VTEQ VeriTeQ Corporation (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Applied Digital Solutions, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Joseph J. Grillo
Chief Executive Officer and President

April 29, 2008

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of Applied Digital Solutions, Inc. d/b/a Digital Angel, which will be held on June 20, 2008, at 9:30 a.m., Central Standard Time, at the Capella Tower, 225 South Sixth Street, Minneapolis, Minnesota 55402.

The enclosed notice of meeting identifies each business proposal for your action. These proposals and the vote the board of directors recommends are:

				Recommended
Proposal				Vote
1.		Election of two directors to hold office until the 2011 annual meeting of stockholders and until their successors have been duly elected and qualified;		FOR
2.		Approval of an amendment to our certificate of incorporation to change our name to Digital Angel Corporation;		FOR
3.		Approval of an amendment to our 2003 flexible stock plan to increase the number of authorized shares of common stock issuable under the plan from 5,200,000 to 7,000,000 shares;		FOR
4.		Approval of an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 165,000,000 to 190,000,000 shares;		FOR
5.		Ratification of the appointment of Eisner LLP as our independent registered public accounting firm for the year ending December 31, 2008; and		FOR
6.		To transact such other business as may properly come before the annual meeting or at any adjournment thereof.		FOR

A notice of annual meeting, a form of proxy, and a proxy statement containing information about the matters to be acted on at the annual meeting are enclosed.

If you plan to attend the annual meeting, please mark the appropriate box on your proxy card to help us plan for the annual meeting. You will need an admission card to attend the annual meeting. If your shares are registered in your name, you are a stockholder of record. Your admission card is attached to your proxy card, and you will need to bring it with you to the annual meeting. If your shares are in the name of your broker or bank, your shares are held in street name. Ask your broker or bank for an admission card in the form of a legal proxy to bring with you to the annual meeting. If you do not receive the legal proxy in time, bring your brokerage statement with you to the annual meeting so that we can verify your ownership of our stock on the record date and admit you to the annual meeting. However, you will not be able to vote your shares at the annual meeting without a legal proxy.

Your vote is important regardless of the number of shares you own. We encourage you to vote by proxy so that your shares will be represented and voted at the annual meeting even if you cannot attend. All stockholders can vote by written proxy card. Many stockholders also can vote by proxy via a touch-tone telephone from the U.S. and Canada, using the toll-free number on your proxy card or via the Internet using the instructions on your proxy card. In addition, stockholders may vote in person at the annual meeting as described above.

EACH STOCKHOLDER IS URGED TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD, USING THE TELEPHONE VOTING SYSTEM, OR ACCESSING THE WORLD WIDE WEBSITE INDICATED ON YOUR PROXY CARD TO VOTE VIA THE INTERNET. IF A STOCKHOLDER DECIDES TO ATTEND THE ANNUAL MEETING, HE OR SHE MAY REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO THE STOCKHOLDERS OF
APPLIED DIGITAL SOLUTIONS, INC.:

The 2008 annual meeting of stockholders of Applied Digital Solutions, Inc. d/b/a Digital Angel, a Delaware corporation, or the Company, whose headquarters are located in Delray Beach, Florida, will be held at the Capella Tower, 225 South Sixth Street, Minneapolis, Minnesota 55402, on June 20, 2008, at 9:30 a.m., Central Standard Time, for the following purposes:

	1.		To elect two directors to hold office until the 2011 annual meeting of stockholders and until their successors have been duly elected and qualified;
	2.		To approve an amendment to our certificate of incorporation to change our name to Digital Angel Corporation;
	3.		To approve an amendment to our 2003 flexible stock plan to increase the number of authorized shares of common stock issuable under the plan from 5,200,000 to 7,000,000 shares;
	4.		To approve an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 165,000,000 to 190,000,000 shares;
	5.		To ratify the appointment of Eisner LLP as our independent registered public accounting firm for the year ending December 31, 2008; and
	6.		To transact such other business as may properly come before the annual meeting or at any adjournment thereof.

The board of directors has fixed the close of business on April 28, 2008 as the record date for the determination of stockholders entitled to receive notice of the annual meeting and vote, or exercise voting rights through a voting trust, as the case may be, at the annual meeting and any adjournments or postponements of the annual meeting. We will make available a list of holders of record of our common stock as of the close of business on April 28, 2008 for inspection during normal business hours at our offices, 1690 South Congress Avenue, Suite 201, Delray Beach, Florida 33445 for ten business days prior to the annual meeting. This list will also be available at the annual meeting.

Delray Beach, Florida
April 29, 2008

1690 South Congress Avenue, Suite 201
Delray Beach, Florida 33445

April 29, 2008

PROXY STATEMENT
FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2008

The board of directors of Applied Digital Solutions, Inc. d/b/a Digital Angel, a Delaware corporation (the “Company,” “we,” “our,” or “us”), whose principal executive office is located at 1690 South Congress Avenue, Suite 201, Delray Beach, Florida 33445, furnishes you with this proxy statement to solicit proxies on its behalf to be voted at the 2008 annual meeting of stockholders, or the annual meeting. The annual meeting will be held at the Capella Tower, 225 South Sixth Street, Minneapolis, Minnesota 55402, on June 20, 2008, at 9:30 a.m., Central Standard Time, subject to adjournment or postponement thereof. The proxies also may be voted at any adjournments or postponements of the annual meeting. This proxy statement and the accompanying form of proxy are first being mailed to our stockholders on or about May 5, 2008.

Voting and Revocability of Proxies

All properly executed written proxies and all properly completed proxies voted by telephone or via the Internet and delivered pursuant to this solicitation (and not revoked later) will be voted at the annual meeting in accordance with the instructions of the stockholder. Below is a list of the different votes stockholders may cast at the annual meeting pursuant to this solicitation.

In voting on the election of two directors to serve until the 2011 annual meeting of stockholders, stockholders may vote in one of the following ways:

	1.		in favor of the nominee, or
	2.		withhold votes as to the nominee.

In voting on (i) approval of an amendment to our certificate of incorporation to change our name to Digital Angel Corporation; (ii) approval of an amendment to our 2003 flexible stock plan to increase the number of authorized shares of common stock issuable under the plan from 5,200,000 to 7,000,000 shares; (iii) approval of an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 165,000,000 to 190,000,000 shares; and (iv) the ratification of the appointment of Eisner LLP as our independent registered public accounting firm for the year ending December 31, 2008, stockholders may vote in one of the following ways:

	1.		in favor of the proposal,
	2.		against the proposal, or
	3.		abstain from voting on the proposal.

Stockholders should specify their choice for each matter on the enclosed form of proxy. If no specific instructions are given, proxies which are signed and returned will be voted FOR the election of the directors as set forth herein, FOR the approval of an amendment to our certificate of incorporation to change our name to Digital Angel Corporation, FOR the approval of an amendment to our 2003 flexible stock plan to increase the number of authorized shares of common stock issuable under the plan from 5,200,000 to 7,000,000 shares, FOR the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 165,000,000 to 190,000,000 shares, and FOR the ratification of the appointment of Eisner LLP as our independent registered public accounting firm for the year ending December 31, 2008.

In addition, if other matters come before the annual meeting, the persons named in the accompanying form of proxy will vote in accordance with their best judgment with respect to such matters. A stockholder submitting a proxy has the power to revoke it at any time prior to its exercise by voting in person at the annual meeting, by giving our proxy tabulator written notice bearing a later date than the proxy or by giving a later dated proxy. Any written notice revoking a proxy should be sent to our proxy tabulator: Broadridge Financial Solutions (formerly ADP Investor Communication Services, Inc.), 51 Mercedes Way, Edgewood, NY 11717.

A quorum must be present at the annual meeting. According to our bylaws, the holders of a majority of the outstanding shares entitled to vote at the annual meeting, represented in person or by proxy, constitute a quorum. If you have returned valid proxy instructions or attend the annual meeting in person, your shares will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters introduced at the annual meeting. Abstentions and “broker non-votes” (shares held by a broker, bank or other nominee that does not have authority, either express or discretionary, to vote on a particular matter) are counted for determining whether there is a quorum.

Approval of the election of two directors to serve until the 2011 annual meeting of stockholders, approval of an amendment to our 2003 flexible stock plan to increase the number of authorized shares of common stock issuable under the plan from 5,200,000 to 7,000,000 shares, and the ratification of the appointment of Eisner LLP as our independent registered public accounting firm for the year ending December 31, 2008, will require the affirmative vote of a majority of the votes cast at the annual meeting of stockholders. For each of these proposals, an abstention will have the effect of a vote against such proposal and broker non-votes will have no effect on the outcome of the vote for these proposals.

Approval of an amendment to our certificate of incorporation to change our name to Digital Angel Corporation and approval of an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 165,000,000 to 190,000,000 shares will require the affirmative vote of a majority of the outstanding shares of our common stock entitled to vote at the annual meeting of stockholders. For each of these proposals, an abstention and broker non-votes will have the effect of a vote against these proposals.

The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded. Specific instructions to be followed by stockholders interested in voting via the telephone or the Internet are set forth on the proxy card.

Record Date and Share Ownership

Owners of record of shares of our common stock at the close of business on April 28, 2008 will be entitled to vote at the annual meeting or adjournments or postponements thereof. Each owner of record of our common stock on April 28, 2008 is entitled to one vote for each share of common stock so held.

