Applied Digital Reports Second Quarter Financial Results for 2005; Revenue Increases From Digital Angel and VeriChip Corporation Drive Margin Expansion.DELRAY BEACH Delray Beach, resort city (1990 pop. 47,181), Palm Beach co., SE Fla., on the Atlantic coast; settled 1895, inc. 1911. Mostly residential, Delray Beach is also the trade center for a citrus-fruit and vegetable-growing region. , Fla. -- Fourth graph, second sentence of release dated Aug. 4, 2005 should read: Loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , after the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of preferred stock beneficial conversion feature, was $(3.4) million and $(2.5) million, or $(0.06) and $(0.05) per basic share, for the second quarters of 2005 and 2004, respectively (sted Loss from continuing operations, after the deduction of preferred stock dividends and accretion of preferred stock beneficial conversion feature, was $(4.5) million and $(2.5) million, or $(0.07) and $(0.05) per basic share, for the second quarters of 2005 and 2004, respectively). Fifth graph, second sentence should read: Loss from continuing operations, after the deduction of preferred stock dividends and accretion of preferred stock beneficial conversion feature, was $(1.8) million and $(2.8) million, or $(0.03) and $(0.06) per basic share, for the six-months ended June June: see month. 30, 2005 and 2004, respectively. (sted Loss from continuing operations, after the deduction of preferred stock dividends and accretion of preferred stock beneficial conversion feature, was $(2.9) million and $(2.8) million, or $(0.05) and $(0.06) per basic share, for the six-months ended June 30, 2005 and 2004, respectively). Financial tables were also corrected. The corrected release reads: APPLIED DIGITAL REPORTS SECOND QUARTER FINANCIAL RESULTS FOR 2005 REVENUE INCREASES FROM DIGITAL ANGEL AND VERICHIP CORPORATION VeriChip Corporation, a wholly owned subsidiary of Applied Digital (Nasdaq: ADSX), markets a line of Radio Frequency Identification (RFID) Devices (including VeriChip) used in security, financial, emergency identification, and other applications. DRIVE MARGIN EXPANSION Applied Digital (Nasdaq: ADSX ADSX Applied Digital Solutions, Inc. (stock symbol) ), a leading provider of identification and security technology, today reported financial results for the second-quarter ended June 30, 2005. The Company's consolidated financial results include the balance sheets, operating results and cash flows of its majority-owned subsidiaries majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. , Digital Angel Corporation (AMEX AMEX See: American Stock Exchange : DOC See doc file and docs. 1. Doc - Directed Oc 2. doc - /dok/ Common spoken and written shorthand for "documentation". Often used in the plural "docs" and in the construction "doc file" (i.e. documentation available on-line). ) and InfoTech USA, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). : IFTH IFTH Institut Français Textile-Habillement (French Textile and Apparel Institute) ). Revenue for the second quarter of 2005 was $29.4 million, a 12% increase from $26.3 million in revenue in the second quarter of 2004. The increase in quarterly revenue was primarily attributable to increases at Digital Angel Corporation and to the additions of, and improvements with, the two acquired companies that are now part of VeriChip Corporation. Revenue for the six-months ended June 30, 2005 was $51.3 million, a decrease from the $52.8 million in revenue in the first half of 2004. This decrease in six-month revenue reflects a revenue decrease that occurred in the first quarter of 2005, which was primarily attributable to the termination of a low-margin contract between the Company's wholly-owned subsidiary, Government Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , Inc. and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Postal Service postal service, arrangements made by a government for the transmission of letters, packages, and periodicals, and for related services. Early courier systems for government use were organized in the Persian Empire under Cyrus, in the Roman Empire, and in medieval . Excluding the impact of this contract, revenue increased from 2004 to 2005. Gross profit increased to approximately $11.8 million in the second quarter of 2005 compared to approximately $7.2 million in the second quarter of 2004, and gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased to 40.1% in the second quarter of 2005 compared to gross profit margins of 27.4% in the second quarter of 2004. Gross profit increased to approximately $20.0 million in the six-months ended June 30, 2005 compared to approximately $15.3 million in the comparable 2004 