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): March 27, 2002
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DIGITAL ANGEL CORPORATION
(Formerly Medical Advisory Systems, Inc.)
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(Exact name of registrant as specified in its charter)
Delaware 2-98314-W 52-1233960
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
490 Villaume Avenue, South St. Paul, MN 55075
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (651) 455-1621
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Item 1. Change in Control of Registrant
Effective March 27, 2002, the Registrant, Digital Angel Corporation
(formerly known as Medical Advisory Systems, Inc. (MAS)) completed its
merger pursuant to a November 1, 2001 Agreement and Plan of Merger, as
amended (the "Merger Agreement") with Applied Digital Solutions, Inc. (ADS),
its wholly owned subsidiary, Digital Angel Corporation, and Digital Angel
Acquisition Co., a wholly-owned subsidiary of the Registrant. Prior to this
transaction, ADS was a 16.6% beneficial owner of the Registrant.
Pursuant to the Merger Agreement, the Registrant acquired from ADS
the Advanced Wireless Group of ADS, which consisted of 100% of the
outstanding shares of common stock of Digital Angel Corporation and Timely
Technology Corp., and 85% of the outstanding shares of common stock of
Signature Industries, Limited. Each issued and outstanding share of Digital
Angel common stock held by ADS was converted into 0.9375 shares of MAS
common stock, or 18,750,000 shares of MAS common stock.
In satisfaction of a condition to the consent to the merger of IBM
Credit Corporation, a secured creditor of ADS, the shares held by ADS were
transferred to the Digital Angel Share Trust, a Delaware statutory business
trust controlled by an advisory board. As a result, the trust has legal
title to 19,600,000 shares of MAS common stock or approximately 77.45% of
the MAS common stock, after giving effect to the exercise of options to
acquire shares of Digital Angel Corporation common stock exercised prior to
the merger. The trust has voting rights with respect to the MAS common stock
until ADS's obligations to IBM Credit Corporation are paid in full. ADS has
retained beneficial ownership of the shares. The trust may be obligated to
liquidate the shares of MAS common stock owned by it for the benefit of IBM
Credit Corporation in the event that ADS fails to make payments to IBM
Credit Corporation beginning on February 28, 2003, or otherwise defaults,
under the IBM credit agreement. As a result, the duration of the trust's
control over MAS following the merger and the identity of any parties which
may acquire control of MAS if and when such sales commence is uncertain.
Following the merger, the Digital Angel Share Trust owns
approximately 77.45% of the issued and outstanding MAS common stock, after
giving effect to the exercise of options to acquire shares of Digital Angel
Corporation common stock exercised prior to the merger, and has the ability
to control the board of directors and elect the officers of Digital Angel
Corporation. The following individuals were appointed to serve as executive
officers of the registrant following the merger.
Name Age Position(s)
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Randolph K. Geissler 41 Chief Executive Officer and President
James P. Santelli 54 Vice president - Finance, Chief Financial Officer,
Treasurer and Secretary
RANDOLPH K. GEISSLER was the chief executive officer of the former
Digital Angel Corporation. Prior to its merger with ADS in September 2000,
Mr. Geissler served as chief executive officer of Destron Fearing
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Corporation, a position he had held since November 1993. He also served as
interim chief executive officer during the merger of Destron/ IDI and
Fearing Manufacturing Co., Inc. Mr. Geissler was also the President and
chief executive officer of Fearing Manufacturing, a position that he had
held since 1987.
JAMES P. SANTELLI was vice president, finance and chief financial
officer of the former Digital Angel Corporation. Mr. Santelli joined Destron
Fearing in September 1999 as vice president finance and chief financial
officer. From October 1998 to September 1999 he was chief operating officer
of Doorlite, Inc., and from November 1995 to October 1998 he was vice
president finance/chief financial officer of Hartzell Manufacturing, Inc.
