VERITEQ (ADSX) SPO
|Company Address||220 CONGRESS PARK DRIVE
DELRAY BEACH, FL 33445
|Employees (as of 6/1/2003)||397|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||Nasdaq SmallCap Market|
|Shares Over Alloted||--|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||--|
We expect the net proceeds from this offering, assuming an offering price of $ per share, to vary depending on the quantity of the shares sold. If we raise the maximum projected, the net proceeds would be approximately $ , an estimated placement fee of $ , or ___ percent (_%) of the net proceeds excluding offering expenses, and estimated offering expenses of $250,000. We cannot assure you that the placement agency fee will not exceed 3%, and that the offering expenses will not exceed $250,000. However, in no event will the placement agency fee exceed eight percent (8%). We intend to use the net proceeds, along with any other financing sources that may become available to us, for the payment of debt. Assuming we are successful in raising the estimated maximum amount, we intend to apply the net proceeds as follows: Maximum Raise Use of Capital Amount % -------------- Payment of debt $ 100.0 ----------------------------- Total $ 100.0 =============================
We operate in highly competitive businesses that are sensitive to technological advances. Although successful product and systems development is not necessarily dependent on substantial financial resources, some of our competitors in each of our businesses are larger and can maintain higher levels of expenditures for research and development than us, and consequently, we may not be able to compete as effectively as those companies. Our competitors in the Advanced Technology, Digital Angel Corporation, and SysComm International segments include large multinational technology companies, as well as smaller companies with developing technology expertise. Our principal methods of competition in these businesses include our product and service mix, technological capabilities, management experience, ability to meet delivery schedules, knowledge of local markets, and effectiveness of customer service.
We are a Missouri corporation and were incorporated on May 11, 1993. Our business has evolved during the past few years. We have grown significantly through acquisitions and since 1996 we have completed 51 acquisitions. During the last half of 2001 and during 2002 we sold or closed many of the
businesses we had acquired that we believed did not enhance our strategy of becoming an advanced digital technology development company. We have emerged from being a supplier of computer hardware, software and telecommunications products and services to becoming an advanced technology company that focuses on a range of life enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. To date, we have five such products in various stages of development. They are: o Digital Angel(TM), for monitoring and tracking people and objects; o Thermo Life(TM), a thermoelectric generator; o VeriChip(TM), an implantable radio frequency verification device that can be used for security, financial, personal identification/safety and other applications; o Bio-Thermo(TM), a temperature-sensing implantable microchip for use in pets, livestock and other animals; and o Personal Locating Device (PLD), an implantable global positioning satellite (GPS) location device. Over two years ago, we developed a proprietary location and monitoring system that combines advanced biosensor technology and location technology (such as GPS) in a watch/pager device that communicates through proprietary software to a secure 24/7 operations center in California. This system is covered under the United States patent registration # 5,629,678, which we acquired in 1999. In addition, we filed an International Patent Application directed to the system, which has been published under publication no. W/0 02/44865. The application, which is in the name of Digital Angel Corporation, is currently pending in several countries. This technology provides "where-you-are" and "how-you-are" information about loved ones (particularly elderly relatives and children), their location and their vital signs via the subscriber's computer, personal digital assistant (PDA) or wireless telephone. We branded this technology Digital Angel and merged the technology with a company formerly known as Destron Fearing Corporation. Our goal was to create a new corporation underpinned by the patented technology and complemented by the products and services and revenues of our existing business segments. We united our existing GPS, application service provider and animal tracking business units to form Digital Angel Corporation, which we refer to as pre-merger Digital Angel. Effective March 27, 2002, pre-merger Digital Angel became its own public company through its merger into Medical Advisory Systems, Inc. (MAS) (AMEX:DOC). Currently, we are the beneficial owner of approximately 73.12% of this new company which has been renamed Digital Angel Corporation. We launched the Digital Angel product on November 26, 2001. In October 2001, we announced that our wholly-owned subsidiary, Thermo Life Energy Corp., formerly Advanced Power