As of the close of business on April 28, 2008, there were 118,615,205 shares of common stock outstanding entitled to vote at the annual meeting (all such shares being referred to herein as the “shares” and all holders thereof being referred to as our “stockholders”). A majority of the shares must be present, in person or by proxy, to conduct business at the annual meeting.

For information regarding security ownership by management and by the beneficial owners of more than 5% of our common stock, see “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

Expenses of Solicitation

The expense of solicitation of proxies will be borne by us. We have not retained a proxy solicitor to solicit proxies; however, we may choose to do so prior to the annual meeting. Proxies may also be solicited by certain of our directors, officers and other employees, without additional compensation, personally or by written communication, telephone or other electronic means. We are required to request brokers and nominees who hold stock in their name to furnish our proxy material to beneficial owners of the stock and will reimburse such brokers and nominees for their reasonable out-of-pocket expenses in so doing.

TABLE OF CONTENTS

		Page
1.  Election of Directors			1
Corporate Governance, Board of Directors and Committees			3
Executive Officers			6
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			7
Compensation Committee Report			11
Compensation Discussion and Analysis			12
Executive Compensation			19
Certain Relationships and Related Transactions			32
2.  Approval of an Amendment to Our Certificate of Incorporation to Change Our Name to Digital Angel Corporation			37
3.  Approval of an Amendment to Our 2003 Flexible Stock Plan to Increase the Number of Authorized Shares of Common Stock Issuable Under the Plan From 5,200,000 to 7,000,000 Shares			38
Description of the 2003 Plan			38
Equity Compensation Plan Information			45
4.  Approval of an Amendment to our Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock from 165,000,000 to 190,000,000 Shares			46
5.  Ratification of the Appointment of Eisner LLP as Our Independent Registered Public Accounting Firm			47
6.  Report of the Audit and Governance Committee			48
7.  Stockholder Proposals			50
Other Matters			50

(Proposal 1)

ELECTION OF DIRECTORS

Board of Directors

Our board of directors is divided into three classes. A class of directors is elected each year to serve for a three-year term and until the directors’ successors are duly elected and qualified, which has been our practice since 1998. The stockholders elect approximately one-third of the members of the board of directors annually. Directors may be removed only for cause. Any director appointed by our board of directors to fill a vacancy on the board serves the balance of the unexpired term of the class of directors in which the vacancy occurred.

The term of Daniel E. Penni and Dennis G. Rawan will expire at the 2008 annual meeting, and Mr. Penni and Mr. Rawan have been nominated to stand for reelection at the annual meeting to hold office until the 2011 annual meeting of stockholders and until each of their successors has been duly elected and qualified. Proxies may not be voted for a greater number of persons than the nominees identified below.

Cumulative voting does not apply in the election of directors. Unless otherwise indicated, the shares represented by this proxy will be voted for the nominee named below. Should the nominee become unable to serve for any reason, or for good cause will not serve, our board of directors may, unless the board of directors by resolution provides for a lesser number of directors, designate substitute nominees, in which event the persons named in the enclosed proxy will vote proxies that would otherwise be voted for all named nominees for the election of such substitute nominee or nominees.

As a result of our merger with Digital Angel Corporation, or DAC, we had three new directors join our board in January 2008, Joseph J. Grillo, John R. Block and Michael S. Zarriello. In order to equalize the number of directors in each of the three classes in accordance with our bylaws, our board of directors determined to (i) appoint Michael S. Zarriello to the class of directors with terms expiring in 2009, (ii) appoint Joseph J. Grillo to the class of directors with terms expiring in 2010, and (iii) appoint John R. Block to the class of directors with terms expiring in 2010.

Vote Required

In order to approve this proposal, the affirmative vote of the majority of the votes cast at the annual meeting, in person or by proxy, must be received in favor of this proposal. Unless a contrary choice is specified, proxies solicited by our board of directors will be voted FOR approval of the election of the director nominees.

Recommendation of our Board of Directors

Our board of directors recommends a vote FOR Daniel E. Penni and Dennis G. Rawan to hold office until the 2011 annual meeting of stockholders and until their successor have been duly elected and qualified.

Biographical and other information concerning our directors and the nominees for election at the annual meeting is set forth below.

NOMINEES FOR ELECTION TO TERM EXPIRING 2011

Daniel E. Penni : Mr. Penni, age 60, has served as a director since March 1995, and is chairman of the board and serves as a member of the audit and governance committee and nominating committee of our board of directors. Presently, he is a principal with the Endowment for the 21st Century. From September 1988 until December 2005, Mr. Penni was employed by Arthur J. Gallagher & Co. (NYSE:AJG), an insurance brokerage and risk management services firm, where he served in several positions, including most recently as an Area Executive Vice President. He has worked in various sales and administrative roles in the insurance business since 1969. He also served as treasurer and chairman of the finance committee of the board of trustees of the Massachusetts College of Pharmacy and Health Sciences in Boston through June 2006. Mr. Penni graduated with a bachelor of science degree in 1969 from the School of Management at Boston College. Mr. Penni was a member of the board of directors of VeriChip Corporation from June 2004 until January 2008.

Dennis G. Rawan : Mr. Rawan, age 64, has served as a director since December 10, 2002, and is a member of our audit and governance committee and nominating committee of our board of directors. Mr. Rawan was Chief Financial Officer of Expo International, Inc. (“Expo”) from 1996 until his retirement in 2000. Expo provides information technology products and services to the event industry. For over 20 years prior to joining Expo, Mr. Rawan was a certified public accountant, or CPA, providing audit, review, tax and financial statement preparation services for a variety of clients. From 1970 to 1988, while working as a CPA, Mr. Rawan taught graduate level accounting courses at Babson College. Mr. Rawan earned a bachelor of science degree and a master of business administration degree from Northeastern University.

INCUMBENT DIRECTORS — TERM EXPIRING 2009

Michael S. Zarriello: Mr. Zarriello, age 58, joined our board of directors on December 28, 2007. He is chair of our audit and governance committee and is a member of our compensation committee of our board of directors. Mr. Zarriello is a Senior Managing Director of MTS Health Partners L.P., a merchant bank providing advisory services and private equity investments to companies in the healthcare sector. He served as Senior Vice President and Chief Financial Officer for Rural/Metro Corporation, a medical transportation company, in Scottsdale, Arizona, from July 2003 to December 2006. From 1998 to 2003, Mr. Zarriello was a Senior Managing Director of Jesup & Lamont Securities Corporation and President of Jesup & Lamont Merchant Partners LLC, both of which are investment banking firms. From 1989 to 1997, Mr. Zarriello was a Managing Director-Principal of Bear Stearns & Co., Inc., an investment bank, and from 1989 to 1991, he served as Chief Financial Officer of the Principal Activities Group that invested Bear Stearns’ capital in middle market companies. Mr. Zarriello previously served as a member of our board of directors from May 2003 until July 2006.

Constance K. Weaver: Ms. Weaver, age 55, has served as a director since July 1998, and is chair of the compensation committee of our board of directors. Since February 2008, Ms. Weaver has served as the Senior Vice President, Marketing and Communications, for The Hartford Financial. She served as the Executive Vice President and Chief Marketing Officer for BearingPoint, Inc., a management and technology consulting firm, from July 2005 to February 2008. From October 2002 to February 2005, Ms. Weaver served as Executive Vice President of Public Relations, Marketing Communications and Brand Management for AT&T Corporation, or AT&T, a major telecommunications provider. From 1996 to October 2002, Ms. Weaver served as Vice President of Investor Relations and Financial Communications for AT&T. From 1995 through 1996, she served as Senior Director of Investor Relations and Financial Communications for Microsoft Corporation. From 1993 to 1995, she served as Vice President of Investor Relations, and from 1991 to 1993 she was Director of Investor Relations, for MCI Communications, Inc. She earned a bachelor of science degree from the University of Maryland in 1975 and has completed post-graduate financial management, marketing and strategic planning courses at The Wharton School of the University of Pennsylvania, Stanford University, Columbia University and Imede (Switzerland). Ms. Weaver was a member of the board of directors of VeriChip Corporation from February 2005 until January 2008.

INCUMBENT DIRECTORS — TERM EXPIRING 2010

Joseph J. Grillo : Mr. Grillo, age 50, an RFID industry veteran, was selected to be our Chief Executive Officer, President and director effective January 2, 2008. From December 2003 until joining Applied Digital, Mr. Grillo served as the President and Chief Executive Officer of the Global Technologies Division of Assa Abloy, AB, a publicly held global manufacturer in the security and lock industry (“Assa Abloy”). From January of 2002 until December of 2003, Mr. Grillo served as the President and Chief Executive Officer of the Identification Technology Group Division of Assa Abloy, where he formed and was responsible for the sales growth of the Identification Technology business unit. He earned a Bachelor of Science in Finance from the University of Connecticut, School of Business.

