SecProbe.io

CORRESP
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  July 6, 2005

  Philip T. Colton
Direct Dial: (612) 604-6729
Direct Fax: (612) 604-6929
pcolton@winthrop.com

VIA FEDERAL EXPRESS

Ms. Kathleen
Kerrigan

Securities and
Exchange Commission

100 F Street N.E.

Washington, DC
20549

  RE:

  Digital
  Angel Corporation

  Form 10-K
  for the year ended December 31, 2004

  Filed
  March 8, 2005

  Form 10-Q
  for the quarterly period ended March 31, 2005

  File
  No. 1-15177

Dear Ms. Kerrigan:

On behalf of
Digital Angel Corporation, a Delaware corporation, we are responding to the
comments presented in the letter from Mr. Larry Spirgel, Assistant
Director dated June 21, 2005.  For
the Staff’s convenience, each of our Responses is preceded by the related Staff
Comment.

Form 10-K
for Fiscal Year Ended December 31, 2004

Note 1.  The Company and Basis of Presentation, page 37.

Revenue
Recognition, page 39.

1.             Please refer to prior comment
6.  It is still unclear to us how you
have determined that the hardware does not have value on a standalone basis,
based on the guidance in EITF 00-21.  In
this regard, please provide a more detailed description of the nature of the
products and services included in the arrangement.  Tell us whether a customer could resell the
equipment to another customer and whether the other customer could then obtain
the required services from you.

Response:              A typical OuterLink system consists of data terminal hardware installed
on a mobile asset, communications services and software tools that enable
clients to visually track and display real-time and historical information
about all assets under their control.
The data terminal hardware consists of a receiver, a high powered
transmitter, a CPU and power supply.
This hardware transmits and receives over specific OuterLink dedicated
frequencies to OuterLink’s network operations center and when used in
connection with OuterLink’s software

enables
the communication of position and location reports, fleet status information as
well as two way messaging.

OuterLink
Corporation’s services are only available through the use of its hardware and
such hardware has no alternative use.  To
the best of the Company’s knowledge, OuterLink, neither prior to or subsequent
to the acquisition, has ever sold the hardware to a customer that does not
subscribe to OuterLink’s service.  The
Company notes that while a customer could resell the hardware to another
customer the new customer could only use the hardware if it obtained the
services from OuterLink.

The
Company does not believe that the hardware should be considered a separate unit
of accounting based on the criteria in paragraph 9 of EITF 00-21 “Revenue
Arrangements with Multiple Deliverables.”
Because the hardware sold to the customer has no utility to the customer
without the Company’s continuing involvement of providing location and
messaging services, the Company believes the hardware and related services must
be viewed as an integrated package.
Accordingly, OuterLink Corporation’s hardware revenue is deferred upon
shipment and recognized ratably over the estimated customer service period,
which customarily is 30 months.  The
Company also believes that this treatment is consistent with similar companies
in its industry.

Form 10-Q
for Fiscal Quarter Ended March 31, 2005

Item 4. Controls
and Procedures, page 24

2.             Please refer to prior comment
15.  Please confirm for us that your
certifying officers concluded that your disclosure controls and procedures were
effective as of the end of the period covered by the report, based upon the
evaluation of your disclosure controls and procedures.

Response:              In regards to the Form 10-Q for the period ended March 31,
2005, the Company confirms that its certifying officers concluded that its
disclosure controls and procedures were effective as of the date covered by the
report, based upon the evaluation of the Company’s disclosure controls and
procedures.

If you have any
questions in connection with the filing, please contact the undersigned at
(612) 604-6729.

Very truly yours,

WINTHROP &
WEINSTINE, P.A.

Philip T. Colton

cc:           Digital Angel Corporation

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