Apparently VeriChip (of Digital Angel fame) is having difficulties. Digital Angel / VeriChip are behind much of the big push for branding humans and other species with RFID tracking devices as with NAIS. As one intelligence source put it this means there may still be hope for the human race.
VeriChip to Place Implantable Division on Block Once the RFID systems provider completes the recently announced sale of its Xmark subsidiary, it plans to sell the rest of its assets.
May 20, 2008 — VeriChip Corp., a provider of RFID systems for health-care and asset-tracking applications, has hired investment banking firm Kaufman Bros. to assist in the sale of its VeriMed Health Link business, as well as the possible sale of the entire company.
Jay McKeage, VeriChip’s VP of business development, believes Kaufman will “shop the VeriMed business around widely,” and that if the VeriMed business sells, another buyer could purchase the remainder of the company, which would then be “a shell of a quoted company.” The buyer could then operate as a public company, he says, or “buy it and stop filing with the SEC.”
Last week, VeriChip announced a $45 million definitive stock purchase agreement with tool and security firm The Stanley Works for the sale of VeriChip’s wholly owned Canadian subsidiary, Xmark, which sells RFID-based products and services designed to help track infants in hospitals, as well as other patients and physical assets. The deal is currently pending approval from VeriChip shareholders, and is expected to be completed by midyear.
Applied Digital Solutions (doing business as Digital Angel) owns 48.2 percent of VeriChip’s stock, and has stated its intention to approve the Xmark deal. According to McKeage, the Xmark business has been “nicely profitable” to VeriChip, as well as for Digital Angel, and has generated cash flow that funds the other half of VeriChip’s operations—VeriMed Health Link. “That [VeriMed] business has a substantial cash burn,” he says, “so once Xmark is sold, [VeriMed] is not sustainable on its own.”
:
Last month, VeriChip rebranded its VeriMed system, renaming it Health Link, and launched a three-month advertising campaign to market its services directly to potential end users in southern Florida (see VeriChip Markets Its Implantable RFID Tags and Services Direct to Consumers). According to Scott Silverman, VeriChip’s CEO and chairman, the initiative included a partnership with hearing care provider HearUSA, with a goal of signing up 1,000 new customers.
:
After VeriChip went public in February (see VeriChip Launches IPO), VeriTrace generated the first revenue for the company’s implantable division. And in its financial report for the first quarter of 2008, the Delray Beach, Fla., firm indicated that its losses shrank. It lost $2.8 million, or 30 cents per share, on revenue of $8.6 million. In the prior-year quarter, it lost $3.3 million, or 47 cents a share, on revenue of $7.1 million. What’s more, its gross profit was up by 5.4 percent.VeriChip’s implantable business, however, only generated $3,000 in revenue in the quarter ending March 31, 2008, during which the company saw a $1.9 million loss. According to a press statement released by Stanley, Xmark generates annual revenues in excess of $30 million, so without that revenue, VeriChip’s implantable business would be unsustainable.
When the Xmark sale is complete, VeriChip plans to use the $45 million from Stanley to pay outstanding debt, then utilize $15 million of the remaining $21.4 million to pay shareholders a special dividend. If the firm sells the VeriMed business or the whole of VeriChip, it plans to propose a second, special dividend to its stockholders consisting of all remaining distributable cash then held by VeriChip.
Privacy advocates have long complained that VeriChip’s implantable tag could put consumers’ personal privacy at risk, proposing that the tags could be read without a carrier’s knowledge. A news report released last fall, linking implanted RFID transponders to tumors in lab mice, caused additional public relations hurdles for the company (see VeriChip Defends the Safety of Implanted RFID Tags).
-RFIDJournal
If you’re looking to get in on the ground floor of a flailing industry now is the time. Oh, my but how the mighty are falling…
Hat tip to Mary.