John R. (Jack) Block : Mr. Block, age 73, joined our board of directors on December 28, 2007. He serves as the chair of the nominating committee and a member of the compensation committee of our board of directors. Mr. Block has served as Senior Policy Advisor for Olsson, Frank, Weeda, P.C., a law firm, since January 2006. From January 2003 through December 2005, Mr. Block served as the Executive Vice President of the Food Marketing Institute, a trade association in Washington, D.C. From 1986 until December 2002, Mr. Block was President and Chief Executive Officer of Food Distributors International and the International Foodservice Distributors Association (NAWGA/IFDA). Mr. Block was appointed to President Reagan’s Cabinet in 1981 and served for five years as the Secretary of the U.S. Department of Agriculture. As a member of the Reagan Cabinet and a key member of the Economic Policy Council, he dealt with a wide range of complex domestic farm program and tax issues. Under his leadership, the Department of Agriculture’s Food for Peace Program was a primary resource in feeding the starving African continent. During his tenure as Secretary of Agriculture, Mr. Block visited more than 30 foreign countries, meeting with heads of state and agriculture ministers from all over the globe and negotiating sensitive agreements critical to U.S. farm interests. From 1977 to 1981, he served as director of Agriculture for the State of Illinois. Mr. Block currently has a syndicated weekly radio commentary broadcast carried by more than 600 stations in 30 states. Mr. Block has served on a number of corporate boards, including NYSE-listed Hormel Foods Corporation, John Deere (Deere & Company), Archer Daniels Midland Company, Blast Energy Services Inc., and MetaMorphix, Inc. He is on the board of directors of the U.S. Friends of the World Food Programme, a joint initiative of the United Nations and the Food and Agricultural Organization, Chairman of the Agribusiness Alliance of the Citizens Network for Foreign Affairs in Washington, and on the Advisory Board of the Illinois Global Partnership.

CORPORATE GOVERNANCE, BOARD OF DIRECTORS AND COMMITTEES

Director Independence

Our board of directors has determined that five of our six current directors—Messrs. Block, Penni, Rawan and Zarriello and Ms. Weaver—are independent under the applicable standards of the Nasdaq Capital Market. For transactions, relationships or arrangements that were considered by our board of directors in determining whether each director was independent, please see the section “Certain Relationships and Related Transactions — Director and Officer Roles and Relationships with Our Subsidiaries.”

Board Meetings and Committees

Our board of directors held thirteen meetings during 2007 and acted by unanimous written consent in lieu of a meeting twelve times, as permitted by the applicable state law. During 2007, all directors attended 75% or more of the meetings of the board of directors and committees to which they were assigned. In order to control expenses, and in light of the fact that very few stockholders attend the annual meeting of stockholders in person, we do not require directors to attend. Our directors are invited, and frequently one or more of our directors is in attendance at the meeting. At the 2007 annual meeting of stockholders, one director was present.

As a result of our merger with DAC, we revised our board committee structure and consolidated our audit committee and our compliance and governance committee to form one committee. We now have standing audit and governance, compensation, and nominating committees of our board of directors, each of which is more fully discussed below.

Audit and Governance Committee

Our audit and governance committee is comprised of three members of the board of directors. Currently, the committee members are Michael Zarriello, Dennis G. Rawan, and Daniel E. Penni. Our board of directors has determined that we have two audit committee financial experts. Mr. Zarriello, who serves as the chairman of the committee, and Mr. Rawan, who serves as a member of the committee, have been designated as the audit committee financial experts as defined in the applicable SEC rules. The committee (i) recommends for approval by our board of directors an independent registered public accounting firm to audit our consolidated financial statements for the fiscal year in which they are appointed, and (ii) monitors the effectiveness of the audit effort, the internal and financial accounting organization and controls and financial reporting. The duties of the committee are also to oversee and evaluate the independent registered public accounting firm, to meet with the independent registered public accounting firm to review the scope and results of the audit, to approve non-audit services provided to us by our independent certified public accountants, and to consider various accounting and auditing matters related to our system of internal controls, financial management practices and other matters. The committee complies with the provisions of the Sarbanes-Oxley Act of 2002. All of the committee members are independent as defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules, as applicable, and as may be modified or supplemented and as defined by the Sarbanes-Oxley Act of 2002. The committee held six meetings during 2007. The audit and governance committee is currently governed by our audit committee charter and our compliance and governance committee charter. We are in the process of combining these two charters. A copy of those charters are available on our website at www.digitalangel.com .

Compensation Committee

Our compensation committee consists of Constance K. Weaver, Michael Zarriello and John R. Block. Ms. Weaver is chairman of the committee. The committee administers the 1996 Non-Qualified Stock Option Plan, the 1999 Flexible Stock Plan, the 2003 Flexible Stock Plan, the 1999 Employees Stock Purchase Plan and the Amended and Restated Digital Angel Corporation Transition Stock Option Plan, including the review and grant of stock options to officers and other employees under such plans, and recommends the adoption of new plans, including the plans of our subsidiary, Thermo Life Energy Corp., or Thermo Life. We own 100% of the outstanding stock of Thermo Life and DAC. The committee also reviews and approves various other compensation policies and matters and reviews and approves salaries, bonuses, the IRP and other matters relating to our senior officers. The 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 our current and future success, as well as their salary level, in comparison to the market value of personnel with similar skills and responsibilities. The committee also looks at accomplishments, which are above and beyond management’s normal expectations for their positions. The committee held one meeting during 2007 and acted by unanimous written consent twelve times during 2007. A copy of the compensation committee charter is available on our website at www.digitalangel.com .

Our compensation committee assists our board of directors in the discharge of its responsibilities relating to compensation of our executive officers. Specific responsibilities of our compensation committee include:

	•		reviewing and recommending to our board approval of the compensation, benefits, corporate goals and objectives of our chief executive officer and our other executive officers;
	•		evaluating the performance of our executive officers; and
	•		administering our employee benefit plans and making recommendations to our board of directors regarding these matters.

Our compensation committee has the authority to delegate any of its responsibilities to one or more subcommittees as the committee may from time to time deem appropriate and may ask members of management, employees, outside counsel, or others whose advice and counsel are relevant to the issues then being considered by the compensation committee to attend any meetings and to provide such pertinent information as the compensation committee may request. We expect that the compensation committee will continue to solicit input from our chief executive officer with respect to compensation decisions affecting other members of our senior management. Our compensation committee has not engaged compensation consultants to determine or recommend the amount or form of executive and director compensation. Our compensation committee has read consultant reports prepared for similar companies and has spoken with experts regarding compensation.

Nominating Committee

Our nominating committee considers and nominates candidates for election to our board of directors. The committee consists of John R. Block, who serves as its chairman, Daniel E. Penni, and Dennis G. Rawan, all of whom are independent members of our board of directors. The committee met one time during 2007. A copy of the nominating committee charter is available on our website at www.digitalangel.com .

Qualifications of Candidates for Election to the Board

Our board of directors takes a critical role in guiding our strategic direction, and it oversees the management of us. When candidates for our board of directors are considered, they are evaluated based upon various criteria. Director candidates for our board of directors are considered for vacant seats if they (i) are independent, in accordance with applicable law and stock exchange listing standards, (ii) demonstrate high ethical standards, professionalism, and integrity in their personal and professional dealings, (iii) are willing to commit themselves to their duties as members of our board of directors and its various committees and to their responsibilities to us, (iv) possess the appropriate knowledge and understanding of fundamental financial statements, (v) have substantial relevant business, technological or government experience, (vi) provide a diverse set of skills, backgrounds and experiences in order to provide varying perspectives, (vii) have no identified conflicts of interest with us, (viii) have not been convicted in a criminal proceeding other than traffic violations during the five years before the date of selection, and (ix) are willing to comply with our code of ethics. We retain the right to modify these minimum qualifications from time to time. Exceptional candidates who do not meet all of these criteria may still be considered.

Process for Identifying and Evaluating Candidates for Election to the Board

The role of the nominating committee of our board of directors is to review the qualifications and backgrounds of any candidates for our board of directors, its current members, as well as the overall composition of the board. Prior to the formation of the nominating committee, our entire board evaluated candidates based upon the qualifications outlined above. In the case of any director candidates, the questions of independence and financial expertise are important to determine what roles the candidate can perform, and the nominating committee will consider whether the candidate meets the applicable independence standards and the level of the candidate’s financial expertise. Any new candidates will be interviewed, and the nominating committee will approve the final nominations. Our chairman of the board, acting on behalf of the nominating committee, will extend the formal invitation to the selected candidate.

Stockholder Nominations

Stockholders may nominate director candidates for consideration by the nominating committee by writing to our Secretary, who will forward the nomination to the chairman of the nominating committee. The submission must provide the candidate’s name, biographical data and qualifications, including five-year employment history with employer names and a description of the employer’s business; whether such individual can read and understand fundamental financial statements; other board memberships (if any); and such other information as is reasonably available and sufficient to enable the nominating committee to evaluate the minimum qualifications stated above under the section of this proxy statement entitled “Qualifications of Candidates for Election to the Board.” The submission must be accompanied by a written consent of the individual to stand for election if nominated by the nominating committee and to serve if elected by the stockholders. If a stockholder nominee is eligible, and if the nomination is proper, the nominating committee then will deliberate and make a decision as to whether the candidate will be appointed and subsequently submitted to our stockholders for a vote. The nominating committee will not change the manner in which it evaluates candidates, including the applicable minimum criteria set forth above, on the basis of whether the candidate was recommended by a stockholder.

Executive Sessions of the Board

Our board of directors has adopted a formal policy of meeting in executive session, with only independent directors being present, on a regular basis and at least two times each year. The board of directors met in executive session two times during 2007.