period, and gross profit margins increased to 39% in the first half of 2005 compared to gross profit margins of 29% in the six-months ended June 30, 2004. Gross margin in both the second quarter and first six months of 2005 significantly improved as a result of a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mix of business, due primarily to increased sales of higher margin products from Digital Angel and VeriChip Corporation. The loss from continuing operations for the second quarter of 2005 was approximately $(1.5) million compared to a loss from continuing operations of $(2.5) million for the second quarter of 2004. Loss from continuing operations, after the deduction of preferred stock dividends and accretion of preferred stock beneficial conversion feature, was $(3.4) million and $(2.5) million, or $(0.06) and $(0.05) per basic share, for the second quarters of 2005 and 2004, respectively. Included in the results for the second quarters of 2005 and 2004 was a non-cash interest reduction of $0.8 million and $0.3 million, respectively, as a result of the quarter-to-quarter revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of certain of the Company's warrants. These warrants were issued to certain investors in connection with the repayment of IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) Credit, the Company's former lender. As a result of the warrants' being exchangeable into shares of the Digital Angel common stock owned by the Company, the warrants are required to be re-valued each reporting period. Fluctuations in the market price of Digital Angel's common stock result in increases/decreases in the value of the warrants, which are reflected in the Company's operating results as increases/reductions in interest expense. The warrants vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) on June 30, 2003 and expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on June 30, 2007. Income from continuing operations for the first half of 2005 was approximately $0.1 million compared to a loss from continuing operations of $(2.9) million for the first half of 2004. Loss from continuing operations, after the deduction of preferred stock dividends and accretion of preferred stock beneficial conversion feature, was $(1.8) million and $(2.8) million, or $(0.03) and $(0.06) per basic share, for the six-months ended June 30, 2005 and 2004, respectively. Included in the results for the first half of 2005 and 2004 was an interest reduction of $3.2 million and $0.9 million, respectively, as a result of the quarter-to-quarter revaluation of the warrants discussed above. Also, included in the results for the first half of 2005 and 2004 was income of $0.9 million and $0.1 million, respectively, attributable primarily to the increase in the Company's ownership percentage of Digital Angel during each of these periods. Revenue for VeriChip Corporation was $3.0 million for the three- and six-months ended June 30, 2005. On a pro-forma basis, (i.e. as if the acquisitions of VeriChip A tamper-proof identification device from VeriChip Corporation (Division of Applied Digital Solutions), Delray Beach, FL (www.adsx.com) that is implanted under the skin of a person for medical or security purposes. Inc., formerly eXI Wireless Since 1980, eXI Wireless Systems has developed and manufactured Radio Frequency IDentification (RFID) wireless systems. eXI's RFID products include HALO, RoamAlert, and Assetrac. eXI Wireless was acquired by VeriChip Corporation in April 2005. , Inc. and Instantel Inc., which occurred on March 31, 2005 and June 10, 2005, respectively, had occurred as of the beginning of the respective second quarters of 2005 and 2004) VeriChip Corporation's revenue for the second quarter of 2005 would have been approximately $6.4M compared to pro-forma revenue of approximately $5.0 million for the second quarter of 2004, representing a 28% growth rate. Commenting on the results, Scott R. Silverman Silverman is the surname of:
Some of the highlights of the second quarter included: --Completion of the acquisition of Instantel Inc. This transaction enhances the Company's product offerings and solidifies VeriChip Corporation as the first RFID (Radio Frequency IDentification) A data collection technology that uses electronic tags for storing data. The tag, also known as an "electronic label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna. company for people. --Integration of VeriChip Corporation's first acquisition, eXI Wireless, with the implantable VeriChip microchip (1) Another term for a microminiaturized integrated circuit (a "chip"). (2) To insert an RFID tag beneath the skin of an animal. It is expected that some day, humans will be microchipped. business, including