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VeriChip
Corporation Announces Financial Results for First Quarter 2008
DELRAY BEACH, Fla.--VeriChip
Corporation ("VeriChip" or the "Company") (NASDAQ:CHIP), a provider
of radio frequency identification, or RFID, systems for healthcare
and patient-related needs, today reported financial results for its
first quarter ended March 31, 2008.
Revenue for the first quarter of 2008
was $8.6 million compared to revenue of $7.1 million for the first
quarter of 2007, an increase of 20.9%, due to strong sales of the
Company’s infant protection and wander
prevention products. Net loss in the first quarter of 2008 was
$(2.8) million, or $(0.30) per share, compared to a net loss in the
first quarter of 2007 of $(3.3) million, or $(0.47) per share. Gross
profit for the first quarter of 2008 was $5.0 million, or a gross
margin of 58.6%, compared to gross profit of $3.8 million, or a
gross margin of 53.2%, in the first quarter of 2007.
As previously announced, VeriChip has
entered into a definitive stock purchase agreement with The Stanley
Works ("Stanley") for the sale of its wholly-owned Canadian
subsidiary, Xmark Corporation (“Xmark”),
for $45 million in cash.
Proxy Statement
The Company plans to file with the
Securities and Exchange Commission ("SEC") and mail to its
stockholders a proxy statement in connection with the special
meeting of stockholders to be called to approve the Xmark
transaction. The proxy statement will contain important information
about the Company, the transaction and related matters. Investors
and stockholders are urged to read the proxy statement carefully
when it is available. Investors and stockholders will be able to
obtain free copies of the proxy statement and other documents filed
with the SEC by the Company through the web site maintained by the
SEC at
www.sec.gov. In addition, investors and stockholders will
be able to obtain free copies of the proxy statement from the
Company by contacting Kay E. Langsford, at 1690 Congress Avenue,
Suite 200, Delray Beach, Florida 33445.
Participants in the
Solicitation
The Company and its executive
officers and directors may be deemed, under SEC rules, to be
participants in the solicitation of proxies from the Company’s
stockholders with respect to the proposed Xmark transaction.
Information regarding the executive officers and directors of the
Company is included in its Form 10-K/A filed with the SEC on April
29, 2008. More detailed information regarding the identity of
potential participants, and their direct or indirect interests, by
securities, holdings or otherwise, will be set forth in the proxy
statement to be filed with the SEC in connection with the proposed
Xmark transaction.
About VeriChip Corporation
VeriChip Corporation, headquartered
in Delray Beach, Florida, develops, markets and sells, RFID systems
used to identify, locate and protect people and assets. VeriChip's
goal is to become the leading provider of RFID systems for people in
the healthcare industry. The Company recently began marketing Health
Link, a passive RFID system for rapidly and accurately identifying
people who arrive in an emergency room and are unable to
communicate. This system uses the first human-implantable passive
RFID microchip cleared for medical use in October 2004 by the United
States Food and Drug Administration.
For more information on VeriChip,
please call 1-800-970-2447, or email
info@verichipcorp.com. Additional information can be found
online at
www.verichipcorp.com.
Forward Looking Statements
Certain statements made in this press
release are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements regarding the intent, belief or current
expectations, estimates or projections of the Company, its directors
or its officers, and include among other items statements regarding
the timing of distributing a proxy statement and holding a
stockholder meeting, the closing of the Xmark transaction with
Stanley, and of the plan to sell the VeriMed Health Link business or
the Company. When used in this release, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates,"
and similar expressions are generally intended to identify
forward-looking statements. Because such statements involve risks
and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Although
the Company believes that its expectations are based on reasonable
assumptions, it can give no assurance that the anticipated results
will occur. Important factors that could cause the actual results to
differ materially from those in the forward-looking statements
include, among other items, management's ability to successfully
satisfy the conditions to the closing of the Xmark transaction with
Stanley, the ability of the Company to comply with its obligations
under agreements governing indebtedness or obtain waivers from
lenders in the event of non-compliance, the continued availability
of liquidity and capital resources required to complete these
transactions, particularly in the event that such transactions
require more time than management anticipates, and other factors.
Additional information about these
and other factors that could affect the Company’s
business is set forth in the Company’s
various filings with the Securities and Exchange Commission,
including those set forth in the Company’s
10-K filed on March 28, 2008, as amended, under the caption
“Risk Factors.”
The Company undertakes no obligation to update or release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this statement or to reflect the
occurrence of unanticipated events, except as required by law.
