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.
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.
.gif)
