NEW YORK, June 28, 2002 (PRIMEZONE) -- A class action complaint has been filed in the United States District Court for the Southern District of Florida, civil action no. 02-80599, on behalf of all persons or entities who purchased Applied Digital Solutions, Inc. ("Applied Digital" or the "Company") securities (Nasdaq:ADSXE) between February 11, 2000 and May 10, 2002, both dates inclusive (the "Class Period"). Applied Digital Solutions, Inc., Richard J. Sullivan, and Mercedes Walton are named as defendants in the action.
The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between February 11, 2000 and May 10, 2002. According to the complaint, defendants were in possession of materially adverse information concerning the lack of proper accounting controls and improper revenue recognition practices at certain of the Company's subsidiaries, but failed to disclose the information to investors for more than two years.
On April 18, 2002, Applied Digital disclosed that during the year ending December 31, 2001, one of the Company's subsidiaries had been booking revenue without "evidence of customer acceptance prior to the recognition of certain revenue." The Company also disclosed that the subsidiary "did not have proper restrictions to vendor access within its accounts payable system." Additionally, the Company disclosed that during the year ended December 31, 2000, a second subsidiary of Applied Digital "lacked monitoring controls over its accounts receivable and was unable to provide certain detailed inventory listings for certain general ledger balances." The disclosure of improper accounting practices at Applied Digital subsidiaries drove Applied Digital's stock down 40%. Approximately three weeks later, on May 9, 2002, defendants claimed that nearly every major hospital in the West Palm Beach, Florida, area would be equipped with VeriChip scanners - an indispensable component of the Company's Verichip technology. However, not one hospital in West Palm Beach or anywhere else had accepted or agreed to use a scanner, an essential device for retrieving the VeriChip's information. One day later, on May 10, 2002, when the truth was disclosed that no hospital had accepted a scanner, Applied Digital's stock fell sharply, dropping nearly 30% in one day.
Plaintiff is represented by the law firm of Rabin & Peckel LLP. Rabin & Peckel LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States. You can learn more information about Rabin & Peckel LLP at www.rabinlaw.com.
If you purchased Applied Digital securities between February 11, 2000 and May 10, 2002, you may, no later than July 23, 2002 move the Court to serve as lead plaintiff. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this action as a lead plaintiff online at www.rabinlaw.com. If you wish to discuss this action further or have any questions concerning this announcement, or your rights or interests, please contact plaintiff's counsel, Eric Belfi or Sharon Lee, Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-1892, or by e-mail at email@rabinlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.