Exhibit 99.1
Applied Digital Solutions Reports First Quarter 2004 Results
Wednesday May 5, 8:00 am ET
First Quarter Results Yield Revenue Growth of 7.2% and Net Income of $0.03
Per Share
PALM BEACH, Fla.--(BUSINESS WIRE)--May 5, 2004--Applied Digital Solutions,
Inc. (Nasdaq: ADSX - News), an advanced technology development company,
today released its financial results for the first-quarter ended March 31,
2004. The Company's consolidated financial results include the financial
condition, operating results and cash flows of its majority-owned
subsidiaries, Digital Angel Corporation (AMEX: DOC - News), and InfoTech
USA, Inc. (OTC: IFTH - News).
Revenue for the first quarter of 2004 was $26.9 million, a 7.2% increase
from the $25.1 million in revenue in the first quarter of 2003. The increase
in comparative quarterly revenue was attributable to an increase in revenue
from InfoTech USA, Inc., as well as the Company's wholly-owned subsidiary
Government Telecommunications, Inc.
Net Income for the first quarter of 2004 was $1.5 million, or $0.03 per
share, compared to a net loss of ($26.9 million), or ($0.95) per share in
the first quarter of 2003. Included in the results for the first quarter of
2003 was a non-recurring non-cash charge in the amount of $22.0 million.
"In 2003, we emphasized elimination of debt, balance sheet strengthening and
building a 'foundation'. This initial phase was completed with our recent
reverse stock split that right-sized our capital structure for future
growth. With the first quarter results, it is clear that the accomplishments
of the past year have positioned Applied Digital for success and
value-building moving forward," said Scott R. Silverman, Applied Digital's
Chairman and Chief Executive Officer. "In addition to our EPS of $0.03, the
Company now has approximately $14 million of cash on hand and no debt at the
parent level. VeriChip opportunities continue to strengthen as evidenced by
the recent announcements with FN Manufacturing and the clinical studies in
Italy. We believe that the FDA is in the final review of our 510k
application for the medical applications of VeriChip. Since there is no
'predicate device' for VeriChip, we expect to move to a 'de novo' (new
product) review process that should take no longer than 60 days." Some of
the highlights of the first quarter included:
Progress in livestock-tracking opportunities. Digital Angel Corporation
announced that it will begin marketing a broad range of radio-frequency
identification (RFID) cattle-tracking system products in Canada under its
distribution arrangement with Compass Animal Health Inc.
Growing VeriChip distribution. VeriChip Corporation has awarded the
exclusive rights to distribute VeriChip in three states, including Florida,
Georgia and Tennessee. The company has also awarded territories to
distributors in Puerto Rico and Central America. The distributors have
collectively agreed to quotas (to retain their exclusivity) to purchase
66,763 VeriChips and 4,945 scanners over the terms of the agreements. Each
of the distributor's plans call for using VeriChip for security-related and
emergency identification applications.
Significant government telecommunications contract work. Government
Telecommunications, Inc. is on schedule to complete telecommunications
network upgrades at United States Postal Service (USPS) mail processing
facilities under a $15 million contract. The project is expected to be
completed in May, when a total of 62 USPS sites will have been upgraded in
less than 1 year.
Strengthened balance sheet. The Company ended the first quarter with $10.3
million in cash and restricted cash. Subsequent to the end of the first
quarter, the Company completed a private placement with Satellite Asset
Management, raising a total of $5.5 million.
The Company will hold a conference call today at 8:30 a.m. ET. Scott R.
Silverman, Chief Executive Officer, Evan McKeown, Chief Financial Officer
and Michael Krawitz, Executive Vice President and 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 7044579. There will be a playback
available until midnight, May 19, 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 7044579 for the replay. The
call will also be webcast. The webcast will be available on the Company's
web site at www.adsx.com.
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 web site at http://www.adsx.com.
APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
Assets
March 31, December 31,
2004 2003
------------------------
Current Assets (unaudited)
Cash and cash equivalents $9,515 $10,161
Restricted cash 785 765
Accounts receivable and unbilled receivables
(net of allowance for doubtful accounts of
$810 in 2004 and $1,035 in 2003) 15,764 14,531
Inventories 10,208 9,490
Notes receivable 1,245 1,658
Other current assets 2,836 2,803
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Total Current Assets 40,353 39,408
Property And Equipment, net 9,169 9,365
Notes Receivable, net 318 504
Goodwill, net 66,692 63,331
Other Assets, net 6,698 1,654
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$123,230 $114,262
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Liabilities and Stockholders' Equity
Current Liabilities
Notes payable and current maturities of
long-term debt $7,324 $6,136
Accounts payable 14,407 13,710
Other accrued expenses 21,262 22,616
Put accrual 200 200
Net liabilities of Discontinued Operations 5,701 9,545
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Total Current Liabilities 48,894 52,207
Long-Term Debt and Notes Payable 2,549 2,860
Other Long-Term Liabilities 3,166 3,430
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Total Liabilities 54,609 58,497
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Commitments And Contingencies - -
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Minority Interest 31,761 23,029
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Stockholders' Equity
Preferred shares: Authorized 5,000 shares in
2004 and 2003 of $10 par value; special
voting, no shares issued or outstanding in
2004 and 2003, Class B voting, no shares
issued or outstanding in 2004 and 2003 - -
Common shares: Authorized 125,000 shares in
2004 and 2003, of $.01 par value; 50,571
shares issued and 49,028 shares outstanding
in 2004 and 41,220 shares issued and 41,126
shares outstanding in 2003 506 412
Common and preferred additional paid-in
capital 449,217 443,099
Accumulated deficit (412,447) (413,923)
Common stock warrants 5,650 5,650
Treasury stock (carried at cost, 1,543 shares
in 2004 and 94 in 2003) (5,690) (1,777)
Accumulated other comprehensive income 227 206
Notes received from shares issued (603) (931)
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Total Stockholders' Equity 36,860 32,736
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$123,230 $114,262
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APPLIED DIGITAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For The Three Months
Ended March 31,
--------------------
2004 2003
--------------------
Product revenue $23,203 $21,023
Service revenue 3,655 4,083
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Total revenue 26,858 25,106
Cost of products sold 16,806 14,328
Cost of services sold 1,860 1,965
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Gross profit 8,192 8,813
Selling, general and administrative expense 8,604 29,468
Research and development 925 1,201
Depreciation and amortization 539 470
Interest and other income (466) (220)
Interest expense (310) 4,631
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Loss from continuing operations before taxes,
minority interest and (gain) loss attributable
to capital transactions of subsidiary (1,100) (26,737)
Provision (benefit) for income taxes 92 (192)
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Loss from continuing operations before minority
interest and (gain) loss attributable to capital
transactions of subsidiary (1,192) (26,545)
Minority interest (379) (139)
Net loss on capital transactions of subsidiary 1,963 171
(Gain) loss attributable to changes in minority
interest as a result of capital transactions of
subsidiary (2,150) 206
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Loss from continuing operations (626) (26,783)
Change in estimate on loss on disposal of
discontinued operations and operating losses
during the phase out period 2,102 (157)
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Net income (loss) $1,476 $(26,940)
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Income (loss) per common share - basic
Income (loss) from continuing operations $(0.01) $(0.95)
Income (loss) from discontinued operations 0.04 -
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Net income (loss) per common share - basic $0.03 $(0.95)
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Income (loss) per common share - diluted
Income (loss) from continuing operations $(0.01) $(0.95)
Income (loss) from discontinued operations 0.04 -
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Net income (loss) per common share - diluted $0.03 $(0.95)
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Weighted average number of common shares
outstanding - basic 48,580 28,233
Weighted average number of common shares
outstanding - diluted 48,580 28,233
======================================================================
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Contact:
CEOcast, Inc.
Ken Sgro, 212-732-4300
kensgro@ceocast.com
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Source: Applied Digital Solutions, Inc.