marketing and operational efforts. --Appointment of Tommy Thompson For other people with similar names, see . Tommy George Thompson (born November 19, 1941), a United States politician, was the 7th U.S. Secretary of Health and Human Services and the 42nd Governor of Wisconsin. , former Secretary of Health and Human Services Noun 1. Secretary of Health and Human Services - the person who holds the secretaryship of the Department of Health and Human Services; "the first Secretary of Health and Human Services was Patricia Roberts Harris who was appointed by Carter" , to the Board of Directors of VeriChip Corporation. --Expansion of VeriChip Corporation's hospital infrastructure both through the eXI Wireless and Instantel acquisitions and the efforts to have hospitals agree to implement the VeriChip identification system. As of the end of July July: see month. , five hospitals have agreed to implement readers in their emergency rooms. --Organic growth of revenue at Digital Angel. Due to strength in its Animal Applications and GPS and Radio Communications businesses, Digital Angel's total revenue for the second quarter rose 46% to $14.9 million from $10.1 million in last year's second quarter. --Improved gross profit and gross profit margins. The Company will host a conference call today at 4:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . Scott R. Silverman, Applied Digital's Chairman and Chief Executive Officer, Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. E. Krawitz, Executive Vice President and General Counsel, Evan C. McKeown McKeown is a surname. People
There will be a playback Playback could mean:
This call is being webcast and can be accessed at Applied Digital's Web site at www.adsx.com until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 4, 2005. The conference call can be found under the subheadings, "Investor Relations Investor relations The process by which the corporation communicates with its investors. " and then "Audio Archives." About Applied Digital -- "The Power of Identification Technology" Applied Digital develops innovative identification and security products for consumer, commercial, and government sectors worldwide. The Company's unique and often proprietary products provide identification and security systems for people, animals, the food supply, government/military arena, and commercial assets. Included in this diversified diversified (di·verˑ·s product line are RFID applications, end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. food safety systems, GPS/Satellite communications, and telecomm and security infrastructure, positioning Applied Digital as the leader in identification technology. Applied Digital is the owner of a majority position in Digital Angel Corporation (AMEX:DOC). Statements about the Company's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time, and the Company's actual results could differ materially from expected results. The Company undertakes no obligation to update forward-looking statements to reflect subsequently occurring events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(In thousands, except par value)
Assets
June 30, December 31,
2005 2004
--------------------------
Current Assets (unaudited)
Cash and cash equivalents $ 22,089 $ 30,839
Restricted cash - 327
Accounts receivable and unbilled
receivables (net of allowance for
doubtful accounts of $911 in 2005 and
$810 in 2004) 20,321 16,553
Inventories 12,031 8,115
Notes receivable 330 621
Other current assets 4,449 2,237
----------------------------------------------------------------------
Total Current Assets 59,220 58,692
Property And Equipment, net 10,672 7,864
Notes Receivable, net 249 263
Goodwill, net 96,350 68,194
Other Assets, net 15,599 5,175
----------------------------------------------------------------------
$ 182,090 $ 140,188
======================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable and current maturities of
long-term debt $ 6,958 $ 2,044
Accounts payable 13,508 9,318
Other accrued expenses 17,341 20,811
Dividends payable 1,459 -
Net liabilities of Discontinued Operations 5,573 5,495
----------------------------------------------------------------------
Total Current Liabilities 44,839 37,668
Long-Term Debt and Notes Payable 3,525 2,288
Other Long-Term Liabilities 6,069 5,075
----------------------------------------------------------------------
Total Liabilities 54,433 45,031
----------------------------------------------------------------------
Commitments And Contingencies
----------------------------------------------------------------------
Minority Interest 53,504 54,313
----------------------------------------------------------------------
Redeemable Preferred Stock - Series D 11,003 -