Non-GAAP Financial Measure
To supplement the Company’s
unaudited condensed consolidated financial statements presented in
accordance with generally accepted accounting principles (“GAAP”),
the Company provides adjusted EBITDA, which is a non-GAAP financial
measure. Adjusted EBITDA is defined as operating loss plus
depreciation and amortization, and other non-cash items (such as
equity-based compensation) and non-recurring items as presented in
the Company’s Unaudited Condensed
Consolidated Statement of Operations. Adjusted EBITDA should not be
considered as an alternative to operating income or net income (as
determined in accordance with GAAP) as a measure of the Company’s
operating performance or to net cash provided by operating,
investing and financing activities (as determined in accordance with
GAAP) as a measure of the Company’s
ability to meet cash needs. The Company believes that adjusted
EBITDA is a measure commonly reported and widely used by investors
and other interested parties as a measure of a company’s
operating performance and debt servicing ability because it assists
in comparing performance on a consistent basis without regard to
capital structure, depreciation and amortization or non-operating
factors (such as historical cost). This information has been
disclosed here to permit a more complete comparative analysis of the
Company’s operating performance relative
to other companies. Adjusted EBITDA may not, however, be comparable
in all instances to other similar types of measures.
For supplemental information to
facilitate evaluation of the impact of non-cash charges,
non-recurring charges, and comparisons with historical results, see
the attached tables showing the detailed reconciliation of results
reported under GAAP to non-GAAP results for the first quarter of
2008 and the first quarter of 2007.
Certain prior year amounts have been
reclassified to conform to current year presentation.
|
VeriChip Corporation
Unaudited Condensed
Consolidated Statements of Operations Data
(Amounts in thousands
except per share data) |
|
|
|
|
|
| |
Three Months Ended
|
| |
March 31
|
| |
|
2008
|
|
|
|
2007
|
|
| |
|
|
|
|
Product revenue |
$ |
8,052 |
|
|
$ |
6,680 |
|
|
Service revenue |
|
546 |
|
|
|
431 |
|
|
Total revenue |
|
8,598 |
|
|
|
7,111 |
|
| |
|
|
|
|
Cost of product |
|
3,121 |
|
|
|
3,069 |
|
|
Cost of services
|
|
437 |
|
|
|
262 |
|
|
Total cost of products and
services |
|
3,558 |
|
|
|
3,331 |
|
| |
|
|
|
|
Gross profit
|
|
5,040 |
|
|
|
3,780 |
|
| |
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling, general and
administrative |
|
6,110 |
|
|
|
5,317 |
|
|
Research and development
|
|
1,101 |
|
|
|
1,372 |
|
|
Total operating expenses
|
|
7,211 |
|
|
|
6,689 |
|
| |
|
|
|
|
Operating loss
|
|
(2,171 |
) |
|
|
(2,909 |
) |
| |
|
|
|
|
Interest income and other
expense, net |
|
52 |
|
|
|
(61 |
) |
|
Interest expense
|
|
361 |
|
|
|
388 |
|
|
Total other expense
|
|
413 |
|
|
|
327 |
|
| |
|
|
|
|
Loss before income tax
provision |
|
(2,584 |
) |
|
|
(3,236 |
) |
|
Provision for income taxes
|
|
283 |
|
|
|
45 |
|
|
Loss from continuing
operations |
|
(2,867 |
) |
|
|
(3,281 |
) |
| |
|
|
|
|
Net income (loss) from
Discontinued Operations |
|
24 |
|
|
|
(32 |
) |
| |
|
|
|
|
Net loss
|
$ |
(2,843 |
) |
|
$ |
(3,313 |
) |
| |
|
|
|
|
Net loss per common
share from continuing operations - basic and diluted
|
$ |
(0.30 |
) |
|
$ |
(0.47 |
) |
| |
|
|
|
|
Net loss (income)
per common share from discontinued operations - basic
and diluted
|
$ |
(0.00 |
) |
|
$ |
0.00 |
|
| |
|
|
|
|
Net loss per common
share - basic and diluted
|
$ |
(0.30 |
) |
|
$ |
(0.47 |
) |
| |
|
|
|
|
