805-8024
Fax: (561) 805-8004
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Tel: (302) 651-1000
Fax: (302) 636-4140
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 27, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box:[ ]
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Applied Digital Solutions, Inc. 43-1641533
Digital Angel Share Trust 45-6117433
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Applied Digital Solutions, Inc. OO
Digital Angel Share Trust OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Applied Digital Solutions, Inc. Missouri
Digital Angel Share Trust Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES
None
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
19,600,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
None
PERSON WITH 10
SHARED DISPOSITIVE POWER
19,600,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
19,600,000 shares of Common Stock
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
74.5%
14 TYPE OF REPORTING PERSON*
Applied Digital Solutions, Inc. CO
Digital Angel Share Trust OO
Item 1. Security and Issuer.
This Statement on Schedule 13D/A (the "Schedule 13D/A") relates to
shares of Common Stock, par value $0.005 per share, of Digital Angel
Corporation, a Delaware corporation (formerly Medical Advisory Systems, Inc., a
Delaware corporation) (the "Issuer"). The principal executive offices of the
Issuer are located at 490 Villaume Avenue, South St. Paul, Minnesota 55075.
Item 2. Identity and Background.
(a)-(c), (f). Applied Digital Solutions, Inc., a Missouri corporation
("ADS"), has its principal place of business at 400 Royal Palm Way, Suite 410,
Palm Beach, Florida 33480. The Digital Angel Share Trust is a Delaware statutory
business trust. The trustee of the Digital Angel Share Trust is the Wilmington
Trust Company, whose principal place of business is at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001. Applied Digital Solutions,
Inc. and Digital Angel Share Trust are collectively referred to herein as the
"Reporting Person."
Information relating to the directors and executive officers of ADS is
contained in Appendix A attached hereto and is incorporated herein by reference.
(d) and (e). Neither the Reporting Person nor, to the best of its
knowledge, any of the persons listed in Appendix A has, during the last five
years, (i) been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction which has resulted in
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
ADS acquired its initial interest in Medical Advisory Systems, Inc.
("MAS") in connection with the execution of two stock purchase agreements (see
Item 4 below) pursuant to which ADS acquired Eight Hundred Fifty Thousand
(850,000) shares of MAS common stock from Dr. Thomas Hall, Ronald W. Pickett,
Parlett Pickett, and Marshall Pickett. Pursuant to each stock purchase
agreement, ADS issued shares of its own common stock in payment of the full
purchase price thereunder. No other financing was required to effect the
transactions.
Ads acquired an additional interest in MAS in connection with the
execution of an Agreement and Plan of Merger (the "Merger Agreement") (see Item
5 below). Under the Merger Agreement, ADS's wholly-owned subsidiary, Digital
Angel Corporation, became a wholly-owned subsidiary of the Issuer and the Issuer
was renamed Digital Angel Corporation. As a result of the merger, ADS acquired
an additional Eighteen Million Seven Hundred Fifty Thousand (18,750,000) shares
of the Issuer. No other financing was required to effect the transaction.
The Digital Angel Share Trust was established to own all of the shares
of the Issuer owned by ADS following the merger as a condition of IBM Credit
Corporation's consent to the merger and the release of its security interest in
other stock and assets owned by ADS. ADS assigned all of its right, title and
interest in and to its shares of the Issuer (the "Contributed Stock") to the
Digital Angel Share Trust upon consummation of the merger. No financing was
required to effect this transaction.
Item 4. Purpose of Transaction.
ADS entered into a Stock Purchase Agreement with Dr. Thomas Hall dated
as of February 27, 2001 and a Stock Purchase Agreement with Ronald W. Pickett,
Parlett Pickett and Marshall Pickett dated February 27, 2001 with the intent of
acquiring a significant financial stake in MAS. ADS executed the Merger
Agreement with MAS with
the intent of acquiring control of the Issuer. The Digital Angel Share Trust
acquired the Contributed Stock from ADS in connection with the assumption of
certain obligations as a borrower under the Third Amended and Restated Term
Credit Agreement, dated March 1, 2002 (the "Credit Agreement"), among IBM Credit
Corporation, the Digital Angel Share Trust and ADS.
Item 5. Interest in Securities of the Issuer.
(a) and (b). Following the consummation of the Merger, under the
definition of "beneficial ownership" as set forth in Rule 13d-3 under the
Exchange Act, the Reporting Person may be deemed to have beneficial ownership of
Nineteen Million Six Hundred Thousand (19,600,000) shares of the Issuer,
constituting approximately 74.5% of the outstanding shares of the Issuer's
common stock (based on approximately Twenty-Six Million Three Hundred Thousand
(26,300,000) shares outstanding). Upon consummation of the Merger Agreement, ADS
assigned all of its shares of the Issuer to the Digital Angel Share Trust, with
whom it shares the power to vote and dispose of such shares (See item 6 below).