Solutions, Inc., will develop, market and license our product, Thermo Life, a small thermoelectric generator powered by body heat. Thermo Life is intended to provide a miniaturized power source for a wide range of consumer electronic devices including attachable or implantable medical devices and wristwatches. On July 9, 2002, we announced that we had achieved an important breakthrough: 3.0-volts of electrical power were successfully generated by Thermo Life in laboratory tests. We expect to begin marketing Thermo Life during the second half of 2003. We have developed a miniaturized, implantable verification chip called VeriChip that can be used in a variety of security, financial, personal identification/safety and other applications. On February 7, 2002, we announced that we had created a new wholly-owned subsidiary, VeriChip Corporation that will develop, market and license VeriChip. About the size of a grain of rice, each VeriChip product contains a unique verification number. Utilizing our proprietary external radio frequency identification (RFID) scanner, radio frequency energy passes through the skin energizing the dormant VeriChip, which then emits a radio frequency signal transmitting the verification number contained in the VeriChip. VeriChip technology is produced under patent registrations #6,400,338 and #5,211,129. This technology is owned by Digital Angel Corporation and licensed to VeriChip under an exclusive product and technology license with a remaining term of approximately ten years. On October 22, 2002, we announced that the Food and Drug Administration (FDA) had determined that VeriChip is not a regulated medical device for security, financial and personal identification/safety applications. The FDA specified in its ruling that VeriChip is a regulated medical device for health information applications when marketed to provide information to assist in the diagnosis or treatment of injury or illness. On November 8, 2002, we received a letter from the FDA, based upon correspondence from us to the FDA, warning us not to market VeriChip for medical applications. We currently intend to market and distribute the VeriChip product for security, financial and personal identification/safety applications and, in the future, we plan to expand our marketing and distribution efforts to health information applications of the product, subject to any and all necessary FDA and other approvals. We are currently in the process of preparing a 510-K application to obtain FDA approval to market VeriChip for certain health information applications. We intend to submit the 510-K application to the FDA within the next several months. We began marketing VeriChip for security, financial and personal identification/safety applications within the United States on October 24, 2002. On February 1l, 2003, we announced that we received written clearances from the FDA and the United States Department of Agriculture to market our new product, Bio-Thermo, for use in pets, livestock and other animals. Bio-Thermo is our first fully integrated implantable bio- sensing microchip that can transmit a signal containing accurate temperature readings to our proprietary RFID scanners. With this new technology, accurate temperature readings can be obtained by simply passing the RFID handheld scanner over the animal or by having the animal walk through a portal scanner. We believe that Bio-Thermo and other biosensors developed in the future will provide vital internal diagnostics about the health of animals more efficiently and accurately than the invasive techniques used in the industry today. On May 13, 2003, we announced that we have developed and successfully field-tested a working prototype of, what we believe to be, the first-ever sub-dermal GPS personal location device called PLD. The dimensions of this initial PLD prototype are 2.5 inches in diameter by 0.5 inches in depth, roughly the size of a pacemaker. As the process of miniaturization proceeds in the coming months, we expect to be able to shrink the size of the device to at least one-half and perhaps to as little as one-tenth of the current size. The PLD is charged by an induction-based power-recharging method which is similar to that used to recharge implantable pacemakers. This recharging technique functions without requiring any physical connection between the power source and the implant. The exact timing of the commercial availability of PLD is unclear pending further technological refinements and the obtainment of any and all required regulatory clearances. The PLD technology builds on our United States patent registration #5,629,678. The majority of our operations are the result of acquisitions completed during the last six years. Our revenues from continuing operations were $25.1 million for the three-months ended March 31, 2003, and were $99.6 million, $156.3 million, $134.8 million, $129.1 million and $74.3 million, respectively, in 2002, 2001, 2000, 1999 and 1998. -------------------- ABOUT US We are a Missouri corporation and were incorporated on May 11, 1993. Our principal executive offices are located at 400 Royal Palm Way, Suite 410, Palm Beach, Florida 33480, and our telephone number is (561) 805-8000.