Stockholder Communications

Our board of directors believes that it is important for us to have a process whereby our stockholders may send communications to our board. Accordingly, stockholders who wish to communicate with our board of directors or a particular director may do so by sending a letter to Kay E. Langsford, Vice President of Administration and Secretary, at 1690 Congress Avenue, Suite 201, Delray Beach, Florida 33445. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Stockholder-Board Communication” or “Stockholder-Director Communication.” All such letters must identify the author as a stockholder and clearly state whether the intended recipients are all members of our board of directors or only certain specified individual directors. Ms. Langsford copies all such letters and circulates them to the appropriate director or directors.

Code of Conduct and Corporate Ethics General Policy Statement

Our board of directors has approved, and we have adopted, a Code of Conduct and Corporate Ethics General Policy Statement, or the Code of Conduct, which applies to all of our directors, officers and employees. Our board of directors has also approved, and we have adopted, a Code of Ethics for Senior Financial Officers, or the Code for SFO, which applies to our chief executive officer and chief financial officer. The Code of Conduct and the Code for SFO are available, without charge, upon written request to Applied Digital Solutions, Inc., Attention: Secretary, 1690 South Congress Avenue, Suite 201, Delray Beach, Florida 33445. The audit and governance committee of our board of directors is responsible for overseeing the Code of Conduct and the Code for SFO. Our audit and governance committee must approve any waivers of the Code of Conduct, and our board of directors must approve any waivers of the Code for SFO.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our officers and directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission, or SEC, and to furnish copies of all such reports to us. We believe, based on our stock transfer records and written representations from certain reporting persons, that all reports required under Section 16(a) were timely filed during 2007, with the exception of one Form 4 filed by Lorraine Breece with the SEC on April 24, 2007 for two transactions reporting the extension of certain stock option grants and one Form 5 filed by Scott Silverman with the SEC on July 6, 2007 for one transaction reporting the acquisition of our common stock.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2007, Mr. Penni and Ms. Weaver served as members of the compensation committee. None of the members of the compensation committee served as an officer or employee of ours or any of our subsidiaries during the fiscal year ended December 31, 2007. There were no material transactions between us and any of the members of the compensation committee during the fiscal year ended December 31, 2007. No member of the compensation committee simultaneously served both as a member of the compensation committee and as an officer or employee of ours during 2007. None of our executive officers serves as a member of the board of directors or the compensation committee, or committee performing an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee.

EXECUTIVE OFFICERS

As of the date of this proxy statement, each of the persons below served as one of our executive officers:

Name		Age				Position
Joseph J. Grillo			50			Chief Executive Officer and President
Lorraine M. Breece			55			Senior Vice President, Chief Financial Officer and Chief Accounting Officer
Parke H. Hess			50			Chief Operating Officer

The following is a summary of the background and business experience of our executive officers other than Joseph J. Grillo (whose background and business experience is described under Proposal 1 above of this proxy statement in connection with his status as a director):

Lorraine M. Breece: Ms. Breece was appointed as our chief financial officer in March 2008. From March 2007 until March 2008, she was our acting chief financial officer. She has served as our senior vice president since April 2006 and served as assistant secretary from November 2006 until January 2008, and as treasurer from March 2007 until January 2008. She was appointed vice president in March 2004. In March 2001, she was named director of accounting and SEC reporting. She joined in April 2000 as our controller and chief accounting officer, and she continues to serve as our chief accounting officer. Prior to joining the Company, from 1991 to 1999, Ms. Breece served as director of finance and chief accounting officer of Nabi BioPharmaceuticals (NASDAQ:NABI). From 1984 to 1990, she served as corporate controller for Levitt Corporation (NYSE:LEV). Ms. Breece has over 20 years employment/consulting experience with public and private companies, including Trammell Crow Company (NYSE:TCC) and Office Depot (NYSE:OD). Ms. Breece began her career as an auditor with Coopers & Lybrand. She earned a bachelor of administration in accounting from Florida Atlantic University and was licensed as a CPA.

Parke H. Hess: Mr. Hess was appointed as our chief operating officer on March 22, 2008. Mr. Hess has been a consultant working with us since January of 2008 and has worked with investment banks and businesses involving investment opportunities and transaction negotiations, primarily within the Radio Frequency Identification technology segment. From 1998 to 2001, Mr. Hess served as the chief financial officer of HID Corporation.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding beneficial ownership of our common stock by (i) each person known to us to beneficially own more than 5% of our common stock, (ii) each of our directors and, (iii) the “Named Executive Officers” (as defined below under “Executive Compensation”), and (iv) all the directors and executive officers as a group. The calculation of the percentage of outstanding shares is based on 118,615,205 shares of our common stock outstanding on April 14, 2008, adjusted, where appropriate, for shares of stock beneficially owned but not yet issued. Except as otherwise indicated, each stockholder named has sole voting and investment power with respect to such stockholder’s shares.

		Aggregate
		Number of
		Shares				Percent of
		Beneficially				Outstanding
Name of Beneficial Owner		Owned (1)				Shares
Five Percent Stockholders:
Valens Capital Management, LLC (2) c/o Valens Capital Management, LLC, 335 Madison Avenue, 10th Floor, New York, NY 10017			6,225,781				5.3	%
Executive Officers and Directors:
Joseph J. Grillo (3)			397,508				*
Lorraine M. Breece (3)			277,549				*
Parke H. Hess (3)			275,262				*
John R. Block (3)			875,000				*
Daniel E. Penni (3)			421,563				*
Dennis G. Rawan (3)			225,000				*
Constance K. Weaver (3)			500,421				*
Michael S. Zarriello (3)			1,199,051				1.0	%
Michael E. Krawitz (3)			4,502,793				3.8	%
Evan C. McKeown (3)			355,000				*
All current directors and executive officers as a group (8 persons)			4,171,354				3.4	%

The following table sets forth information regarding beneficial ownership of IFTH Acquisition Corp. f/k/a InfoTech USA, Inc, or InfoTech, by (i) each of our directors and nominees, (ii) the “Named Executive Officers” (as defined below “Executive Compensation”), and (iii) all the directors and executive officers as a group. The calculation of the percentage of outstanding shares is based on 5,146,398 shares of InfoTech’s common stock outstanding on February 9, 2008, adjusted, where appropriate, for shares of stock beneficially owned but not yet issued. Except as otherwise indicated, each stockholder named has sole voting and investment power with respect to such stockholder’s shares.

		Aggregate
		Number of
		Shares				Percent of
		Beneficially				Outstanding
Name of Beneficial Owner		Owned (1)				Shares
Joseph J. Grillo			—				*
Lorraine M. Breece			—				*
Parke H. Hess			—				*
John R. Block			—				*
Daniel E. Penni			—				*
Dennis G. Rawan			—				*

		Aggregate
		Number of
		Shares				Percent of
		Beneficially				Outstanding
Name of Beneficial Owner		Owned (1)				Shares
Constance K. Weaver			—				*
Michael S. Zarriello			—				*
Michael E. Krawitz			450,000				8.0	%
Evan C. McKeown			—				*
All current directors and executive officers as a group (8 persons)			—				*

The following table sets forth information regarding beneficial ownership of VeriChip by (i) each of our directors, (ii) the “Named Executive Officers” (as defined below under “Executive Compensation”), and (iii) all the directors and executive officers as a group. The calculation of the percentage of outstanding shares is based on 11,006,877 shares of VeriChip’s common stock outstanding on April 14, 2008, adjusted, where appropriate, for shares of stock beneficially owned but not yet issued. Except as otherwise indicated, each stockholder named has sole voting and investment power with respect to such stockholder’s shares.

		Aggregate
		Number of
		Shares				Percent of
		Beneficially				Outstanding
Name of Beneficial Owner		Owned (1)				Shares
Joseph J. Grillo			—				*
Lorraine M. Breece			22,222				*
Parke H. Hess			—				*
John R. Block			5,556				*
Daniel E. Penni			75,000				*
Dennis G. Rawan			11,111				*
Constance K. Weaver			86,111				*
Michael S. Zarriello			11,111				*
Michael E. Krawitz			289,445				2.6	%
Evan C. McKeown			—				*
All current directors and executive officers as a group (8 persons)			211,111				1.9	%

The following table sets forth information regarding beneficial ownership of our subsidiary, Thermo Life by (i) each of our directors, (ii) the “Named Executive Officers” (as defined below under “Executive Compensation”), and (iii) all the directors and executive officers as a group. The calculation of the percentage of outstanding shares is based on 20,000,000 shares of Thermo Life’s common stock outstanding on April 14, 2008, adjusted, where appropriate, for shares of stock beneficially owned but not yet issued. Except as otherwise indicated, each stockholder named has sole voting and investment power with respect to such stockholder’s shares.