----------------------------------------------------------------------
Preferred Stock, Common Stock and Other
Stockholders' Equity
Preferred shares: Authorized 5,000 shares
in 2005 and 2004 of $10 par value;
special voting, no shares issued or
outstanding in 2005 and 2004, Class B
voting, no shares issued or outstanding
in 2005 and 2004 - -
Common shares: Authorized 125,000 shares
in 2005 and 2004, of $.01 par value;
63,425 shares issued and 63,325 shares
outstanding in 2005 and 56,541 shares
issued and 56,441 shares outstanding in
2004 634 565
Common and preferred additional paid-in
capital 491,850 471,271
Accumulated deficit (431,088) (431,222)
Common stock warrants 4,239 2,882
Treasury stock (carried at cost, 100
shares in 2005 and 2004) (1,777) (1,777)
Accumulated other comprehensive income 11 402
Notes received for shares issued (719) (1,277)
----------------------------------------------------------------------
Total Preferred Stock, Common Stock and
Other Stockholders' Equity 63,150 40,844
----------------------------------------------------------------------
$ 182,090 $ 140,188
======================================================================
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(In thousands, except per share data)
(Unaudited)
For The For The
Three-Months Six-Months
Ended June 30, Ended June 30,
---------------------------------------
2005 2004 2005 2004
---------------------------------------
Product revenue $ 25,562 $ 22,459 $ 43,695 $ 45,497
Service revenue 3,833 3,878 7,638 7,342
----------------------------------------------------------------------
Total revenue 29,395 26,337 51,333 52,839
Cost of products sold 15,640 17,320 27,824 34,058
Cost of services sold 1,956 1,850 3,511 3,475
----------------------------------------------------------------------
Gross profit 11,799 7,167 19,998 15,306
Selling, general and
administrative expense 12,170 8,373 21,076 16,805
Research and development 1,284 1,140 2,584 2,065
Depreciation and amortization 1,028 667 1,454 980
Interest and other income (872) (83) (1,183) (581)
Interest expense reduction (595) (139) (2,755) (449)
----------------------------------------------------------------------
Loss from continuing operations
before taxes, minority
interest and gain (loss)
attributable to capital
transactions of subsidiary (1,216) (2,791) (1,178) (3,514)
Provision for income taxes (55) (27) (42) (119)
----------------------------------------------------------------------
Loss from continuing operations
before minority interest and
gain (loss) attributable to
capital transactions of
subsidiary (1,271) (2,818) (1,220) (3,633)
Minority interest 186 424 465 690
Net gain (loss) on capital
transactions of subsidiary 32 196 411 (1,767)
Gain (loss) attributable to
changes in minority interest
as a result of capital
transactions of subsidiary (422) (259) 482 1,891
----------------------------------------------------------------------
(Loss) income from continuing
operations (1,475) (2,457) 138 (2,819)
Loss from discontinued
operations - (525) - (790)
Change in estimate on loss on
disposal of discontinued
operations and operating
losses during the phase out
period - 13 (4) 2,115
----------------------------------------------------------------------
Net (loss) income (1,475) (2,969) 134 (1,494)
Preferred stock dividends (1,500) - (1,500) -
Accretion of beneficial
conversion feature of
Redeemable Preferred Stock -
series D (474) - (474) -
----------------------------------------------------------------------
Net loss available to common
stockholders $ (3,449) $ (2,969) $ (1,840) $ (1,494)
======================================================================
Loss per common share - basic
Loss from continuing
operations $ (0.06) $ (0.05) $ (0.03) $ (0.06)
(Loss) income from
discontinued operations - (0.01) - 0.03
----------------------------------------------------------------------
Net loss per common share -
basic $ (0.06) $ (0.06) $ (0.03) $ (0.03)
======================================================================
Loss per common share - diluted
Loss from continuing
operations $ (0.06) $ (0.05) $ (0.04) $ (0.06)
(Loss) income from
discontinued operations - (0.01) - 0.03
----------------------------------------------------------------------
Net loss per common share -
diluted $ (0.06) $ (0.06) $ (0.04) $ (0.03)
======================================================================
Weighted average number of
common shares outstanding -
basic 62,435 50,855 59,668 49,398
Weighted average number of
common shares outstanding -
diluted 62,736 50,855 59,819 49,398
======================================================================
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