VeriChip Closes Sale of Subsidiary

HDM Breaking News, July 18, 2008

Delray Beach, Fla.-based VeriChip Corp. has completed the sale of its Xmark subsidiary to a Canadian unit of The Stanley Works, New Britain, Conn., for $47.9 million.

Xmark sells radio frequency identification technology to tag and track newborns, adults prone to wandering and medical equipment. The Stanley Works is a major manufacturer of tools and security products.

The final price includes a $2.9 million increase from a balance sheet adjustment.

VeriChip, after retiring debt and paying transaction-related costs, will net approximately $24.8 million from the sale. About $4.5 million will be held in escrow for a year, and the company will fund a special dividend to stockholders of at least $15 million.

VeriChip continues to seek a buyer for its VeriMed Health Link business line of implantable RFID chips. Only a handful of patients, including individuals with Alzheimer’s or diabetes, and CareGroup Health System CIO John Halamka, have had the chips implanted. The chips contain information on how to access the user’s electronic health records in an emergency, but a hospital must have a VeriChip-supplied reader.

Because VeriMed was funded by Xmark and is not self-sustaining, VeriChip is looking for a buyer who can further develop the technology. More information is available at verichipcorp.com.

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