Veriteq – ‘424B4’ on 5/15/03

On:  Thursday, 5/15/03, at 4:57pm ET   ·   Accession #:  1068800-3-357   ·   File #:  333-102165

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Prospectus   —   Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                             4     16K 

Document Table of Contents

424B4
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                                        Filed Pursuant to Rule 424(b)(4)
                                   Registration No. 333-102165

APPLIED DIGITAL SOLUTIONS, INC.   
PROSPECTUS SUPPLEMENT NO. 1   
TO THE PROSPECTUS DATED MAY 6, 2003   

7,450,000 shares of Common Stock    

     We are offering up to 12.5 million shares (25 million shares in the
aggregate) of our common stock pursuant to the terms of two securities          
purchase agreements entered into on May 8, 2003, with each of Cranshire         
Capital, L.P and Magellan International Ltd. The purchase agreements            
contemplate up to five settlement dates within a 16-trading day period          
following our issuance of a press release announcing our entering into these    
agreements, which occurred on May 9, 2003.                                      

This prospectus supplement relates to 2,500,000 shares and    
4,950,000 shares purchased by Cranshire Capital, L.P. and Magellan              
International Ltd., respectively, on May 14, 2003, the first settlement date    
under the purchase agreements, at a price of $0.3833 per share. This price      
represents a discount of 12.75% from the volume weighted average trading        
price (as reported by Bloomberg Financial L.P.) of our common stock for the     
three trading days immediately preceding the first settlement date. On May      
14, 2003, the last reported sales price of our common stock (symbol: "ADSX")    
on the Nasdaq SmallCap Market was $.40 per share. For more information, see     
the disclosure under the caption "Plan of Distribution" set forth below in      
this prospectus supplement.                                                     

AN INVESTMENT IN OUR SECURITIES INVOLVES SUBSTANTIAL RISKS.   
THESE RISKS ARE DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE    
11 OF THE PROSPECTUS ACCOMPANYING THIS PROSPECTUS SUPPLEMENT.                   

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER  
REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED       
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE RELATED      
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.           

The date of this prospectus supplement is May 15, 2003.   

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     This prospectus supplement is part of a registration statement that
we filed with the Securities and Exchange Commission. The registration          
statement covers our offering of up to 50 million shares of our common          
stock. This prospectus supplement provides specific information about the       
offering of common stock under this registration statement, and updates         
information provided in the prospectus dated May 6, 2003. You should read       
both this prospectus supplement and the prospectus carefully.                   

PLAN OF DISTRIBUTION    
--------------------    

On May 8, 2003, we entered into separate securities purchase  
agreements with each of Cranshire Capital, L.P. and Magellan International      
Ltd., each of whom was introduced to us by J.P. Carey Securities, our           
placement agent, under which we may sell up to 12.5 million shares of our       
common stock to each of them. Under the terms of the placement agency           
agreement with J.P. Carey Securities, we have agreed to pay J.P. Carey          
Securities a fee of 3% of the gross subscription proceeds of the shares sold    
to purchasers identified (or deemed to be identified) to us by J.P. Carey       
Securities. The shares sold to Cranshire Capital, L.P. and Magellan             
International Ltd. under the securities purchase agreements will prompt the     
payment of such fee. On May 14, 2003, Cranshire Capital, L.P. and Magellan      
International Ltd. purchased 2,500,000 shares and 4,950,000 shares,             
respectively, or an aggregate of 7,450,000 shares of common stock under the     
securities purchase agreements.                                                 

Terms of the Securities Purchase Agreements                   

The securities purchase agreements provide for up to five     
settlement dates for purchases of our shares over a 16-trading day period.      
The first settlement date occurred on May 14, 2003. The second through fifth    
settlement dates are to occur on the seventh, tenth, thirteenth and             
sixteenth trading day after the date of issuance of the press release, which    
occurred on May 9, 2003.                                                        

