Digital Angel Corporation Announces 2006 Third Quarter, Nine-Month Results
November 09 2006 - 7:35AM
PR Newswire (US)
Special Committee of Board of Directors Concludes Its Strategic
Analysis Commenced in July, 2006 SO. ST. PAUL, Minn., Nov. 9
/PRNewswire-FirstCall/ -- Digital Angel Corporation (AMEX:DOC), an
advanced technology company in the field of rapid and accurate
identification, location tracking and condition monitoring of
high-value assets, today announced results for its third quarter
and nine months ended September 30, 2006. Revenue for the third
quarter of 2006 was $13.2 million and the net loss was $1.4 million
or $0.03 loss per share, compared to revenue of $13.8 million and a
net loss of $984,000 or $0.02 loss per share in the third quarter
of 2005. For the first nine months of 2006 revenue was $42.0
million and the net loss was $4.1 million, or a $0.09 loss per
share, compared to revenue of $42.0 million and a net loss of $2.4
million, or a $0.05 loss per share for the first nine months of
2005. Nine-month Animal Applications revenue was up 10.7 percent,
primarily reflecting increased companion pet sales to Schering
Plough which were up 77.0 percent over the same period last year.
Offsetting this increase were decreased sales of SARBE(TM) radios
reflecting the completion of the India contract in 2005 not offset
by similar SARBE orders this year. The final shipment to the Indian
government occurred in mid-2005. Digital Angel President and CEO
Kevin McGrath noted that, "Other than the SARBE business, our
revenue performance was excellent, particularly with regard to
livestock and companion pets. Moreover, with regard to SARBE, we
believe orders will accelerate as we approach the end of the year.
Overall, we expect the fourth quarter of 2006 and the year 2007
will show great improvement including the continuing expansion of
our global livestock business." The Special Committee of The Board
of Directors recently concluded its strategic analysis commenced in
July, 2006. The Committee reviewed a number of strategic
alternatives including but not limited to: * The sale of the
Company. * The purchase of the majority shareholder's shares and a
re-capitalization of the Company. * A merger/combination with the
Company's majority shareholder. At its current value, the Committee
concluded that none of the proposed transaction alternatives was
best for shareholders. Therefore, the Board has focused its
attention on management improving operating performance at the
top-line and at the bottom-line. The Board asked management to
focus its attention on reducing G&A expenses and stemming
operating losses so as to reach profitability in 2007. The
Company's Board of Directors may, without further public
announcement, resume the strategic alternative review process, or,
from time to time respond to follow-on opportunities created by the
Special Committee's recent activities. The highlights of the third
quarter and first nine months of 2006 included: * The Company was
the first animal tag manufacturer to have an electronic RFID
livestock tagging system approved by the U.S. Department of
Agriculture for use in the National Animal Identification System
(NAIS). * The Company was one of only two companies awarded a
contract from the U.S. Air Force to develop a new survival radio
for military aircraft to replace the URT33, which is carried in air
crew survival packs and sets off a distress signal in an emergency.
* The Company signed a distribution agreement with Digitaltronic to
begin selling electronic RFID livestock tags, antennas and readers
throughout Brazil, the largest beef exporting country in the world
and home to nearly 200 million cattle. * The Company expanded South
American operations by winning approval from the Chilean government
to begin selling visual and electronic RFID livestock tags. * The
Company added Rae Powell as Vice President of Sales and Marking for
the North American Animal Applications business, John Braley, a
former executive with the National Cattlemen's Beef Association, as
new Vice President of Business Development and Industry Relations,
and Patricia Petersen as General Counsel. Subsequent to the end of
the third quarter, are the following highlights: * The Company was
granted a U.S. patent for a syringe-implanted RFID microchip that
measures glucose concentration levels of diabetic patients. The
microchip could impact the 230 million people worldwide who suffer
from diabetes and will be marketed and distributed by Digital
Angel's sister company, VeriChip Corporation. * The Company
announced an aggressive initiative to target the more than $100
million equine market for identification products with the patented
Bio-Thermo(TM) temperature-sensing implantable microchip. Results
Conference Call A conference call for institutional investors to
discuss the results for the third quarter of fiscal year 2006 will
take place today at 11:00 am EST, and will be broadcast live over
the Internet. The live webcast may be accessed by visiting the
Company's site at http://www.digitalangelcorp.com/ or by going to
Precision IR's webcast site at http://www.vcall.com/. Web
participants are encouraged to go to the website at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. The online archive will be
available immediately and continue for seven days. About Digital
Angel Corporation Digital Angel Corporation develops and deploys
