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VeriChip Corporation Declares Special
Cash Dividend of $1.35 Per Share
Company provides update on
strategic alternatives for its VeriMed Business and the Company as a
Whole
DELRAY BEACH, FL – August 8, 2008 – As
previously announced, the Board of Directors of VeriChip Corporation
(the “Company”) (NASDAQ: CHIP), a provider of radio frequency
identification (RFID) systems for healthcare and patient-related
needs, approved an initial, special cash dividend to be paid on a
pro rata basis to its stockholders, the aggregate amount of which is
estimated to be up to $16.2 million (the “Special Dividend”).
On August 8, 2008, the Board of Directors of the
Company declared a one-time Special Dividend payment of $1.35 per
share to its stockholders. The Special Dividend
is payable on August 28, 2008 (“Payment Date”) to stockholders of
record as of August 18, 2008 (“Record Date”).
Because of the magnitude of the Special
Dividend, the Company's common stock will begin trading without the
dividend, on an ex-dividend basis on August 29, 2008 (i.e., the
first business day following the Payment Date), in accordance with
NASDAQ listing rules. Stockholders of record on
the Record Date who sell their shares on or before the Payment Date
will also be selling their right to receive the Special Dividend.
We believe that trading without the dividend, or on an
ex-dividend basis, will have no impact on the Company’s NASDAQ
listing status.
William J. Caragol, VeriChip’s President
and Chief Financial Officer, said, “Following the successfully
completed sale of our Xmark subsidiary in July 2008, I am pleased to
announce this special dividend of $1.35 per share to our
stockholders, which is at the high-end of the range we previously
announced. Immediately after issuing this dividend, the Company will
be debt-free and expects to have in excess of $4.0 million in cash
on hand and $4.5 million of restricted cash which is being held in
escrow until July 2009 to support indemnification obligations, if
any, under the stock purchase agreement with The Stanley Works.”
“As for the future of VeriChip, the
Board of Directors continues to evaluate potential strategic
transactions regarding the VeriMed Health Link business and the
Company as a whole,” continued Caragol. “We look forward to updating
the investor community as events develop.”
There are tax implications related to
the Special Dividend for both
U.S.
and non-U.S. holders of the Company’s common stock. Please see the
Company’s previously filed Proxy Statement on Form DEFM14A filed
with the Securities and Exchange Commission on June 17, 2008, which
generally describes such implications. For
U.S. federal income tax purposes,
the Special Dividend will not be a taxable event to the Company.
The Special Dividend will be treated as a taxable dividend to
the extent of the Company's current or accumulated earnings and
profits (computed using U.S. federal income tax principles), with
any amount in excess of such current or accumulated earnings and
profits treated as a non-taxable return of capital to the extent of
the holder's adjusted tax basis in their shares of the Company's
common stock and, thereafter, as a capital gain. Because the
Company's current earnings and profits must take into account the
results of operations for the entire year in which the Special
Dividend is made, the Company will not be able to determine the
portion of the Special Dividend that will be treated as a dividend
until after the close of the taxable year in which the Special
Dividend is made. If the portion of a
U.S. holder's Special Dividend that is treated
as a dividend equals or exceeds 10% of the
U.S. holder's tax basis in the
U.S. holder's shares of the
Company's common stock, the dividend may be treated as an
“extraordinary dividend.” Stockholders will
receive a Form 1099-DIV in early 2009 notifying them of the portion
of the Special Dividend that is treated as a dividend for
U.S. federal income tax purposes.
Stockholders are advised to consult with their own tax and
financial advisors regarding the implications of the Special
Dividend.
About VeriChip Corporation
VeriChip Corporation, headquartered in
Delray Beach, Florida,
markets its VeriMed™ Health Link System for rapidly and accurately
identifying people who arrive in an emergency room and are unable to
communicate. This system uses the first human-implantable passive
RFID microchip, cleared for medical use in October 2004 by the
United States Food and Drug Administration.
For more
information on VeriChip, please call 1-800-970-2447, or email
info@verichipcorp.com. Additional information can be found
online at www.verichipcorp.com.
Contact:
VeriChip Corporation
Allison
Tomek
561-805-8044
atomek@verichipcorp.com
Forward
Looking Statements
Certain statements made in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are
statements regarding the intent, belief or current
expectations, estimates or projections of the Company, its directors
or its officers, and include, among other items, projected sales,
operating income, net income and earnings per share, the
expectation that the Company will realize net proceeds, the
potential range per share of any available proceeds to distribute to
stockholders, the Company’s plans to pay the special dividend and
the estimated amount of the total size of the special dividend. When
used in this release, the words
"expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and similar expressions are generally intended to
identify forward-looking statements. Because such statements involve
risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements.
Although the Company believes that its expectations are based on
reasonable assumptions, it can give no assurance that the
anticipated results will occur. Important factors that could cause
the actual results to differ materially from those in the
forward-looking statements include, among other items, the continued
availability of liquidity and capital resources required to complete
these transactions, particularly in the event that such transactions
require more time than management anticipates,
our ability to successfully implement our business strategy; our
expectation that we will incur losses, on a consolidated basis, for
the foreseeable future; our reliance on third-party dealers to
successfully market and sell our products; uncertainty as to whether
a market for our VeriMed Health Link system will develop and whether
we will be able to generate more than a nominal level of revenue
from the sale of these systems; and market acceptance of our VeriMed
Health Link system, which will depend in large part on the future
availability of insurance reimbursement for the VeriMed Health Link
system microchip implant procedure from government and private
insurers, and the timing of such reimbursement, if it in fact
occurs.
Additional
information about these and other factors that could affect the
Company’s business is set forth in the Company’s various filings
with the Securities and Exchange Commission, including those set
forth in the Company’s 10-K filed on March 28, 2008, as amended,
under the caption “Risk Factors.” 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.
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