Neither the filing of this Schedule 13D/A nor any of its contents shall
be deemed to constitute an admission that the Reporting Person is the beneficial
owner of the Issuer's shares referred to herein for purposes of Section 13(d) of
the Exchange Act or for any other purpose, and such beneficial ownership is
expressly disclaimed.
(c). Except as set forth in Item 3 and this Item 5(c), to the best
knowledge of the Reporting Person, neither the Reporting Person nor any director
or executive officer of the Reporting Person and no other person described in
Item 2 hereof has beneficial ownership of, or has engaged in any transaction
during the past 60 days in, any shares of the Issuer.
On March 26, 2002, Richard J. Sullivan exercised options to purchase
1,000,000 shares of ADS's wholly-owned subsidiary, Digital Angel Corporation, at
an exercise price of $0.05 per share. On April 26, 2002, pursuant to the Merger
Agreement, the Issuer issued 937,750 of its shares to Richard J. Sullivan in
exchange for his 1,000,000 shares of Digital Angel Corporation. On March 26,
2002, Evan C. McKeown exercised options to purchase 32,500 of ADS's wholly-owned
subsidiary, Digital Angel Corporation, at an exercise price of $0.63 per share.
On April 26, 2002, pursuant to the Merger Agreement, the Issuer issued 30,469 of
its shares to Evan C. McKeown in exchange for his 32,500 shares of Digital Angel
Corporation. On April 17, 2002, Scott Silverman exercised options to purchase
93,750 of the Issuer's shares at an exercise price of $0.672 per share. On April
18, 2002, Constance Weaver exercised options to purchase 10,800 of the Issuer's
shares at an exercise price of $0.05333 per share and then sold all of such
shares at a price of $4.79 per share.
(d). The Reporting Person or one of its designees has the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, all of the shares of the Issuer.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Pursuant to the Trust Agreement, dated March 1, 2002 (the "Trust
Agreement"), by and between Wilmington Trust Company (the "Trustee") and ADS,
ADS contributed the Contributed Stock to the Digital Angel Share Trust. The
Digital Angel Share Trust acquired the Contributed Stock following the merger in
connection with its assuming certain obligations as a borrower under the Credit
Agreement and as a condition to IBM Credit Corporation's consent to the merger
and release of its security interest in certain stock and assets owned by ADS.
Currently, the Digital Angel Share Trust owns approximately 74.5% of the
Issuer's outstanding common stock and is obligated to vote and dispose of the
Contributed Stock pursuant to the terms of the Trust Agreement.
Under the Trust Agreement, the Advisory Board of the Digital Angel Share Trust,
which consists of one individual selected by ADS and two independent
individuals, shall instruct the Trustee with respect to the voting of the
Contributed Stock. Pursuant to the Credit Agreement, the Contributed Stock is
pledged to IBM Credit Corporation. The Digital Angel Share Trust's sole purpose
is to hold the Contributed Stock to secure and facilitate the performance of its
obligations under the Credit Agreement. The Trustee is required to liquidate the
shares of the Contributed Stock in order to perform those obligations. In the
event that the Digital Angel Share Trust defaults under the Credit Agreement,
IBM may instruct the Trustee to liquidate that number of shares of the
Contributed Stock necessary to remedy the default under the Credit Agreement and
cover any expenses associated with such liquidation. Once ADS's and the Digital
Angel Share Trust's obligations to IBM Credit Corporation under the Credit
Agreement have been paid in full, the Digital Angel Share Trust will be
dissolved, and any remaining shares of the Issuer distributed to ADS.
Item 7. Material to be Filed as Exhibits.
Attached hereto or incorporated herein as exhibits are the following
documents:
Exhibit 2.1 Stock Purchase Agreement by and between the Reporting Person
and Dr. Thomas Hall dated as of February 27, 2001.
(Filed on Schedule 13D/A dated November 28, 2001).
Exhibit 2.2 Stock Purchase Agreement by and among the Reporting
Person, Ronald W. Pickett, Parlett Pickett and Marshall
Pickett dated as of February 27, 2001. (Filed on Schedule
13D/A dated November 28, 2001).
Exhibit 2.3 Agreement and Plan of Merger by and among the Reporting
Person, the Issuer and Acquisition Subsidiary, Inc.
dated as of November 1, 2001. (Filed on Schedule 13D/A dated
November 28, 2001).
Exhibit 2.4 Trust Agreement between Wilmington Trust Company and ADS dated
March 1, 2002.
Exhibit 2.5 Third Amended and Restated Term Credit Agreement among IBM
Credit Corporation, the Digital Angel Share Trust and ADS,
dated March 1, 2002.
Exhibit 2.6 Joint Filing Agreement between ADS and the Digital Angel
Share Trust, dated April 23, 2002
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: April 26, 2001
Applied Digital Solutions, Inc.
/s/ Jerome C. Artigliere
By: ------------------------------------------
Name: Jerome C. Artigliere
Title: Senior Vice President and Chief Operating Officer
Digital Angel Share Trust
By: Wilmington Trust Company, trustee
/s/ James P. Lawler
By: ------------------------------------------
Name: James P. Lawler
Title: Vice President
Appendix A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF APPLIED DIGITAL SOLUTIONS, INC.