Weighted average number of
shares outstanding – basic
and diluted |
|
9,604 |
|
|
|
7,106 |
|
|
VeriChip Corporation
Unaudited Condensed Consolidated Balance
Sheet Data
(Amounts in thousands)
|
|
|
|
|
|
| |
March 31,
|
|
December 31,
|
| |
|
2008
|
|
|
|
2007
|
|
| |
|
|
|
|
Assets
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash |
$ |
4,935 |
|
|
$ |
7,221 |
|
|
Accounts receivable, net of
allowance for
doubtful accounts of $229 (2007
- $144) |
|
|
|
| |
5,395 |
|
|
|
5,243 |
|
|
Inventories, net of allowance
|
|
2,604 |
|
|
|
2,335 |
|
|
Prepaid expenses and other
current assets |
|
2,130 |
|
|
|
1,301 |
|
|
Deferred tax asset
|
|
- |
|
|
|
216 |
|
|
Current assets from
Discontinued operations |
|
19 |
|
|
|
202 |
|
|
Total Current Assets
|
|
15,083 |
|
|
|
16,518 |
|
| |
|
|
|
|
Equipment, net of accumulated
depreciation |
|
875 |
|
|
|
952 |
|
|
Intangible assets, net of
accumulated amortization |
|
16,304 |
|
|
|
16,752 |
|
|
Goodwill |
|
15,776 |
|
|
|
15,776 |
|
|
Total Assets
|
$ |
48,038 |
|
|
$ |
49,998 |
|
| |
|
|
|
|
Liabilities and
Stockholders’ Equity
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Bank indebtedness
|
$ |
- |
|
|
$ |
1,515 |
|
|
Accounts payable
|
|
1,086 |
|
|
|
1,855 |
|
|
Accrued expenses and other
current liabilities |
|
3,704 |
|
|
|
4,237 |
|
|
Note payable to stockholder,
current portion |
|
- |
|
|
|
2,167 |
|
|
Note payable |
|
8,000 |
|
|
|
- |
|
|
Current liabilities from
Discontinued operations |
|
- |
|
|
|
71 |
|
|
Total Current Liabilities
|
|
12,790 |
|
|
|
9,845 |
|
|
Deferred tax liability
|
|
3,693 |
|
|
|
3,809 |
|
|
Note payable to stockholder,
less current portion |
|
7,595 |
|
|
|
10,753 |
|
|
Total Liabilities
|
|
24,078 |
|
|
|
24,407 |
|
| |
|
|
|
| |
|
|
|
|
Stockholders’
Equity:
Capital stock: |
|
|
Preferred stock: Authorized
5,000 shares of $0.001 par value; none outstanding
|
|
- |
|
|
|
- |
|
|
Common stock:
|
|
|
|
|
Authorized 40,000 shares $0.01
par value; 11,007 and 10,144 shares issued and outstanding
at March 31, 2008 and December 31, 2007, respectively
|
|
| |
|
|
| |
110 |
|
|
|
101 |
|
|
Additional paid-in capital
|
|
55,689 |
|
|
|
54,486 |
|
|
Accumulated deficit
|
|
(31,802 |
) |
|
|
(28,959 |
) |
|
Accumulated other
comprehensive loss – foreign
currency translation |
|
(37 |
) |
|
|
(37 |
) |
|
Total Stockholders’
Equity |
|
23,960 |
|
|
|
25,591 |
|
|
Total Liabilities and
Stockholders’ Equity
|
$ |
48,038 |
|
|
$ |
49,998 |
|
|
VeriChip Corporation
Unaudited Segment Reporting Data
(Amounts in thousands)
|
|
|
| |
|
Three Months Ended
March 31, 2008
|
| |
|
Healthcare
Security |
|
|
|
|
|
|
|
|
| |
|
|
Industrial
|
|
Implantable
|
|
Corporate
|
|
Total
|
| |
|
|
|
|
|
|
|
|
|
|
|
Product revenue |
|
$ |
6,474 |
|
|
$ |
1,575 |
|
$ |
3 |
|
|
$ |
- |
|
|
$ |
8,052 |
|
|
Service revenue |
|
|
150 |
|
|
|
396 |
|
|
- |
|
|
|
- |
|
|
|
546 |
|
|
Total revenue
|
|
|
6,624
|
|
|
|
1,971
|
|
|
3
|
|
|
|
-
|
|
|
|
8,598
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
3,865
|
|
|
|
1,172
|
|
|
3
|
|
|
|
-
|
|
|
|
5,040
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
|
2,209 |
|
|
|
653 |
|
|
1,312 |
|
|
|
1,936 |
|
|
|
6,110 |
|
|
Research and development
|
|
|
641 |
|
|
|
298 |
|
|
162 |
|
|
|
- |
|
|
|
1,101 |
|
|
Total operating
expenses |
|
|
2,850
|
|
|
|
951
|
|
|
1,474
|
|
|
|
1,936
|
|
|
|
7,211
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
$ |
1,015 |
|
|
$ |
221 |
|
$ |
(1,471 |
) |
|
$ |
(1,936 |
) |
|
$ |
(2,171 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$ |
1,015 |
|
|
$ |
221 |
|
$ |
(1,471 |
) |
|
$ |
(1,936 |
) |
|
$ |
(2,171 |
) |
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