		Aggregate
		Number of
		Shares				Percent of
		Beneficially				Outstanding
Name of Beneficial Owner		Owned (1)				Shares
Joseph J. Grillo			—				*
Lorraine M. Breece			70,000				*
Parke H. Hess			—				*
John R. Block			—				*
Daniel E. Penni			200,000				*
Dennis G. Rawan			200,000				*
Constance K. Weaver			200,000				*
Michael S. Zarriello			—				*
Michael E. Krawitz			750,000				3.6	%
Evan C. McKeown			200,000				*
All current directors and executive officers as a group (8 persons)			670,000				3.1	%

COMPENSATION COMMITTEE REPORT

The compensation committee has reviewed and discussed with management the contents of the Compensation Discussion and Analysis set forth below. Based on its review and discussion, the committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

THE COMPENSATION COMMITTEE
Constance K. Weaver (Chair)
Michael S. Zarriello
John R. Block

The compensation committee report above shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

COMPENSATION DISCUSSION AND ANALYSIS

General

Our executive compensation programs are designed to enable us to attract, retain and motivate our executives and those of our subsidiaries. Our general compensation philosophy is that total cash compensation should vary with our performance in attaining financial and non-financial objectives and that any long-term incentive compensation should be closely aligned with the interests of stockholders. Total 2007 cash compensation for our executive officers includes a base salary and a non-equity incentive compensation based on the achievement of certain financial and non-financial goals and the profitability of our individual subsidiaries. Long-term incentive compensation is realized through the granting of stock options.

In setting the base salary and individual non-equity incentive compensation packages for executives, the compensation committee reviews information relating to executive compensation of U.S. based companies that are of approximately the same size and in the same or similar industry as we are. While there is no specific formula that is used to set compensation in relation to this market data, executive officer base salary and individual non-equity incentive compensation packages are generally set around the median salaries for comparable jobs in the market place. However, when specific financial and non-financial goals are met, upon the approval of the compensation committee, additional compensation in the form of either cash compensation or long-term incentive compensation may be paid to our executive officers. Therefore, such additional compensation may not be comparable to compensation paid by companies of comparable size in the same or similar industry.

The foregoing information is intended to provide context for the discussion that follows regarding our existing compensation arrangements with those persons who served as our executive officers for all or part of 2007.

Principal Components of Compensation of Our Executive Officers

The principal components of the compensation we have historically paid to our executive officers have consisted of:

	•		base salary;
	•		cash incentive compensation under the terms of individual incentive and recognition policies established for our executive officers; and
	•		equity compensation, generally in the form of grants of stock options.

Our chief executive officer has historically played a significant role in the determination of the amounts of base salary and other forms of cash and equity-based compensation to be paid other members of senior management. We expect that the compensation committee of our board of directors will continue to solicit input from our chief executive officer with respect to compensation decisions affecting other members of senior management.

Allocation of Compensation among Principal Components

The compensation committee of our board of directors has established policies with respect to the mix of base salary, bonus, cash incentive compensation and equity awards to be paid or awarded to our executive officers. In general, the compensation committee believes that a greater percentage of the compensation of the most senior members of our management should be performance-based. The compensation committee endeavors to implement policies designed to attract, retain and motivate individuals with the skills and experience necessary for us to achieve our business objectives. These policies also serve to link pay with measurable performance, which, in turn, helps to align the interests of our executive officers with our stockholders.

Base Salary

Chief Executive Officer and President

On January 3, 2008, our board selected and approved Joseph J. Grillo as our chief executive officer, president and director. In connection with Mr. Grillo’s appointment, we entered into an employment agreement with Mr. Grillo, or the Grillo Employment Agreement, effective as of January 1, 2008, which provides that Mr. Grillo will receive a base salary of $375,000. To exhibit his confidence in our future, as of March 13, 2008, Mr. Grillo agreed to accept the balance of his 2008 salary, after customary withholdings, but at a program-related premium, in unrestricted shares of our common stock, as discussed under “Compensation Discussion and Analysis — Equity Swap Program.”

Former Chief Executive Officer and President

We appointed Michael E. Krawitz as our chief executive officer and president on December 2, 2006. Mr. Krawitz joined us in 1999 and previously served as our executive vice president, general counsel and secretary. On December 6, 2006, in connection with Mr. Krawitz’s appointment as chief executive officer and president, we and Mr. Krawitz entered into the Applied Digital Solutions, Inc. Employment and Non-Compete Agreement, or the ADS/Krawitz Employment Agreement. The ADS/Krawitz Employment Agreement commenced on December 6, 2006. It provided for an annual base salary of $350,000 and discretionary increases, a discretionary bonus and fringe benefits. Mr. Krawitz’s base salary before becoming chief executive officer was $199,800. In connection with the consummation of the merger of Digital Angel Acquisition Corp. and DAC, pursuant to the terms of the Agreement and Plan of Reorganization, dated as of August 8, 2007, as amended, among us, DAC and Digital Angel Acquisition Corp., Mr. Krawitz ceased being our chief executive officer and president effective December 31, 2007.

Chief Operating Officer

On March 22, 2008, our board approved Parke H. Hess, Jr. to be our chief operating officer. From January 2008 to the time of his appointment, Mr. Hess served us in the capacity of a consultant. In connection with his appointment, we and Mr. Hess entered into an employment agreement, effective as of March 24, 2008, or the Hess Employment Agreement, which provides that Mr. Hess will receive a base salary of $200,000, payable in a lump sum, less customary withholdings, and a signing bonus in the amount of $50,000. On March 24, 2008, Mr. Hess’ salary and signing bonus were paid entirely in the form of unrestricted shares of our common stock, for which Mr. Hess received a program-related premium, as discussed under “Compensation Discussion and Analysis — Equity Swap Program.”

Senior Vice President, Chief Financial Officer, and Chief Accounting Officer

On March 1, 2007, our board of directors appointed Lorraine M. Breece as our senior vice president, acting chief financial officer, chief accounting officer, treasurer and assistant secretary to replace Evan C. McKeown. On March 11, 2008, our board of directors appointed Ms. Breece as our senior vice president, chief financial officer and chief accounting officer. Ms. Breece’s base salary for 2007 was initially $150,000. On December 6, 2007, our compensation committee approved an increase of her base salary to $210,000. Ms. Breece’s bonus received in 2007 was $58,600, $33,600 of which was due to her appointment as acting chief financial officer and a discretionary bonus of $25,000. We do not have an employment agreement with Ms. Breece.

Pursuant to a reimbursement arrangement between us and DAC, DAC reimbursed us for one-half of Ms. Breece’s compensation, which ceased effective January 1, 2008.

Former Chief Financial Officer, Senior Vice President and Treasurer

Evan McKeown joined us in 2001 and became our chief financial officer in 2002. In 2006, his annual base salary was $183,600. Effective March 1, 2007, Mr. McKeown no longer served as our chief financial officer, and, effective March 9, 2007, we terminated Mr. McKeown’s employment. We did not have an employment agreement with Mr. McKeown.

Performance-Based Non-Equity Incentive Compensation

Effective beginning with the year ended December 31, 2004, our board of directors authorized and adopted an Incentive and Recognition Policy, or IRP. The IRP is designed to strongly motivate senior management to achieve goals that, in the judgment of the compensation committee, are important to our long-term success.

The IRP for fiscal year 2007 provided our senior management with the opportunity to receive incentive compensation in connection with the attainment of financial and other corporate performance objectives, as well as individual performance objectives, set forth in the plans. Our compensation committee sets those performance objectives, with the participation and input of our chief executive officer and other members of senior management. The IRP reflects common corporate performance objectives intended to encourage senior management unity. In setting the performance objectives, our compensation committee includes performance objectives that are viewed as reasonably achievable and others that are viewed as more of a challenge to achieve. The intent is to provide a balance between the two to ensure that our executive officers maintain their level of motivation throughout the year.

On April 2, 2007, the compensation committee of our board of directors approved the goals and compensation awards for 2007, under the IRP, for Mr. Krawitz and Ms. Breece, who in 2007 were eligible to receive up to $1,175,000 and $475,000, respectively. The eleven factors that were considered in 2007 in determining senior executive incentive compensation were (in no order of importance and in no order of likelihood of success):

	1.		Engaging in a strategic transaction to better our long-term profitability and value
	2.		Earnings per share for the year and EBITDA for the year (i.e., earnings per share before interest, taxes, depreciation and amortization)
	3.		Improved valuation in InfoTech during 2007
	4.		Realization of profit from the pending USPS matter
	5.		Continued 404 clean opinion
	6.		Increased analyst coverage
	7.		Audit committee assessment
	8.		Excellent communication with stockholders through timely, accurate and quality reporting
	9.		Debt reduction
	10.		Thermo Life progress
	11.		Improved value in, or valuable sale of, our investments in our subsidiaries

Mr. Krawitz’s and Ms. Breece’s incentive compensation for 2007 of $425,000 and $225,000, respectively, was determined and paid in accordance with the terms of the IRP.

For additional information regarding specific performance objectives for 2007 under the IRP, see “Executive Compensation — Our 2007 Incentive and Recognition Policies” below.

Under the Grillo Employment Agreement, Mr. Grillo is eligible to receive annual non-equity incentive compensation, subject to the approval of our board of directors, ranging from 0% to 200% of his base salary. Mr. Grillo’s non-equity incentive compensation for fiscal year 2008 will be determined based on the following performance metrics (weighted as indicated): total company revenues in 2008 (15%), total operating income in 2008 (25%), total company cash generation in 2008 (20%), and 2008 individual performance goals with respect to leadership, strategic planning, and tactical measures (40%).

