Veriteq (DIGA) 8-K Results of Operations and Financial Condition

Exhibit 99.1

DIGITAL ANGEL ANNOUNCES
PRELIMINARY FOURTH QUARTER AND FISCAL YEAR 2008 FINANCIAL RESULTS
Company achieves $1.5 million cash flow from continuing operations
Maintains steady revenue base in difficult operating environment

SO. ST. PAUL, MN (March 12, 2009) — Digital Angel (NASDAQ: DIGA), an advanced technology company in the field of animal identification and emergency identification solutions, today announced preliminary financial results for its fourth quarter and fiscal year ended December 31, 2008.

Joseph J. Grillo, Digital Angel’s Chief Executive Officer and President, commented, “Despite the extremely challenging operating environment in 2008 we managed to hold our revenues steady, and as a result of our company-wide reorganizational measures we achieved positive cash flow from operations, for the first time in many years.”

The financial results are shown below in the data tables.

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 (866) 393-5807 within the United States and Canada, or (706) 679-2276 internationally. Please use passcode 88702471.

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 2:00 p.m. ET to April 12 at 11.59 p.m. ET. For the telephonic replay, dial (800) 642-1687 (USA/Canada) or (706) 645-9291 (international), using access code 88702471. 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 full year and last three months of 2008 and the full year and last three months of 2007.

About Digital Angel

Digital Angel (www.digitalangel.com) 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 tracking using visual and radio frequency identification (RFID) ear tags; and global positioning systems (GPS) search and rescue beacons for use on aircraft, ships and boats, and by adventure enthusiasts.

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, those concerning the expected filing of the Company’s annual report onForm 10-K for the fiscal year ended December 31, 2008; the Company’s 4^th quarter and full year 2008 financial results that the Company expects to report in theForm 10-K; the opinion the Company’s independent registered public accounting firm will issue with respect to the Company; expectations that the announced preliminary financial results will be materially consistent with the final audited results to be reported onForm 10-K; future expectations in 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 successfully integrate the businesses of acquired companies; 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 the military and commercial 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 regulations relating 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 March 17, 2008, 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.

Contact:
Digital Angel
Jay McKeage
Phone: (651) 554-1564

TABLES FOLLOW

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

	For the year ended December 31,
	2008		2007
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,807	$	2,222
Restricted cash		—		90
Accounts receivable, net		10,945		16,143
Note receivable		450		—
Inventories		8,922		14,193
Deferred taxes		130		180
Other current assets		1,530		2,235
Current assets of discontinued operations		5		23,503
Total current assets		23,789		58,566
Property and equipment, net		8,834		12,014
Goodwill and intangibles, net		30,214		57,367
Note receivable		1,015		—
Other assets, net		322		3,960
Other assets of discontinued operations		32		35,729
Total Assets	$	64,206	$	167,636
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable and current maturities of long-term debt	$	8,581	$	14,231
Accounts payable		9,704		13,907
Advances from factors		1,474		1,992
Accrued expenses		9,133		9,839
Deferred revenue		840		804
Current liabilities of discontinued operations		10		13,866
Total current liabilities		29,742		54,639
Long-term debt and notes payable		6,943		17,217
Deferred taxes		2,593		2,229
Other liabilities		2,223		2,752
Other liabilities of discontinued operations		—		6,439
Total Liabilities		41,501		83,276
Commitments and contingencies
Minority interest — continuing operations		45		208
Minority interest — discontinued operations		—		13,157
Total Stockholders’ Equity		22,660		70,995
Total Liabilities and Stockholders’ Equity	$	64,206	$	167,636