 The securities purchase agreements provide for purchases of the
shares to be at a per share purchase price equal to 87.25% of the average of    
the volume weighted average price of our common stock (as reported by           
Bloomberg Financial L.P., using the VAP function) for the three trading days    
prior to each applicable settlement date but in no event less than $0.35.       
The terms of the securities purchase agreements contemplate that the number     
of shares to be purchased on the respective settlement dates by a particular    
purchaser will be approximately equal to the following: (i) 2.5 million         
shares on the 1st settlement date; (ii) 5.0 million shares less the number      
of shares purchased by such purchaser on the 1st settlement date, on the 2nd    
settlement date; (iii) 7.5 million shares less the number of shares             
purchased by such purchaser on the 1st and 2nd settlement dates, on the 3rd     
settlement date; (iv) 10.0 million shares less the number of shares             
purchased by such purchaser on the 1st, 2nd and 3rd settlement dates, on the    
4th settlement date; and (v) 12.5 million shares less the number of shares      
purchased by such purchaser on the 1st, 2nd, 3rd and 4th settlement dates,      
on the 5th settlement date.                                                     

   There are several exceptions to the per share purchase price, the
timing and number of shares to be purchased, and each purchaser's               
obligations. First, each purchaser has the right, on the day preceding any      
settlement date, to elect to acquire up to the maximum aggregate amount of      
shares to be acquired under such agreement on the applicable settlement         
date. Second, if the                                                            

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average of the volume weighted average trading price of our common stock on     
the three trading days immediately preceding any settlement date is less        
than $0.40, each purchaser has the right (but not the obligation) to            
purchase on such settlement date up to the maximum aggregate amount of the      
shares under the applicable purchase agreement at $0.40 less the selling        
discount referenced herein. In addition, if the average of the volume           
weighted average price of our common stock is below $0.40 on two consecutive    
settlement dates, each purchaser has the right to terminate any and all of      
its obligations under the purchase agreements. A purchaser is not permitted     
to acquire shares under its purchase agreement to the extent that, giving       
effect to such proposed acquisition, the beneficial ownership of our common     
stock by such purchaser (together with its affiliates), would exceed 9% of      
our outstanding shares of common stock.                                         

     Each of Cranshire Capital, L.P. and Magellan International Ltd. may
be deemed to be an "underwriter" within the meaning of Section 2(a)(11) of      
the Securities Act of 1933, in connection with its sale of any shares           
acquired under the respective securities purchase agreements. Broker-dealers    
or other persons acting on account of either of them or each other may also     
be deemed to be underwriters. The determination of whether or not the           
purchasers are underwriters requires a facts and circumstances analysis         
entailing consideration of, among other things: (i) how long the purchasers     
have held or intend to hold the shares purchased from us (the securities        
purchase agreements do not contain representations or warranties by the         
purchasers regarding their investment intent); (ii) the circumstances in        
which they acquired the shares; (iii) the amount of shares involved (which      
would entail consideration of the existence of any affiliation between or       
among J.P. Carey Securities and/or either or both of the purchasers); (iv)      
whether they are in the business of underwriting securities; and (v) whether    
under all the circumstances it appears that the purchasers are acting as        
conduits for us.                                                                

    Underwriters and entities acting on their behalf would not be able
to resell the shares purchased from us in reliance on the exemption from        
registration provided by Section 4(1) of the Securities Act of 1933.            
Further, the purchasers and entities acting on behalf of underwriters would     
be subject to the prospectus delivery requirements of the Securities Act of     
1933 and the rules and regulations under the Securities Act.                    

Indemnification and Fees                                      

     We have agreed to indemnify and hold harmless J.P. Carey Securities
Inc. and each of Cranshire Capital, L.P. and Magellan International Ltd. and    
their respective officers, directors, employees, agents and control persons     
from and against any losses, claims, damages, liabilities, costs and            
expenses to which they may become subject, under the Securities Act of 1933     
or otherwise, to the extent such losses, claims, damages, liabilities, costs    
and expenses arise out of or are based upon:                                    

o    any actual or alleged untrue statement of a material fact contained
in our registration statement, as amended or supplemented; or 

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o    the actual or alleged omission to state in the registration        
    statement, as amended or supplemented, a material fact required to
  be stated in the registration statement or necessary to make the
statements in the registration statement not misleading.      

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
Filed on:		5/15/03		1					8-K
		5/14/03		1		2			10-Q
		5/9/03		1		2
		5/8/03		1		2
		5/6/03		1		2			POS AM
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