Under the Hess Employment Agreement, Mr. Hess is eligible to receive annual non-equity incentive compensation, subject to the approval of our board of directors, ranging from 0% to 120% of his base salary. Mr. Hess’ non-equity incentive compensation for fiscal year 2008 will be determined based on performance metrics and goals as determined by us. Mr. Hess is considered to have a “Target Bonus” of 60% of base salary for the purposes of calculating total cash compensation. Under the Hess Employment Agreement, during 2008 we guaranteed the “Target Bonus” of 60% of base salary, which will be adjusted proportionally for the amount of time Mr. Hess is employed with us during the year.

On March 11, 2008, our compensation committee established the annual targets for the 2008 fiscal year for the Digital Angel Corporation Annual Incentive Plan (the “Annual Incentive Plan”). The targets are based on the following metrics: revenue, operating income, cash generation, and achievement of objective personal goals for each participant. Our compensation committee determines the participants entitled to participate in the Annual Incentive Plan. The category of eligible participants remains the same as previous years, except Mr. Grillo is not eligible to participate. Mr. Grillo’s incentive compensation is determined instead by reference to the Grillo Employment Agreement. Each participant’s bonus amount is calculated based on an analysis of performance in relation to established targets and individual performance objectives, and is subject to the discretion of our chief executive officer. Determination of awards and actual performance under the Annual Incentive Plan is the responsibility of our compensation committee, which reserves the right, in its sole discretion, to increase or decrease awards to participants.

Under the Annual Incentive Plan, Ms. Breece is eligible to receive non-equity compensation for 2008, subject to the approval of our board of directors, ranging from 0% to 200% of her base salary, with her target bonus being 60% of her base salary.

Our compensation committee has not considered whether it would adjust or attempt to recover incentive compensation paid to any or all of our executive officers if the relevant performance objectives upon which such compensation were based were to be restated or otherwise adjusted in a manner that would have the effect of reducing the amounts payable or paid. However, in accordance with Section 304 of the Sarbanes-Oxley Act of 2002, if we were required to restate our financial statements due to material noncompliance with any financial reporting requirement under the federal securities laws, as a result of misconduct, our chief executive officer and chief financial officer are legally required to reimburse us for any bonus or other incentive-based or equity-based compensation he, she or they receive from us during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission of the financial document embodying such financial reporting requirement, as well as any profits they realize from the sale of our securities during this 12-month period.

Non-Performance-Based Bonus Compensation

Subject to limited exceptions, we have not historically paid any automatic or guaranteed bonuses to our executive officers. One exception was the bonus paid to Ms. Breece in connection with her appointment as our acting chief financial officer. Another recent exception was the signing bonus paid and annual bonus to be paid to Mr. Hess under the Hess Employment Agreement, as discussed under “Compensation Discussion and Analysis — Base Salary.” Bonuses awarded are usually in the form of compensation for the achievement of certain performance objectives, as discussed under “Compensation Discussion and Analysis — Performance-Based Bonus Compensation.”

Equity Compensation

Our board of directors’ historical practice has been to grant equity-based awards to attract, retain, motivate and reward our executive officers, and to encourage their ownership of an equity interest in us. Through April 14, 2008, such grants have consisted, with several exceptions, of stock options — specifically non-qualified stock options, that is, options that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended. One exception is the grant of 100,000 shares of our common stock, under an applicable stock incentive plan previously approved by our stockholders, to Mr. Krawitz in connection with his appointment as our chief executive officer and president under the ADS/Krawitz Employment Agreement. Fifty thousand of the shares vested immediately and 50,000 of the shares were subject to forfeiture in the event Mr. Krawitz resigned or was terminated for cause on or before December 31, 2008, but in connection with Mr. Krawitz’s termination due to the merger with DAC, the restricted shares vested in December 2007.

In 2007, no stock options exercisable into shares of our common stock were granted to Messrs. Krawitz, McKeown or Ms. Breece, except for merger consideration received in connection with the merger with DAC in which options to purchase shares of DAC common stock outstanding at the time of the merger were converted into options to purchase shares of our common stock. On January 3, 2008, pursuant to the terms of the Grillo Employment Agreement, Mr. Grillo received stock options exercisable into 550,000 shares of our common stock, vesting ratably over five years. In addition, on January 30, 2008, Mr. Grillo received stock options exercisable into 218,965 shares of our common stock, vesting ratably over five years. On March 24, 2008, pursuant to the terms of the Hess Employment Agreement, Mr. Hess received stock options exercisable into 300,000 shares of our common stock, vesting ratably over the next five years.

All grants of options to our executive officers, as well as to our directors, have been granted with exercise prices equal to or exceeding the fair value of the underlying shares of common stock on the grant date, as determined by our board of directors. All equity-based awards have been reflected in our consolidated financial statements, based upon the applicable accounting guidance. Previously, we accounted for equity compensation paid to our executive officers and directors using the intrinsic value method under APB No. 25 and FIN 44. Under the intrinsic value method, no stock-based compensation was recognized in our consolidated statements of operations for options granted to our directors, employees, consultants and others when the exercise price of such stock options equaled or exceeded the fair value of the underlying stock on the dates of grant. Changes in the exercise prices of previously issued stock options and other modifications were treated under variable accounting in accordance with APB No. 25 and FIN 44. Effective January 1, 2006, we adopted FAS 123R using the modified prospective transition method. Under this method, stock-based compensation expense is recognized using the fair-value based method for all awards granted on or after the date of adoption of FAS 123R. FAS 123R requires us to estimate and record an expense over the service period of the stock-based award. In 2006, our compensation committee, conscious of the less favorable accounting treatment for stock options resulting from adoption of FAS 123R, took a more deliberate approach to the granting of awards of stock options.

We structure cash incentive compensation so that it is taxable to our executive officers at the time it becomes available to them. We currently intend that all cash compensation we pay will be tax deductible. However, with respect to equity-based awards, while any gain recognized by our executive officers and other employees from non-qualified stock options should be deductible, to the extent that in the future we grant incentive stock options, any gain recognized by the optionee related to such options will not be deductible by us if there is no disqualifying disposition by the optionee. In addition, our grant of shares of restricted stock or restricted stock units that are not subject to performance vesting provisions may not be fully deductible by us at the time the grant is otherwise taxable to the grantee.

We do not have any program, plan or practice that requires us to grant equity-based awards on specified dates, and we have not made grants of such awards that were timed to precede or follow the release or withholding of material non-public information. It is possible that we will establish programs or policies regarding the timing of equity-based awards in the future. Authority to make equity-based awards to executive officers rests with our compensation committee, which considers the recommendations of our chief executive officer and other executive officers. As a Nasdaq-listed company, we are subject to NASDAQ listing standards that, in general, require stockholder approval of equity-based plans.

Equity Swap Program

On March 11, 2008, our compensation committee approved an Equity Swap Program for 2008 (the “Equity Swap Program”), which allows employees earning an annual base salary of over $100,000 to elect to receive their 2007 bonus or 2008 salary, or both, in shares of our common stock, less customary withholdings, payable in a lump sum at the current market value of the stock. An election to exchange 10%, 20% or 30% of base salary for shares of our common stock allows the employee to receive a 20%, 25% or 30% premium, respectively, on the amount exchanged. Employees who sell the stock within the first thirty days after issuance receive 100% price protection. Employees who elect to participate in the Equity Swap Program must sign a repayment agreement that contemplates any form of termination or resignation during 2008.

If participating employees commit to holding stock received under the Equity Swap Program for a period of between six to twelve months, they will receive an additional premium of 1% for every month the stock is held (compounded on the gross amount to be issued under the Equity Swap Program).

For example, as a result of agreeing to accept the entire balance of his 2008 salary in our common stock, Mr. Grillo received a 30% premium on the balance of his 2008 salary (remaining as of March 14, 2008) under the Equity Swap Program, for an aggregate of 397,508 shares of our common stock. In addition, since Mr. Grillo agreed not to sell this stock for twelve months from the date on which he received the shares, he received an additional premium of 12%, compounded on the gross amount issued to him under the Equity Swap Program.

Likewise, as a result of agreeing to accept his 2008 salary and signing bonus in our common stock, Mr. Hess received a 30% premium on his 2008 salary and signing bonus under the Equity Swap Program, for an aggregate of 275,262 shares of our common stock. In addition, since Mr. Hess agreed not to sell this stock for twelve months from the date on which he received the shares, he received an additional premium of 12%, compounded on the gross amount issued to him under the Equity Swap Program.

Severance and Change-in-Control Payments

Our board of directors believes that companies should provide reasonable severance benefits to employees, recognizing that it may be difficult for them to find comparable employment within a short period of time. Our board also believes it prudent that we should disentangle ourselves from employees whose employment terminates as soon as practicable. Our historical practice for U.S. employees has been to make the termination of an employee effective immediately upon the communication of the termination rather than at the expiration of any required advance notice period. In such situations, we have continued to pay, on a post-termination basis, base salary compensation to the terminated employee under his or her employment agreement, if any, for the specified advance notice period.

