Digital Angel Corporation Announces 2005 Second Quarter, Six-Month Results
05 August 2005 - 7:05AM
PR Newswire (US)
Year-Over-Year Revenues Up Nearly 48 Percent for Second Quarter, 36
Percent for First Six Months; Company Reiterates Revenue Guidance
for 2005 SO. ST. PAUL, Minn., Aug. 4 /PRNewswire-FirstCall/ --
Digital Angel Corporation (AMEX:DOC), an advanced technology
company in the field of rapid and accurate identification, location
tracking and condition monitoring of high-value assets, today
announced that revenues were up 47.6 percent for the second quarter
and 35.6 percent for the first six months ended June 30, 2005,
compared to the prior-year periods. The Company reiterates its 2005
annual revenue guidance of between $60 million and $65 million.
Revenue for the second quarter of 2005 was $14.9 million with a net
loss of $891,000, or $0.02 loss per share, compared to revenue of
$10.1 million and a net loss of $2.0 million, or $0.06 loss per
share, in the same period of 2004. Revenue for the first six months
of 2005 was $28.3 million with a net loss of $1.4 million, or $0.03
loss per share, compared to revenue of $20.8 million with a net
loss of $5.7 million, or $0.18 loss per share in the 2004 first six
months. Revenue for the Company's Animal Applications segment
increased 36.4 percent to $8.3 million in this year's second
quarter, and 26.2 percent to $16.6 million in the first six months
of 2005, when compared to the prior year periods. The increases
were principally due to increased sales to fish and wildlife
customers, increases in microchip and visual product sales to
livestock customers and the inclusion of revenues from
Denmark-based DSD Holdings A/S, which was acquired in February
2005. DSD Holdings, which manufactures and markets visual and
electronic radio frequency identification (RFID) tags for livestock
throughout Europe, the Middle East, Japan and Australia,
contributed revenues of $1.5 million for the second quarter and a
total of $2.1 million for the first six months of this year. In the
GPS and Radio Communications segment, revenue increased by 64.9
percent, to $6.5 million in the second quarter, and by 51.9
percent, to $11.6 million, for the first six months of 2005
compared to the year earlier periods. The increases are primarily
due to increased revenue at the London- based Signature Industries
subsidiary related to shipments of the G2R pilot locator beacon to
fulfill a contract with the government of India and shipments of
antennas to the United Kingdom Ministry of Defence. Chief Executive
Officer Kevin McGrath commented, "We are pleased that our top-line
revenue continues to grow and it is our expectation that due to the
traditional seasonal strength in the last six months of the year,
these growth trends will improve. Our electronic livestock sales
are well ahead of last year, which reflects the continued focus on
traceability and national livestock identification systems and
bodes well for our future. Furthermore, our Signature Industries
subsidiary is on track to have one of its best years ever. Overall
we have had success this year on almost every front and the loss in
this year's second quarter was primarily due to legal and
administrative items. We believe we will continue to see growth and
a move toward profitability as the year progresses." McGrath noted
that overall gross margins in the 2005 second quarter rose to 44.7
percent from 41.3 percent in the 2004 second quarter and increased
to 44.7 percent from 41.7 percent in the first six months of 2004.
Contributing to the overall improvement in gross margins for the
first six months of 2005, when compared to the prior year period,
was an increase in the gross margin at Signature Industries to 53.8
percent, up from 49.5 percent, and an increase in gross margin at
the Company's Lowell, MA-based OuterLink Corporation subsidiary to
35.1 percent from 18 percent. Selling, general and administrative
expenses increased $1.8 million, or 42.2 percent for the second
quarter of 2005 compared to the prior year period, and $2.7
million, or 31.1 percent for the six months ended June 30, 2005.