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

	For the year ended December 31,
	2008			2007			2006
	(Unaudited)
Revenue	$	78,172		$	77,794		$	54,053
Cost of sales		51,850			48,963			31,779
Gross profit		26,322			28,831			22,274
Selling, general and administrative expenses		34,295			44,338			34,487
Research and development expenses		3,146			4,702			3,442
Restructuring, severance and separation expenses		3,678			—			—
Goodwill and asset impairments		35,467			4,632			—
Operating loss		(50,264	)		(24,841	)		(15,655	)
Gain on sale of assets		—			691			—
Interest and other income (expense), net		2,722			444			1,734
Interest expense		(10,892	)		(6,720	)		(3,076	)
Loss from continuing operations before taxes, minority interest and gains (losses) attributable to capital transactions of subsidiary		(58,434	)		(30,426	)		(16,997	)
Benefit (provision) for income taxes		165			(160	)		198
Loss from continuing operations before minority interest and gains (losses) attributable to capital transactions of subsidiary		(58,269	)		(30,586	)		(16,799	)
Minority interest		(122	)		8,011			2,368
Net (loss) gain on capital transactions of subsidiary		—			(629	)		322
(Loss) gain attributable to changes in minority interest as a result of capital transactions of subsidiary		—			(3,632	)		135
Loss from continuing operations		(58,391	)		(26,836	)		(13,974	)
Income (loss) from discontinued operations, net of income taxes of $0, $1,056 and $33		258			(5,184	)		(13,235	)
Net loss	$	(58,133	)	$	(32,020	)	$	(27,209	)
(Loss) income per common share — basic and diluted
Loss from continuing operations	$	(3.85	)	$	(3.11	)	$	(1.66	)
Income (loss) from discontinued operations		0.02			(0.60	)		(1.57	)
Net loss	$	(3.83	)	$	(3.71	)	$	(3.23	)

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

	For the quarter ended December 31,
	2008			2007
	(Unaudited)			(Unaudited)
Revenue	$	16,186		$	22,626
Cost of sales		11,863			15,358
Gross profit		4,323			7,268
Selling, general and administrative expenses		7,970			15,390
Research and development expenses		890			1,069
Restructuring, severance and separation expenses		1,344			—
Goodwill and asset impairments		4,958			4,632
Operating loss		(10,839	)		(13,823	)
Interest and other income (expense), net		1,308			151
Interest expense		(3,505	)		(1,889	)
Loss from continuing operations before taxes, minority interest and losses attributable to capital transactions of subsidiary		(13,036	)		(15,561	)
(Provision) benefit for income taxes		(273	)		298
Loss from continuing operations before minority interest and losses attributable to capital transactions of subsidiary		(13,309	)		(15,263	)
Minority interest		(1	)		4,309
Net loss on capital transactions of subsidiary		—			(432	)
Loss attributable to changes in minority interest as a result of capital transactions of subsidiary		—			(2,884	)
Loss from continuing operations		(13,310	)		(14,270	)
(Loss) income from discontinued operations		(135	)		1,420
Net loss	$	(13,445	)	$	(12,850	)
(Loss) income per common share — basic and diluted
Loss from continuing operations	$	(0.83	)	$	(1.60	)
(Loss) income from discontinued operations		(0.01	)		0.16
Net loss	$	(0.84	)	$	(1.44	)

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

	For the year ended December 31,
	2008			2007			2006
Operating loss	$	(50,264	)	$	(24,841	)	$	(15,655	)
Depreciation and amortization		4,434			2,606			1,996
EBITDA (earnings before interest, taxes, depreciation and amortization)	$	(45,830	)	$	(22,235	)	$	(13,659	)
Restructuring, severance and separation expenses1		5,141			—			—
Goodwill and asset impairments		35,467			4,632			—
Adjusted EBITDA2	$	(5,222	)	$	(17,603	)	$	(13,659	)

1	Restructuring, severance and separation expenses includes $1,463 of restructuring expense in cost of sales.
2	Adjusted EBITDA is regular EBITDA with the restructuring, severance and separation expenses and goodwill and asset impairment expenses backed out.

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

	For the quarter ended December 31,
	2008			2007
Operating income (loss)	$	(10,839	)	$	(13,823	)
Depreciation and amortization		676			728
EBITDA		(10,163	)		(13,095	)
Restructuring, severance and separation expenses		1,344			—
Goodwill and asset impairments		4,958			4,632
Adjusted EBITDA1	$	(3,861	)	$	(8,463	)

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