The ADS/Krawitz Employment Agreement provided that if the ADS/Krawitz Employment Agreement was terminated due to Mr. Krawitz’s resignation within 120 days following a change in control of the Company—or due to (i) Mr. Krawitz’s “total disability,” upon our election, (ii) Mr. Krawitz’s death, (iii) Mr. Krawitz’s “constructive termination,” or (iv) our termination of the ADS/Krawitz Employment Agreement without “cause"—Mr. Krawitz would have been due severance, perquisites and other amounts. Therefore, as a result of Mr. Krawitz’ termination on December 31, 2007 in connection with the merger with DAC, Mr. Krawitz was entitled to severance in an amount equal to approximately $1,730,000. The ADS/Krawitz Employment Agreement is more fully described in “Item 11. Executive Compensation — Potential Payments Upon Termination or Change in Control.”

The Grillo Employment Agreement provides that, if we terminate Mr. Grillo’s employment without cause or Mr. Grillo terminates his employment for good reason or due to a change in control before January 1, 2009, Mr. Grillo will receive six months of base salary. The Grillo Employment Agreement further provides that, if we terminate Mr. Grillo’s employment without cause or Mr. Grillo terminates his employment for good reason or due to a change in control after January 1, 2009, Mr. Grillo will receive a payment equal to the sum of one and one-half times his base salary at the time of his termination, plus one and one-half times his target bonus at the time of the termination.

The Hess Employment Agreement provides that, if, at any time during the term of the Hess Employment Agreement, Mr. Hess’ employment is terminated by us without cause, or, after the first anniversary of the Hess Employment Agreement, we terminate Mr. Hess’ employment without cause, or Mr. Hess terminates his employment for good reason within six months after a change of control, Mr. Hess will receive one times his base salary, plus 60% of earned base salary.

In May 2004, we entered into an executive management change-in-control plan with certain of our executive officers. The plan provided for the payment of one-half to up to three times the then current base salary and average annual bonuses paid to the officers, as well as the continued payment of any leased vehicles used by the executives. In addition, any outstanding stock options held by the executive officers as of the date of the change of control became vested and exercisable as of such date, or in the case of an acquisition of all of our common stock, such options vested prior to such closing and remained exercisable during the remaining life of the option. All severance and change-of-control payments made in connection with the change-in-control plan could have been paid in shares of our common stock, subject to necessary approvals, or in cash at the executives’ option. As of March 9, 2007, this plan is no longer in effect.

Our named executive officers and certain other officers are also entitled to receive severance payments if we terminate such an employee without cause or if the employee resigns for good reason. The severance package includes providing such officers between six and twelve months of base salary, based on the salary in effect at the time of the termination, plus an additional amount equal to the percentage of yearly base salary representing the target bonus for the employee for the year of termination, depending upon such employee’s position. The issuance of any severance benefit is subject to the execution of a general release at the time of separation.

Joseph J. Grillo and Parke H. Hess Jr. are not covered by this policy because their severance rights are as described in their employment agreements with us. Ms. Breece was entitled to receive one year of base salary if she was terminated without cause or if she resigned with good reason. On December 6, 2007, this arrangement was modified to be consistent with the severance package described above to include one year of base salary plus an additional 60% of her yearly base salary, subject to the execution of a general release by Ms. Breece at the time of separation. We reserved the right to pay the additional 60% of Ms. Breece’s yearly base salary as a lump sum, or in our common stock, which would be subject to price protection for three months following the issuance.

Other Benefits

We believe that establishing competitive benefit packages for our employees is an important factor in attracting and retaining highly qualified personnel. Executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life and accidental death and dismemberment insurance and our 401(k) plan, in each case on the same basis as other employees. Ms. Breece is also provided with an individual term life insurance policy. We do not currently offer retirement benefits.

Perquisites

Our board of directors annually reviews the perquisites that members of senior management receive. With the exception of the perquisites received previously by Mr. Krawitz, the cost to us of such perquisites is minimal. In 2007, Mr. Krawitz received $20,000, representing non-allocable expenses, and an automobile allowance and related insurance and maintenance expenses.

Section 162(m) of the Internal Revenue Code

Section 162(m) of the Internal Revenue Code generally does not allow a deduction for annual compensation in excess of $1,000,000 paid to our named executive officers. This limitation on deductibility does not apply to certain compensation, including compensation that is payable solely on account of the attainment of one or more performance goals. Our policy is generally to preserve the federal income tax deductibility of compensation, and we intend generally to qualify eligible compensation for the performance-based exception in order for compensation not to be subject to the limitation on deductibility imposed by Section 162(m) of the Internal Revenue Code; we may, however, approve compensation that may not be deductible if we determine that the compensation is in our best interests as well as the best interests of our stockholders.

Board Process

On at least an annual basis, the compensation committee of our board of directors approves all compensation and awards to our chief executive officer and president and our chief financial officer. With respect to equity compensation awarded to other employees, the compensation committee grants stock options, generally based on the recommendation of our chief executive officer.

EXECUTIVE COMPENSATION

The following table sets forth information regarding compensation earned in or with respect to our fiscal years 2007 and 2006 by:

	•		each person who served as our chief executive officer in 2007; and
	•		each person who served as our chief financial officer in 2007.

We had no other executive officers in 2007. We refer to these officers collectively as our named executive officers.

Summary Compensation Table

																						Non-Equity				Nonqualified
																						Incentive				Deferred
														Stock				Option				Plan				Compensation				All Other
Name and Principal						Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
Position		Year				($)				($)				($)				($)				($) (1)				($)				($)				($)
Michael E. Krawitz (2)			2007			$	385,000			$	—			$	97,656	(3)		$	—			$	425,000			$	—			$	1,753,533	(4)		$	2,661,189
Former Chief Executive Officer and President			2006			$	207,227			$	360,000	(5)		$	104,344	(3)		$	—			$	—			$	—			$	36,042	(6)		$	707,613
Evan C. McKeown (7)			2007			$	51,713			$	—			$	—			$	—			$	—			$	—			$	137,700	(8)		$	189,413
Former Chief Financial Officer, Senior Vice President and Treasurer			2006			$	183,600			$	—			$	—			$	—			$	125,000			$	—			$	26,759	(9)		$	335,359
Lorraine M. Breece (10)			2007			$	153,462			$	58,600			$	—			$	103,252	(11)		$	225,000			$	—			$	1,290	(12)		$	541,604
Senior Vice President, Chief Financial Officer and Chief Accounting Officer			2006			$	150,000			$	6,800	(13)		$	—			$	—			$	54,000			$	—			$	690	(12)		$	211,490

(1)		The amounts shown in this column were paid under the terms of incentive and recognition policies for fiscal year 2007, which were entered into with each of our named executive officers for the achievement of specified performance objectives. For a description of the material terms of each of these policies, see the discussion under “Our 2007 Incentive and Recognition Policies” below. Under prior rules of the SEC, payments under non-equity compensation plans were reported under the “Bonus” column.
(2)		Mr. Krawitz became our chief executive officer and president effective December 2, 2006. Prior to that, he served as our executive vice president, general counsel, chief privacy officer and secretary. Effective December 31, 2007, in connection with the merger with DAC, Mr. Krawitz ceased being our president and chief executive officer.
(3)		Upon the execution of the ADS/Krawitz Employment Agreement, Mr. Krawitz was issued 50,000 shares of our common stock, which vested immediately. At the same time, he was granted 50,000 restricted shares of our common stock. The restricted shares were subject to forfeiture in the event Mr. Krawitz resigned or was terminated for cause on or before December 31, 2008, but in connection with Mr. Krawitz’s termination due to the merger with DAC, the restricted shares vested in December 2007. The dollar amount of this award reflected in the table represents the amount recognized in 2006 and 2007 for financial statement reporting purposes in accordance with FAS 123R. We determined the value of the stock to be $202,000 based on the closing price of our stock on the date of grant. We recorded compensation expense of approximately $104,344 in 2006 and $97,656 in 2007 associated with the stock award.

(4)		Effective December 31, 2007, in connection with the merger with DAC, Mr. Krawitz ceased being our president and chief executive officer, and as a result, was entitled to severance in an amount equal to $1,730,000 under the terms of the ADS/Krawitz Employment Agreement, which was approved by our stockholders on November 27, 2007. The amount shown also includes (i) amounts in respect of perquisites and other personal benefits aggregating $23,263 and (ii) $270 in respect of group term life insurance provided to Mr. Krawitz. The perquisites and other personal benefits were as follows:

		Amount of
Nature of Expense		Expense
Expense allowance		$	20,000
Automobile allowance and related insurance and maintenance expenses		$	3,263
Total		$	23,263

We aggregated the total amount of the lease payments and insurance and maintenance expenses relating to the automobile used by Mr. Krawitz to compute the aggregate incremental cost associated with this perquisite.

		Amount of
Nature of Expense		Expense
Expense allowance		$	20,000
Automobile allowance and related insurance and maintenance expenses		$	15,336
Other*		$	436
Total		$	35,772

We aggregated the total amount of the lease payments and insurance and maintenance expenses relating to the automobile used by Mr. Krawitz to compute the aggregate incremental cost associated with this perquisite.

		Amount of
Nature of Expense		Expense
Automobile allowance for one automobile and related insurance, maintenance and gasoline expenses		$	26,304
Other*		$	455
Total		$	26,759

We aggregated the total amount of the lease payments and insurance, maintenance, and gasoline expenses relating to the one automobile used by Mr. McKeown to compute the aggregate incremental cost associated with this perquisite.

2007 Grants of Plan-Based Awards

Set forth in the table below is information regarding cash amounts that could have been received in 2007 by our named executive officers under the terms of the 2007 incentive and recognition policy.

