Exhibit 99.1
APPLIED DIGITAL SOLUTIONS REPORTS FOURTH QUARTER AND 2003
YEAR END FINANCIAL RESULTS
CURRENT YEAR AUDIT OPINION DOES NOT CONTAIN A "GOING CONCERN" EXPLANATION
PALM BEACH, FL- MARCH 15, 2004 - APPLIED DIGITAL SOLUTIONS, INC. (NASDAQ:
ADSX), an advanced technology development company, today released financial
results for the fourth quarter and year ended December 31, 2003. The
Company's consolidated financial results include the balance sheets,
operating results and cash flows of its majority owned subsidiaries, Digital
Angel Corporation (AMEX: DOC) and InfoTech USA, Inc., formerly SysComm
International Corporation (OTC: IFTH).
Fourth quarter revenue from continuing operations was $25.5 million,
representing a 17% increase compared with the $21.8 million for the
year-earlier period. For the three-months ended December 31, 2003, the
Company reported a loss from continuing operations of $25.2 million, or
$(0.06) per share, a sharp reduction from a loss from continuing operations
of $64.0 million, or $(0.23) per share for the three-months ended December
31, 2002. The loss from continuing operations in the fourth quarter of 2003
included $8.7 million of non-cash charges in connection with the redemption
of the IBM-related debentures.
Revenue from continuing operations in 2003 was $95.3 million, a 5% decrease
from the $100.2 million recorded in 2002. For 2003, the Company reported
income from continuing operations of $3.5 million, or $0.01 per share,
compared to a loss from continuing operations of $113.9 million, or $(0.42)
per share, for 2002.
"We ended 2003 a dramatically different Company than when we began the
year," said Scott R. Silverman, Applied Digital Solutions' Chairman and
Chief Executive Officer. "When we began the year, the Company's very
survival was in jeopardy. Today, we have begun to demonstrate that our model
of pairing technology with a complementary operating company that has
long-standing revenue works. We have executed on most of our key objectives
this year. We have paid off IBM, grown revenue of VeriChip and improved the
operating results of our subsidiaries significantly. While we did not see
that improvement at Digital Angel, we believe we have taken the necessary
measures at Digital Angel, through the installation of a new management
team, to position the Company to possibly capitalize on potential
opportunities in livestock tracking."
Some of the highlights of 2003 included:
o Improved Balance Sheet. The Company eliminated approximately $100
million in debt and increased stockholders' equity by over $68
million as a result of the Company's repayment of IBM.
o Current year audit opinion does not contain a "going concern"
explanation. The improved financial status of the Company, and
management's future plans, have overcome the need for the
Company's auditors to include a going concern explanation in the
auditors' opinion on our financial statements for the year ended
December 31, 2003. For the prior four years, the Company's
auditors' opinions contained "going concern" language.
o Sales of VeriChip Corporation Continue to Grow. During the fourth
quarter, revenues of VeriChip Corporation more than doubled versus
the previous quarter, increasing from $123,000 to $275,000.
"While we are pleased by these accomplishments, we know there are many new
challenges ahead of us," continued Mr. Silverman. "Our existence is no
longer in jeopardy, and with our businesses now on much more solid-footing,
we have the opportunity to create real value for our shareholders. This is
why I am pleased to announce today that we will effectuate a 1 for 10 stock
split with a record date of April 5, 2004. We do this not because we are
required to do so today by the Nasdaq, as we have until July to meet its
listing requirements, but because our businesses have matured to the extent
that we can now attract quality institutional investors seeking a company
that is capable of generating earnings in the future. Our improved capital
structure, now that we no longer have to issue shares to satisfy
pre-existing obligations to previous management or creditors, will allow
investors to evaluate the Company's prospects without fear that we will have
to issue equity under those adverse conditions. I am excited about the
prospects for 2004, as we now have all of the pieces in place, including the
right management team, capital structure and technology mix to pursue
sustainable, long-term value for our shareholders."
The Company will hold a conference call and webcast today at 10 a.m. ET. Mr.
Silverman, Evan McKeown, Chief Financial Officer, and Michael Krawitz,
General Counsel, will host the call. Interested participants should call
800-472-8309 when calling within the United States or 706-643-9561 when
calling internationally. Please reference Conference I.D. Number 6081841.
There will be a playback available until midnight, March 22, 2004. To listen
to the playback, please call 800-642-1687 when calling within the United
States or 706-645-9291 when calling internationally. Please use pass code
6081841 for the replay. This call is being webcast and can be accessed at
Applied Digital Solutions' web site at www.adsx.com until March 22, 2004.
About Applied Digital Solutions, Inc.
Applied Digital Solutions is an advanced technology development company that
focuses on a range of early warning alert, miniaturized power sources and
security monitoring systems combined with the comprehensive data management
services required to support them. Through its Advanced Wireless unit, the
Company specializes in security-related data collection, value-added data
intelligence and complex data delivery systems for a wide variety of end
users including commercial operations, government agencies and consumers.
For more information, visit the company's website at <http://www.adsx.com>.
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" 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
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.
- --------------------
Contact:
Investors:
CEOcast, Inc.