From 1984 to 1995 he held senior financial and operating positions with
several start-up and emerging companies. In addition, he has held financial
positions with major national firms including Pillsbury Co., Northrup King
Co. and The Musicland Group. He served in the U. S. Marine Corps from
1969-73. Mr. Santelli has a Bachelor's degree in economics from Carleton
College and an M.B.A. in finance from Cornell University.
Item 2. Acquisition or Disposition of Assets
Effective March 27, 2002, the Registrant acquired from ADS the
Advanced Wireless Group of ADS, which consisted of 100% of the outstanding
shares of common stock of Digital Angel Corporation and Timely Technology
Corp., and 85% of the outstanding shares of common stock of Signature
Industries, Limited. Each issued and outstanding share of Digital Angel
common stock held by ADS was converted into 0.9375 shares of MAS common
stock, or 18,750,000 shares of MAS common stock.
The assets of the Advanced Wireless Group acquired in connection
with the merger included, without limitation, physical property. For the
foreseeable future, the Registrant intends to utilize such assets in
connection with its operations.
For accounting purposes, the transaction described above will be
accounted for as a reverse acquisition, with the Advanced Wireless Group as
acquirer. The historical financial statements of the Advanced Wireless Group
will become the historical financial statements of the Registrant and the
assets and liabilities of MAS will be accounted for as required under the
purchase method of accounting. The results of operations of MAS will be
included in the financial statements from March 27, 2002, the effective date
of the merger.
Additional information with respect to the merger is set forth in
the merger agreement which is incorporated herein by reference and attached
hereto as Exhibits 2.1 and 2.2. The Registrant's common stock currently
trades on the American Stock Exchange under the symbol "DOC."
Item 4. Change in Registrant's Certifying Accountant
The Registrant and the accounting acquirer currently engage
different independent accountants. The Registrant is evaluating which
accountants will be engaged as the continuing independent accountants. When
this determination is made, the Registrant will file a current report on
Form 8-K disclosing its selection, and the information required by Item
304(a) of Regulation S-K.
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Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired:
Financial statements for the Advanced Wireless Group for the years
ended December 31, 2000 and 1999 and for the seven months ended
December 31, 1998 and interim financial statements for the nine
months ended September 30, 2000 and 1999 have been provided in the
Registrant's Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934 filed with the Commission on
February 14, 2002. Financial statements for the year ended December
31, 2001 will be filed by amendment to this Form 8-K on or about
May 15, 2002.
(b) Pro forma financial information
Pro forma financial information, pursuant to Rule 11-01 of
Regulation S-X of the Securities Exchange Act of 1934, for the year
ended December 31, 2000 and the nine months ended September 30,
2001, have been provided in the Registrant's Proxy Statement
Pursuant to Section 14(a) of the Securities and Exchange Act of
1934 filed with the Commission on February 14, 2002. Pro forma
financial information for the year ended December 31, 2001 and the
three months ended March 27, 2002 will be filed by amendment to
this Form 8-K on or about May 15, 2002.
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of November 1, 2001
by and between Applied Digital Solutions, Inc., Digital
Angel Corporation, Medical Advisory Systems, Inc., and
Digital Angel Acquisition Co. (incorporated herein by
reference to Appendix A to the Registrant's Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of
1934 filed with the Commission on February 14, 2002
(Commission file number 2-98314-W)
2.2 First Amendment to Agreement and Plan of Merger, dated as
of March 26, 2002, by and among Applied Digital Solutions,
Inc., Digital Angel Corporation, Medical Advisory Systems,
Inc. and Digital Angel Acquisition Co.
Item 8. Change in Fiscal Year
The Registrant is planning to change its fiscal year end from
October 31 to December 31, the fiscal year end of the accounting acquirer.
The Registrant will report its next Quarterly Report on Form 10-Q for the
three months ended March 31, 2002.
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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.
DIGITAL ANGEL CORPORATION
(Registrant)
Date: April 10, 2002 /s/ Randolph K. Geissler
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Randolph K. Geissler
Chief Executive Officer
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