Veriteq (DIGA) 8-K Digital Angel Reports Second Quarter 2010 Financial Results

Exhibit 99.1

DIGITAL ANGEL REPORTS SECOND QUARTER 2010 FINANCIAL RESULTS

SO. ST. PAUL, MN, August 12, 2010 — Digital Angel (NASDAQ: DIGA), an advanced technology company in the field of animal identification and emergency identification solutions, today announced financial results for the period ended June 30, 2010.

Total revenues for the second quarter of 2010 were $8.7 million, compared to $10.3 million in the same period last year. The decline in revenues was primarily attributable to the emergency identification segment, where sales declined from $2.8 million in the second quarter of 2009 to $1.3 million this year. Revenues from the animal identification segment, Digital Angel’s core business, were $7.4 million this year compared to $7.5 million in the second quarter of 2009.

For the quarter, the Company reported a loss from continuing operations of $3.0 million or ($0.10) per share, basic and diluted, compared to a loss from continuing operations of $2.7 million or ($0.15) per share, basic and diluted, for the same period a year ago. Excluding quarterly restructuring charges of $1.1 million for severance costs related to corporate downsizing in 2010 and $0.3 million in 2009, the loss from continuing operations in the second quarter was $1.9 million in 2010 compared to $2.4 million in 2009. Cost cutting measures, supply chain improvements, and overhead reductions are primarily responsible for this improvement.

Commenting on the results, Mr. Joe Grillo, Digital Angel’s CEO, said, “In the second quarter, regulatory developments in the EU, expansion into new markets, and key customer wins in the animal identification markets, have positioned Destron Fearing to increase sales in the second half of 2010. Additionally, we continue to make progress towards our goal of turning around Digital Angel’s operations. The elimination of an unneeded corporate structure will further improve our cost structure and overhead, while allowing us to take advantage of additional opportunities in our core business of animal identification.”

Results Conference Call

The Company will host a conference call to discuss the results at 10:00 a.m. ET today. Interested participants should call (877) 470-1843 within the United States and Canada, or (706) 643-9051 internationally. Please use access code 92504199. Alternatively, a simultaneous webcast of the live conference call can be accessed through Digital Angel’s website atwww.digitalangel.com.

For persons unable to participate in either the conference call or the webcast, a digitized replay will be available from today at approximately 1:00 p.m. ET to September 12, 2010 at 11.59 p.m. ET. For the telephonic replay, dial (800) 642-1687 (USA/Canada) or (706) 645-9291 (international), using access code 92504199. The webcast replay can also be accessed through Digital Angel’s website atwww.digitalangel.com.

Non-GAAP Financial Measure

To supplement the Company’s preliminary consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company provides EBITDA, which is a non-GAAP financial measure. EBITDA is defined as operating income (loss) plus depreciation and amortization as presented in the Company’s Preliminary Consolidated Statement of Operations. 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 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. 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 depreciation and amortization, and comparisons with historical results, see the attached tables showing the detailed reconciliation of results reported under GAAP to non-GAAP results for the three-month and six-month periods ended June 30, 2010 and 2009.

About Digital Angel

Digital Angel (NASDAQ: DIGA) is an advanced technology company in the field of animal identification and emergency identification solutions. Digital Angel’s products are utilized around the world in such applications as pet identification, using its patented, FDA-approved implantable microchip; livestock identification and herd management using visual and radio frequency identification (RFID) ear tags; and global positioning systems (GPS) search and rescue beacons for army, navy and air force applications worldwide. For further information please visitwww.digitalangel.com.

This press release contains certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Forward-looking statements included in this press release include, without limitation, future expectations about our financial performance; our ability to streamline our operations and drive our business towards profitability; and our expectations for the success of and cost savings resulting from our restructuring plan. These forward-looking statements are based on the Company’s current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions. Among the important factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements are our ability to successfully implement our business strategy and restructuring plan; uncertainty as to our working capital requirements over the next 12 to 24 months; our ability to successfully obtain the necessary working capital to meet the operating needs of our businesses; our ability to maintain compliance with the covenants of our credit facilities; the degree of success we have in leveraging our brand reputation; our ability to become a major player in the food source traceability and safety arena; our ability to successfully develop survival and emergency radios for military uses; our reliance on third-party dealers and distributors to successfully market and sell our products; our ability to defend against costly product liability claims and claims that our products infringe the intellectual property rights of others; our ability to comply with current and future regulationsrelating to our businesses; our inability to meet all applicable Nasdaq Capital Market requirements; and our ability to maintain proper and effective internal accounting and financial controls. Additional information about these and other factors that could affect the Company’s businesses is set forth in the Company’sForm 10-K under the caption “Risk Factors” filed with the Securities and Exchange Commission (“SEC”) on April 1, 2010, and subsequent filings with the SEC. 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.