Set forth below are the name, current business address, citizenship and
the present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each director and
executive officer of Applied Digital Solutions, Inc. The principal address of
Applied Digital Solutions, Inc. and, unless otherwise indicated below, the
current business address for each individual listed below is 400 Royal Palm Way,
Suite 410, Palm Beach, Florida 33480. Unless otherwise indicated, each such
person is a citizen of the United States. Unless otherwise indicated, each
occupation set forth opposite the individual's name refers to employment with
Applied Digital Solutions, Inc.
Name and Current Present Principal Occupation or Employment:
Business Address Material Positions Held During the Past Five Years
Arthur F. Noterman Mr. Noterman, a Chartered Life Underwriter, has
served as a Director since February 1997, and serves
on the Audit Committee of the Board of Directors of
Applied Digital Solutions, Inc. 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.
Constance K. Weaver Ms. Weaver was elected to the Board of Directors in
July 1998 and serves on the Compensation and Audit
Committees of the Board of Directors of Applied
Digital Solutions, Inc. 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.
Name and Current Present Principal Occupation or Employment:
Business Address Material Positions Held During the Past Five Years
Richard S. Friedland Mr. Friedland 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 Applied Digital Solutions,
Inc. 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.
Richard J. Sullivan Mr. R. Sullivan was elected to the Board of
Directors, and named Chief Executive Officer of
Applied Digital Solutions, Inc., in May 1993. He was
appointed Secretary in March 1996 and is a member of
the Compensation Committee of the Board of Directors
of Applied Digital Solutions, Inc. Mr. R. Sullivan is
currently Chairman of Great Bay Technology, Inc. From
August 1989 to December 1992, Mr. R. 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. R. 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. R. Sullivan is
married to Angela M. Sullivan.
Name and Current Present Principal Occupation or Employment:
Business Address Material Positions Held During the Past Five Years
Daniel E. Penni Mr. Penni 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 Applied Digital Solutions, Inc. 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 has served as a Director since April
1996 and serves on the Compensation Committee of the
Board of Directors of Applied Digital Solutions, Inc.
From 1988 to the present, Ms. Sullivan has been a
partner in The Bay Group, a 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.
Name and Current Present Principal Occupation or Employment:
Business Address Material Positions Held During the Past Five Years
Jerome C. Artigliere Mr. Artigliere joined a subsidiary of Applied Digital
Solutions, Inc. as President in January 1998, and was
appointed Vice President of Applied Digital
Solutions, Inc. in April 1998, and Treasurer in
December 1999, and in January 2001 was appointed
Senior Vice President and Chief Operating Officer.
From 1996 to 1997 he was Regional Vice President at
General Electric Capital Corporation in Portsmouth,
New Hampshire. Prior to that, from 1994 to 1996 he
was State Vice President at First National Bank in
Portsmouth, New Hampshire, a commercial bank
subsidiary of Peoples Heritage Bank of Portland,
Maine. 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 joined Applied Digital Solutions, Inc. as
Assistant Vice President and General Counsel in April
1999, and was appointed Vice President and Assistant
Secretary in December 1999 and Senior Vice President
in January 2001 and currently holds the positions of
General Counsel and Senior Vice President. 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.
Scott R. Silverman Mr. Silverman, age 38, has served since August 2001
as a special advisor to the Board of Directors of
Applied Digital Solutions,Inc. In March 2002, he was
appointed to the Board of Directors and named
President of Applied Digital Solutions, Inc. From
September 1999 to March 2002, Mr. Silverman operated
his own private investment-banking firm and prior to
that time, from October 1996 to September 1999, he
served in various capacities for Applied Digital
Solutions, Inc., including positions related to
business development, corporate development and legal
affairs. From July 1995 to September 1996, he served
as President of ATI Communications, Inc., one of the
subsidiaries of the Company. He began his career as
an attorney specializing in commercial litigation and
communications law at the law firm of Cooper Perskie
in Atlantic City, New Jersey, and Philadelphia,
Pennsylvania. Mr. Silverman is a graduate of the
University of Pennsylvania and Villanova University
School of Law.
Evan C. McKeown Mr. McKeown, age 43, joined Applied Digital
Solutions, Inc. as Vice President, Chief Accounting
Officer and Corporate Controller in March 2001. He
was appointed Vice President, Chief Financial Officer
in March 2002. Prior to joining Applied Digital
Solutions, Inc., Mr. McKeown served as Corporate
Controller at Orius Corporation in West Palm Beach,
Florida. From 1992 to 1999, he served as Controller
and then Chief Financial Officer of Zajac, Inc., in
Portland, Maine. Mr. McKeown has more that 20 years
experience in accounting and financial reporting,
including serving as a Tax Manager for Ernst & Young
and public accountant with Coopers & Lybrand. He is a
graduate of the University of Maine and is a
certified public accountant.