Ken Sgro or Ed Lewis 212-732-4300
kensgro@ceocast.com
edlewis@ceocast.com
Financial Data Tables Follow
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APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE)
ASSETS DECEMBER 31,
---------------------------------
2003 2002
---------------------------------
CURRENT ASSETS
Cash and cash equivalents $10,161 $5,818
Restricted cash 765 --
Accounts receivable and unbilled receivables
(net of allowance for doubtful accounts of $1,035 in 2003 and $1,263 in 2002) 14,531 16,548
Inventories 9,490 6,409
Notes receivable 1,658 2,801
Other current assets 2,803 2,920
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TOTAL CURRENT ASSETS 39,408 34,496
PROPERTY AND EQUIPMENT, NET 9,365 9,822
NOTES RECEIVABLE, NET 504 758
GOODWILL, NET 63,331 67,818
OTHER ASSETS, NET 1,654 4,339
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$114,262 $117,233
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable and current maturities of long-term debt $6,136 $81,879
Accounts payable 13,710 9,761
Accrued interest -- 10,149
Other accrued expenses 22,616 19,145
Put accrual 200 200
Net liabilities of Discontinued Operations 9,545 9,368
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TOTAL CURRENT LIABILITIES 52,207 130,502
LONG-TERM DEBT AND NOTES PAYABLE 2,860 3,346
OTHER LONG-TERM LIABILITIES 3,430 1,055
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TOTAL LIABILITIES 58,497 134,903
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COMMITMENTS AND CONTINGENCIES
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MINORITY INTEREST 23,029 18,422
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PREFERRED STOCK, COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY (DEFICIT)
Preferred shares: Authorized 5,000 shares in 2003 and 2002 of $10 par value;
special voting, no shares issued or outstanding in 2003 and 2002, Class B voting,
no shares issued or outstanding in 2003 and 2002 -- --
Common shares: Authorized 560,000 shares in 2003 and 435,000 shares in 2002 of
$.001 par value; 412,195 shares issued and 411,260 shares outstanding in 2003 and
285,069 shares issued and 284,134 shares outstanding in 2002 412 285
Additional paid-in capital 443,099 377,621
Accumulated deficit (413,923) (417,066)
Common stock warrants 5,650 5,650
Treasury stock (carried at cost, 935 shares in 2003 and 2002) (1,777) (1,777)
Accumulated other comprehensive income 206 31
Notes received for shares issued (931) (836)
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TOTAL PREFERRED STOCK, COMMON STOCK, AND OTHER STOCKHOLDERS' EQUITY(DEFICIT) 32,736 (36,092)
- ------------------------------------------------------------------------------------------------------------------------------
$114,262 $117,233
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See the accompanying notes to consolidated financial statements.
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------
2003 2002
----------------------------
PRODUCT REVENUE $78,649 $80,936
SERVICE REVENUE 16,618 19,276
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TOTAL REVENUE 95,267 100,212
COST OF PRODUCTS SOLD 59,921 59,239
COST OF SERVICES SOLD 6,526 9,323
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GROSS PROFIT 28,820 31,650
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 56,656 66,450
RESEARCH AND DEVELOPMENT EXPENSE 6,255 4,130
GAIN ON EXTINGUISHMENT OF DEBT (70,064) --
ASSET IMPAIRMENT 5,442 69,382
DEPRECIATION AND AMORTIZATION 1,754 3,929
(GAIN) LOSS ON SALES OF SUBSIDIARIES AND BUSINESS ASSETS 330 (132)
INTEREST AND OTHER INCOME (1,115) (2,356)
INTEREST EXPENSE 22,736 17,524
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INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES,
MINORITY INTEREST, LOSSES ATTRIBUTABLE TO CAPITAL
TRANSACTIONS OF SUBSIDIARY AND EQUITY IN NET LOSS OF AFFILIATE 6,826 (127,277)
PROVISION FOR INCOME TAXES 1,702 326
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INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST
LOSSES ATTRIBUTABLE TO CAPITAL TRANSACTIONS OF SUBSIDIARY AND
AND EQUITY IN NET LOSS OF AFFILIATE 5,124 (127,603)
MINORITY INTEREST (5,180) (18,474)
NET LOSS ON CAPITAL TRANSACTIONS OF SUBSIDIARY 244 2,437
LOSS ATTRIBUTABLE TO CHANGES IN MINORITY INTEREST AS A RESULT OF CAPITAL
TRANSACTIONS OF SUBSIDIARY 6,535 2,048
EQUITY IN NET LOSS OF AFFILIATE -- 291
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INCOME (LOSS) FROM CONTINUING OPERATIONS 3,525 (113,905)
INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES OF $0 IN 2001. -- --
CHANGE IN ESTIMATE ON LOSS ON DISPOSAL AND OPERATING LOSSES DURING THE
PHASE OUT PERIOD (382) 1,420
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NET INCOME (LOSS) 3,143 (112,485)
PREFERRED STOCK DIVIDENDS AND OTHER -- --
ACCRETION OF BENEFICIAL CONVERSION FEATURE OF REDEEMABLE PREFERRED
STOCK - SERIES C -- --
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NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $3,143 $(112,485)
==============================================================================================================
EARNINGS (LOSS) PER COMMON SHARE - BASIC
INCOME (LOSS) FROM CONTINUING OPERATIONS $0.01 $(0.42)
(LOSS) INCOME FROM DISCONTINUED OPERATIONS -- --
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NET INCOME (LOSS) PER COMMON SHARE - BASIC $0.01 $(0.42)
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EARNINGS (LOSS) PER COMMON SHARE - DILUTED
INCOME (LOSS) FROM CONTINUING OPERATIONS $0.01 $(0.42)
(LOSS) INCOME FROM DISCONTINUED OPERATIONS -- --
- --------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE - DILUTED $0.01 $(0.42)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 361,781 269,232
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 372,989 269,232
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