These represent all of the grants of awards to our named executive officers under any plan during or with respect to 2007.

		Estimated Future Payouts
		Under Non-Equity Incentive Plan Awards
																						All other				All other
																						Stock				Option								Grant
																						Awards:				Awards:								Date Fair
																		Date of				Number of				Number of				Exercise or				Value of
																		Board or				Shares of				Securities				Base Price				Stock and
																		Compensation				Stock or				Underlying				of Option				Option
		Threshold				Target				Maximum								Committee				Units				Options				Awards				Awards
Name		($) (1)				($) (1)				($) (1)				Grant Date				Action				(#)				(#)				($/Sh)				($)
Michael E. Krawtiz			—			$	1,175,000			$	1,175,000				—				—				3,509,128	(2)			—				—				—
Evan C. McKeown			—				—				—				—				—				—				—				—				—
Lorraine M. Breece			—			$	475,000			$	475,000				08/15/2007				08/14/2007				—				100,000	(3)		$	1.55	(3)		$	103,252	(4)

Our 2007 Incentive and Recognition Policies

In 2007, Mr. Krawitz and Ms. Breece were eligible to receive cash incentive compensation upon the attainment of specific performance objectives, as set forth in their individually tailored 2007 incentive and recognition policies. Effective March 9, 2007, Mr. McKeown was no longer employed by us, and therefore, was not eligible to receive cash incentive compensation. The target amounts of incentive compensation specified for Mr. Krawitz and Ms. Breece in 2007 are as follows:

		Target Amount of
		Incentive
		Compensation
Name		($)
Michael E. Krawitz		$	1,175,000
Lorraine M. Breece		$	475,000
Total		$	1,650,000

The tables below set forth, for Mr. Krawitz and Ms. Breece:

	•		The performance objectives applicable to his or her incentive and recognition policy for 2007; and
	•		The weighting of such performance objectives, stated as a dollar amount.

Following each table is a narrative discussion of the amounts payable for the attainment of such performance objectives, including a discussion of whether performance objectives were achieved, where applicable.

Michael E. Krawitz

Performance Objective		Weighting
Major strategic transaction (1)		$	300,000
Positive EPS and positive EBITDA for the year (2)		$	250,000
InfoTech valuation or major transaction involving InfoTech (1)		$	50,000
Postal service (1)		$	25,000
404 clean opinion and audit clean opinion (1)		$	50,000
Analyst coverage (2)		$	50,000
Thermo Life disposition or licensing agreement (2)		$	50,000
Paying off debt to Laurus Master Fund, Ltd. (2)		$	150,000
Subsidiary transaction: Either transactions that yield $30 million to us or improve stock price of public subsidiaries (2)		$	250,000

Therefore, Mr. Krawitz earned $425,000 under his 2007 incentive and recognition policy. This amount has been reflected as the amount earned by Mr. Krawitz as non-equity incentive plan compensation in the Summary Compensation Table above.

Lorraine M. Breece

Performance Objective		Weighting
Major strategic transaction (1)		$	100,000
Positive EPS and positive EBITDA for the year (2)		$	100,000
404 clean opinion and audit clean opinion (1)		$	75,000
Audit and governance committee discretion (1)		$	25,000
Analyst coverage (2)		$	25,000
Timely, accurate and quality SEC filings (1)		$	25,000
Paying off debt to Laurus Master Fund, Ltd. (2)		$	75,000
Subsidiary transaction: Either transactions that yield $30 million to us or improve stock price of public subsidiaries (2)		$	50,000

Therefore, Ms. Breece earned $225,000 under her 2007 incentive and recognition policy. This amount has been reflected as the amount earned by Ms. Breece as non-equity incentive plan compensation in the Summary Compensation Table above.

Outstanding Equity Awards as of December 31, 2007

The following table provides information as of December 31, 2007 regarding unexercised stock options and restricted stock awards granted to each of our named executive officers by us, our wholly-owned subsidiaries, Thermo Life and DAC, and our majority-owned subsidiaries, InfoTech and VeriChip.

		Option Awards																				Stock Awards
																																		Equity
																																		Incentive
																																		Plan
																														Equity				Awards:
																														Incentive				Market
																														Plan				or Payout
										Equity																				Awards:				Value of
										Incentive												Number of								Number of				Unearned
										Plan												Shares				Market				Unearned				Shares,
										Awards:												or Units				Value of				Units or				Units or
		Number of				Number of				Number of												of Stock				Shares of				Other				Other
		Securities				Securities				Securities												That				Units of				Rights				Rights
		Underlying				Underlying				Underlying				Option								Have				Stock				That				That
		Unexercised				Unexercised				Unearned				Exercise				Option				Not				That				Have Not				Have Not
		Options (#)				Options (#)				Options				Price				Expiration				Vested				Have Not				Vested				Vested
Name		Exercisable (1)				Unexercisable				(#)				($) (2)				Date				#				Vested ($)				(#)				($)
Michael E. Krawitz (3)
Applied Digital Solutions, Inc.			—				—				—				—				—				—				—				—				—
			2,500				—				—			$	1.500				05/18/2009				—				—				—				—
			5,000				—				—			$	1.500				10/05/2009				—				—				—				—
			7,900				—				—			$	1.500				09/27/2009				—				—				—				—
			60,000				—				—			$	3.200				02/04/2008				—				—				—				—
			40,000				—				—			$	2.800				07/25/2008				—				—				—				—
			100,000				—				—			$	3.900				11/03/2011				—				—				—				—
			250,400				—				—			$	2.530				07/29/2012				—				—				—				—
			250,000				—				—			$	3.230				07/06/2013				—				—				—				—
			42,000	(4)			—				—			$	3.11	(4)			05/03/2015				—				—				—				—
			140,000	(4)			—				—			$	2.78	(4)			12/31/2013				—				—				—				—
			98,438	(4)			—				—			$	0.04	(4)			12/30/2010				—				—				—				—
			47,425	(4)			—				—			$	0.48	(4)			01/01/2012				—				—				—				—
InfoTech USA, Inc.			350,000				—				—			$	0.280				06/28/2010				—				—				—				—
			100,000				—				—			$	0.340				03/23/2012				—				—				—				—
Thermo Life Energy Corp.			750,000				—				—			$	0.050				04/18/2011				—				—				—				—
VeriChip Corporation			111,111				—				—			$	0.225				02/07/2010				—				—				—				—
			97,778				—				—			$	0.225				04/01/2011				—				—				—				—
			55,556				—				—			$	1.125				05/26/2012				—				—				—				—
Evan C. McKeown (5)
Applied Digital Solutions, Inc.			5,000				—				—			$	2.800				07/25/2008				—				—				—				—
			25,000				—				—			$	3.900				11/03/2011				—				—				—				—
			75,000				—				—			$	2.530				07/29/2012				—				—				—				—
			250,000				—				—			$	3.230				07/06/2013				—				—				—				—
			10,000				—				—			$	3.200				02/04/2008				—				—				—				—

		Option Awards																				Stock Awards
																																		Equity
																																		Incentive
																																		Plan
																														Equity				Awards:
																														Incentive				Market
																														Plan				or Payout
										Equity																				Awards:				Value of
										Incentive												Number of								Number of				Unearned
										Plan												Shares				Market				Unearned				Shares,
										Awards:												or Units				Value of				Units or				Units or
		Number of				Number of				Number of												of Stock				Shares of				Other				Other
		Securities				Securities				Securities												That				Units of				Rights				Rights
		Underlying				Underlying				Underlying				Option								Have				Stock				That				That
		Unexercised				Unexercised				Unearned				Exercise				Option				Not				That				Have Not				Have Not
		Options (#)				Options (#)				Options				Price				Expiration				Vested				Have Not				Vested				Vested
Name		Exercisable (1)				Unexercisable				(#)				($) (2)				Date				#				Vested ($)				(#)				($)
InfoTech USA, Inc.			—				—				—				—				—				—				—				—				—
Thermo Life Energy Corp.			200,000				—				—			$	0.050				04/18/2010				—				—				—				—
VeriChip Corporation			—				—				—				—				—				—				—				—				—
Lorraine M. Breece (6)
Applied Digital Solutions, Inc.			1,667				—				—			$	1.500				04/24/2009				—				—				—				—
			3,500				—				—			$	3.200				02/04/2008				—				—				—				—
			2,500				—				—			$	2.800				07/25/2008				—				—				—				—
			10,000				—				—			$	3.900				11/03/2011				—				—				—				—
			48,833				—				—			$	2.530				07/29/2012				—				—				—				—
			50,000				—				—			$	3.230				07/06/2013				—				—				—				—
			9,025	(4)			—				—			$	0.48	(4)			01/01/2012
			14,000	(4)			—				—			$	3.11	(4)			05/02/2015
			140,000	(4)			—				—			$	1.11	(4)			08/15/2017				—				—				—				—
InfoTech USA, Inc.			—				—				—				—				—				—				—				—				—
Thermo Life Energy Corp.			70,000				—				—			$	0.050				04/18/2011				—				—				—				—
VeriChip Corporation			11,111				—				—			$	0.225				04/01/2010				—				—				—				—
			11,111				—				—			$	1.125				05/26/2012				—				—				—				—