## TABLES TO FOLLOW ##

DIGITAL ANGEL CORPORATION AND SUBSIDIARIES
Preliminary
Consolidated Balance Sheets Data
(in thousands, except par values)

	June 30,		December 31,
	2010		2009
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	2,903	$	1,895
Restricted cash		—		202
Accounts receivable, net		6,160		6,370
Note receivable		99		450
Inventories		9,127		8,980
Other current assets		2,412		2,064
Current assets of discontinued operations		1,424		3,735
Total current assets		22,125		23,696
Property and equipment, net		6,068		6,998
Goodwill and intangibles, net		13,910		14,790
Note receivable		347		596
Other assets, net		791		599
Other assets of discontinued operations		—		365
Total assets	$	43,241	$	47,044
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable and current maturities of long-term debt	$	6,671	$	9,297
Accounts payable		7,395		7,905
Advances from factors		1,229		1,240
Accrued expenses		6,291		6,580
Deferred gain on sale		1,600		960
Deferred revenue		762		548
Current liabilities of discontinued operations		2,345		2,734
Total current liabilities		26,293		29,264
Long-term debt and notes payable		226		392
Other liabilities		1,688		1,445
Total liabilities		28,207		31,101
Total stockholders’ equity		15,034		15,943
Total liabilities and stockholders’ equity	$	43,241	$	47,044

DIGITAL ANGEL CORPORATION AND SUBSIDIARIES
Preliminary
Consolidated Statements of Operations Data
(in thousands, except per share data)

	For the Three Months
	Ended June 30,
	2010			2009
	(Unaudited)			(Unaudited)
Revenue	$	8,678		$	10,297
Cost of sales		5,465			6,354
Gross profit		3,213			3,943
Selling, general and administrative expenses		4,708			5,567
Research and development expenses		235			263
Restructuring, severance and separation expenses		1,074			313
Operating loss		(2,804	)		(2,200	)
Interest and other income (expense), net		117			114
Interest expense		(318	)		(541	)
Loss from continuing operations before income tax provision		(3,005	)		(2,627	)
Provision for income taxes		(5	)		(52	)
Loss from continuing operations		(3,010	)		(2,679	)
Income from discontinued operations		1,240			1,786
Net loss		(1,770	)		(893	)
Loss attributable to the noncontrolling interest, continuing operations		16			230
Income attributable to the noncontrolling interest, discontinued operations		(18	)		(247	)
Net loss attributable to Digital Angel Corporation	$	(1,772	)	$	(910	)
(Loss) income per common share — basic and diluted
Loss from continuing operations	$	(0.10	)	$	(0.15	)
Income from discontinued operations		0.04			0.10
Net loss	$	(0.06	)	$	(0.05	)

DIGITAL ANGEL CORPORATION AND SUBSIDIARIES
Preliminary
Consolidated Statements of Operations Data
(in thousands, except per share data)

	For the Six Months
	Ended June 30,
	2010			2009
	(Unaudited)			(Unaudited)
Revenue	$	19,592		$	22,726
Cost of sales		11,805			14,067
Gross profit		7,787			8,659
Selling, general and administrative expenses		9,768			11,681
Research and development expenses		509			568
Restructuring, severance and separation expenses		1,215			313
Operating loss		(3,705	)		(3,903	)
Interest and other (expense) income, net		(355	)		135
Interest expense		(671	)		(1,068	)
Loss from continuing operations before income tax provision		(4,731	)		(4,836	)
Provision for income taxes		(15	)		(56	)
Loss from continuing operations		(4,746	)		(4,892	)
Income from discontinued operations		1,860			2,793
Net loss		(2,886	)		(2,099	)
Loss attributable to the noncontrolling interest, continuing operations		29			233
Income attributable to the noncontrolling interest, discontinued operations		(25	)		(262	)
Net loss attributable to Digital Angel Corporation	$	(2,882	)	$	(2,128	)
(Loss) income per common share — basic and diluted
Loss from continuing operations	$	(0.17	)	$	(0.28	)
Income from discontinued operations		0.07			0.16
Net loss	$	(0.10	)	$	(0.12	)

DIGITAL ANGEL CORPORATION AND SUBSIDIARIES
Preliminary
Reconciliation to Non-GAAP Financial Information
(in thousands) (unaudited)

	For the Three Months
	Ended June 30,
	2010			2009
Operating loss	$	(2,804	)	$	(2,200	)
Depreciation and amortization		785			919
EBITDA		(2,019	)		(1,281	)
Restructuring, severance and separation expenses		1,074			313
Adjusted EBITDA1	$	(945	)	$	(968	)

¹ Adjusted EBITDA is regular EBITDA with the restructuring, severance and separation expenses backed out.

DIGITAL ANGEL CORPORATION AND SUBSIDIARIES
Preliminary
Reconciliation to Non-GAAP Financial Information
(in thousands) (unaudited)

	For the Six Months
	Ended June 30,
	2010			2009
Operating loss	$	(3,705	)	$	(3,903	)
Depreciation and amortization		1,634			1,917
EBITDA		(2,071	)		(1,986	)
Restructuring, severance and separation expenses		1,215			313
Adjusted EBITDA1	$	(856	)	$	(1,673	)

¹ Adjusted EBITDA is regular EBITDA with the restructuring, severance and separation expenses backed out.

KCSA Strategic Communications
Todd Fromer / Rob Fink
212-896-1215 / 212-896-1236
digitalangel@kcsa.com