sensor and communications technologies that enable rapid and
accurate identification, location tracking, and condition
monitoring of high-value assets. Applications for the Company's
products include identification and monitoring of pets, fish,
livestock, poultry and humans through its patented implantable
microchips; location tracking and message monitoring of vehicles
and aircraft in remote locations through systems that integrate GPS
and geosynchronous satellite communications; and monitoring of
asset conditions such as temperature and movement, through advanced
miniature sensors. Digital Angel Corporation is majority-owned by
Applied Digital, Inc. (NASDAQ:ADSX). For more information about
Digital Angel, please visit http://www.digitalangelcorp.com/. The
statements in this press release that are not strictly historical,
are "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and are intended to be covered by the safe
harbors created by these sections. The forward-looking statements
are subject to risks and uncertainties and the actual results that
the Company achieves may differ materially from these
forward-looking statements due to such risks and uncertainties,
including, but not limited to, that Applied Digital Inc. owns 55.4
percent of the Company's common stock, that new accounting
pronouncements regarding expensing of share based compensation may
impact the Company's future results of operations, the Company may
continue to incur net losses, infringement by third parties on the
Company's intellectual property or development of substantially
equivalent proprietary technology by the Company's competitors
could negatively impact the Company's business, domestic and
foreign government regulation and other factors could impair the
Company's ability to develop and sell its products in certain
markets, the Company relies on sales to government contractors for
its animal identification and search and rescue beacon products,
and any decline in the demand by these customers for such products
could negatively affect the Company's business, the Company depends
on a single production arrangement for its patented
syringe-injectable microchips, and the loss of or any significant
reduction in the production could have an adverse effect on the
Company's business, technological change could cause the Company's
products to become obsolete, the loss of one of the Company's
principal customers could negatively impact the Company's net
revenue, the Company's earnings will decline if the Company writes
off goodwill and other intangible assets, options and warrants
outstanding and available for issuance may adversely affect the
market price of the Company's common stock, currency exchange rate
fluctuations could have an adverse effect on the Company's sales
and financial results, the Company depends on a small team of
senior management. A detailed statement of risks and uncertainties
is contained in the Company's reports to the Securities and
Exchange Commission, including in particular the Company's Form
10-K for the fiscal year ended December 31, 2005. Investors and
stockholders are urged to read this document carefully. The Company
can offer no assurances that any projections, assumptions or
forecasts made or discussed in this release will be met, and
investors should understand the risks of investing solely due to
such projections. The Company undertakes no obligation to revise
any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this press release.
Contact: Allen & Caron Inc Michael Lucarelli (investors)
212-691-8087 TABLES FOLLOW DIGITAL ANGEL CORPORATION AND
SUBSIDIARIES Selected Financial Data Condensed Balance Sheets (in
thousands) As of As of September December 30, 2006 31, 2005
(unaudited) Total Current Assets $25,862 $30,818 Property and
Equipment, net 9,227 8,602 Goodwill 51,210 48,491 Other Intangible
Assets, net 1,678 1,813 Other Assets, net 462 483 Total Assets
$88,439 $90,207 Total Current Liabilities $12,066 $12,401 Long Term
Debt and Notes Payable 3,498 3,656 Other Long Term Liabilities
1,520 1,086 Minority Interest 556 618 Stockholders' Equity 70,799
72,446 Total Liabilities and Stockholders' Equity $88,439 $90,207
Statement of Operations Data (in thousands, except per share
amounts) (unaudited) For the Three Months For the Nine Months Ended
Sept. 30, Ended Sept. 30, 2006 2005 2006 2005 Total Net Revenue
$13,191 $13,758 $41,969 $42,021 Gross Profit 5,640 5,936 17,478
18,571 Selling, General and Administrative Expenses 5,946 5,756
18,181 17,202 Research and Development Expenses 1,098 1,165 3,439
3,370 Operating Loss (1,404) (985) (4,142) (2,001) Net Loss (1,435)
(984) (4,145) (2,368) Net Loss per Common Share - Basic and Diluted
$(0.03) $(0.02) $(0.09) $(0.05) Weighted Average Common Shares
Outstanding - Basic and Diluted 44,516 43,847 44,238 43,811
Selected Cash Flow Data (in thousands) (unaudited) For the Nine
Months Ended September 30, 2006 2005 Net Cash Used in Operating
Activities $(3,986) $(1,618) Net Cash Used in Investing Activities
(2,891) (2,568) Net Cash Provided By (Used In) Financing Activities
674 (1,048) Net Decrease in Cash (6,178) (5,375) DATASOURCE:
Digital Angel Corporation CONTACT: Investors, Michael Lucarelli of
Allen & Caron Inc, +1-212-691-8087, , for Digital Angel
Corporation Web site: http://www.vcall.com/ Web site:
http://www.digitalangelcorp.com/
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