The increases in the 2005 second quarter include charges of
$350,000 for Director and Officer's Insurance and $300,000 in legal
costs related to the Company's ongoing program to protect its
intellectual property rights. Additionally, this year's second
quarter SG&A expenses included $145,000 of compensation expense
related to restricted stock grants and $250,000 of compensation
expense related to employee bonuses. Chief Financial Officer James
P. Santelli noted that as of June 30, 2005, the Company's balance
sheet showed cash of $12.7 million, total assets of $96.7 million,
long term debt and notes payable of $3.5 million and total
stockholders' equity of $80.5 million. "We remain in a very solid
financial position with a strong balance sheet and sufficient cash
to fund operations and take advantage of any potential opportunity
that presents itself," Santelli said. Results Conference Call A
conference call for institutional investors to discuss the results
for the second quarter of fiscal year 2005 will take place Friday,
Aug. 5 at 11:00 a.m. EDT, and will be broadcast live over the
Internet. The live webcast may be accessed by visiting the
Company's site at http://www.digitalangelcorp.com/. Web
participants are encouraged to go to the website at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. The online archive will be
available immediately and continue for seven days. About Digital
Angel Corporation Digital Angel Corporation develops and deploys
sensor and communications technologies that enable rapid and
accurate identification, location tracking, and condition
monitoring of high-value assets. Applications for the Company's
products include identification and monitoring of pets, fish,
humans and livestock through its patented implantable microchips;
location tracking and message monitoring of vehicles and aircraft
in remote locations through systems that integrate GPS and
geosynchronous satellite communications; and monitoring of asset
conditions such as temperature and movement, through advanced
miniature sensors. Digital Angel Corporation is majority-owned by
Applied Digital, Inc. (NASDAQ:ADSX). For more information about
Digital Angel, please visit http://www.digitalangelcorp.com/. The
statements in this press release that are not strictly historical,
are "forward-looking" statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and are intended to be covered by the safe
harbors created by these sections. The forward-looking statements
are subject to risks and uncertainties and the actual results that
the Company achieves may differ materially from these
forward-looking statements due to such risks and uncertainties,
including, but not limited to, that the Company's majority
stockholder, Applied Digital Inc. owns 55.4% of the Company's
common stock; that new accounting pronouncements may impact the
Company's future results of operation; that the Company may
continue to incur losses, that infringements by third parties on
the Company's intellectual property or development of substantially
equivalent proprietary technology by the Company's competitors
could negatively affect the Company's business; that domestic and
foreign government regulation and other factors could impair the
Company's ability to develop and sell the Company's products in
certain markets; that the Company relies on sales to government
contractors of its animal identification products, and any decline
in the demand by these customers for the Company's products could
negatively affect the Company's business; that the Company depends
on a single production arrangement for its patented
syringe-injectable microchips; that the Company depends on
principal customers; that the Company competes with other companies
and the products sold by the Company's competitors could become
more popular than the Company's products or render the Company's
products as obsolete; that the Company's earnings will decline if
the Company must write-off goodwill and other intangible assets;
that the exercise of options and warrants outstanding and available
for issuance may adversely affect the market price of the Company's
common stock ;that currency exchange rate fluctuations could have
an adverse effect on the Company's sales and financial results; and
that the Company depends on a small team of senior management and
the Company may have difficulty attracting and retaining additional
personnel. A detailed statement of risks and uncertainties is
contained in the Company's reports to the Securities and Exchange
Commission, including in particular the Company's Form 10-K for the
fiscal year ended December 31, 2004. Investors and stockholders are
urged to read this document carefully. The Company can offer no
assurances that any projections, assumptions or forecasts made or
discussed in this release will be met, and investors should
understand the risks of investing solely due to such projections.
The Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may
arise after the date of this press release. Contact: Allen &
Caron Inc Michael Lucarelli (investors) Len Hall (media)
212-691-8087 949-474-4300 DIGITAL ANGEL CORPORATION AND
SUBSIDIARIES Condensed Balance Sheets (in thousands) June 30, Dec.
31, 2005 2004 (Unaudited) Total Current Assets $30,620 $32,933
Property and Equipment, Net 8,161 5,947 Goodwill 53,624 48,997
Other Intangible Assets, net 3,649 4,011 Other Assets, net 598 785
Total Assets $96,652 $92,673 Total Current Liabilities $11,466
$9,633 Long Term Debt and Notes Payable 3,505 2,285 Deferred
Revenue 640 744 Minority Interest 567 249 Stockholders' Equity
80,474 79,762 Total Liabilities and Stockholders' Equity $96,652
$92,673 Statement of Operations Data (in thousands, except per
share amounts) For the Quarter Ended For the Six Months Ended June
30, June 30, 2005 2004 2005 2004 Total net revenue $14,860 $10,070
$28,263 $20,841 Gross profit 6,640 4,156 12,635 8,685 Selling,
general and administrative expenses 6,118 4,303 11,446 8,727
Research and development expenses 1,119 850 2,205 1,519 Operating
loss (597) (997) (1,016) (1,561) Net loss (891) (1,989) (1,384)
(5,733) Net loss per common share (basic and diluted) $(0.02)
$(0.06) $( 0.03) $(0.18) Weighted average common shares outstanding
(basic and diluted) 43,917 32,691 43,792 31,604 Selected Cash Flow
Data (in thousands) For the Six-Months Ended June 30 (Unaudited)
2005 2004 Net cash used in operating activities $(1,378) $(320) Net
cash (used in) provided by investing activities (1,772) 146 Net
cash used in financing activities (1,734) (53) Net decrease in cash
(4,830) (224) DATASOURCE: Digital Angel Corporation CONTACT:
investors, Michael Lucarelli, +1-212-691-8087, , or media, Len
Hall, +1-949-474-4300, , both of Allen & Caron Inc, for Digital
Angel Corporation Web site: http://www.digitalangelcorp.com/
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