 | Tuesday, May 20, 2008
Issue 841 | | Will Smith, Editor |  |
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Editor's Note: Today's top story is a report on what may be the death throes for human-implantable RFID producer VeriChip. An executive warned that the company is currently too small to be sustainable after the sale of a major business unit last week. It now lacks revenue streams to fund the development and marketing of human-implantable RFID chips for its VeriMed business, leading to questions about the company's very viability. Also see yesterday's VeriChip Sells an RFID Business, More Change May Come.
ABI Research predicts the RFID market will grow by 15 percent annually between 2008 and 2013, when it will generate $9.7 billion in aggregate revenue.
Enterprise mobility and asset tracking solutions provider InfoLogix has acquired the assets of Aware Interweave, which provides enterprise mobility solutions to SAP users. Among the assets is a controller for RFID and barcode workflow on handheld readers.
Lastly, mobile market solutions provider MangoMOBILE has introduced an RFID-based suite of solutions for event marketers that includes mobile readers and wearable tags. |
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| Training & Certification | | - CORFIDA sponsors OTA's RFID Training, June 3-6 - Denver, CO (site) | | | RTLS & Active RFID | | 
Sponsored by Ekahau | |
| | - Locate it now. How? Ekahau. That's how! (site) | | | Products & Services | | - PCB Tracking & Visibility Solution from Omnitrol Networks (site) | | - Employees steal over $1 billion per week from employers (site) | | | RFID Tags & Labels | | - Ferroxtag HF tags: Smart on Metal! (site) | | - Confidence in RFID - Confidex tags and tickets (site) | | | Employment | | - RFID Recruiters - 100% Focused on RFID Recruiting (site) | | | Upcoming Events | | - AWA PABS08 N. America Conference, Sept 11-12, Chicago, IL (site) | | - AWA PABS08 Asia Conference, Dec 4-5 - Hong Kong, China (site) | | - SCAN & RFID CHINA 2008, June 19-21, Guangzhou, China (site) | | | Research & Whitepapers | | - RFID Marketing Strategies Report (site) | |
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Implantable RFID Business 'Not Self-Sustainable'
By John Burnell
Human-implantable RFID microchips face an uncertain future in the wake of developments that the technology's developer, VeriChip, announced last week. The Delray Beach, Florida-based company announced it sold most of its assets to tool manufacturer Stanley Works for $45 million and that the rest of the company is for sale (see VeriChip Sells an RFID Business, More Change May Come). The remaining company essentially consists of the VeriMed Health Link business line, a patient identification service based on VeriChip's controversial, FDA-approved line of implantable RFID tags for lifetime human identification.
"That business is not self-sustainable," VeriChip vice president of corporate development Jay McKeage candidly told RFID Update. "It cannot stand on its own because of the cash burn involved in marketing to consumers."
VeriMed Health Link is a service in which patients have an RFID tag injected under their skin in the arm to provide lifetime identification. The tag is encoded with a 16-digit unique ID number, which medical professionals with VeriChip-issued readers can use to access the patient's complete medical history from a secure database. VeriChip markets the system on patient-safety benefits -- emergency room doctors or other medical staff can access a patient's medical history without relying on a patient response or an ID card. The idea is that even if a patient arrives unconscious or otherwise uncommunicative, his or her complete medical history is still accessible. The FDA approved VeriChip's human-implantable passive RFID microchips in 2004, but adoption has been limited.
While much lower-profile than the human chips, the RFID businesses that VeriChip sold to Stanley Works had in fact accounted for the vast majority of the company's revenue. VeriChip's implantable business unit generated a paltry $3,000 in revenue in the quarter that ended March 31, 2008, during which the company saw a $1.9 million loss. Continuation of the VeriMed service likely depends on VeriChip finding a committed buyer.
In March, VeriChip announced it secured $8 million in debt financing. The company said the money would be used to repay a loan to its parent company, Digital Angel, and that the rest would finance its new business strategy through 2009. In April the company formally announced its new direct-to-consumer marketing strategy to spur VeriMed Health Link enrollment.
That strategy appears to have been abandoned, based on the fact that proceeds from the $45 million Xmark sale will not be invested into VeriMed Health Link. Instead, VeriChip announced the money will be used to retire debt, and $15 million of the remainder will be paid to shareholders as a special dividend. Another $4.5 million from the sale will be held in escrow for a year. VeriChip is required to purchase at least $875,000 worth of implantable microchips from Digital Angel this year as part of an escalating contract that runs at least through 2011.
"It appears the company had a liquidity issue in the first quarter," financial analyst Kevin Starke of CRT Capital Holdings in Stamford, Connecticut, told RFID Update. Starke specializes in analyzing distressed companies and formerly followed the RFID industry. "The money they borrowed in March appears to have been to fund operations until they could sell Xmark. Now they're left with so few assets it makes me wonder if they would continue as a public company."
VeriChip trades on the NASDAQ exchange under the symbol CHIP.
The market values VeriChip's business at approximately $0.77 per share once the share price is adjusted for the special dividend from the Xmark sale, according to Starke. "Of that, 37 cents is the company's share, so really, the market values the outstanding shares at 40 cents per share," Starke said. VeriChip shares were trading at $2.15 when he made his calculations on Monday. They have since sunk to $1.89.
VeriChip went public less than 16 months ago, opening at $6.50 per share on February 7, 2008 (see Human RFID Tag Provider VeriChip Announces IPO).
In 2007 VeriMed operations generated less than $100,000 in revenue, according to VeriChip's 10-K statement. In the document, VeriMed pins its hopes for a sustainable market on Medicare and Medicaid approving reimbursement for RFID tagging, but the federal insurers currently do not.
VeriChip never attracted the patients or revenues to match the attention it gained after announcing human-injectable RFID technology. The company has been a lightning rod for criticism by RFID opponents and privacy advocates. VeriChip cited privacy concerns and negative media coverage as risks to the business in its 2007 10-K report. It also acknowledged that people may not be willing to be implanted and that physicians may be reluctant to recommend the procedure. The document warned that the VeriMed system may not gain enough acceptance to continue as a business, an analysis that may soon prove true.
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| Training & Certification | CORFIDA sponsors OTA's RFID Training, June 3-6 - Denver, CO
The Colorado RFID Alliance (CORFIDA) has partnered with OTA Training, LLC. to address the statewide shortage of RFID trained workers. The two entities have arranged a series of training sessions to be held at Sun's APT test lab from June 3rd through June 6th. Learn more. | | | RTLS & Active RFID | Locate it now. How? Ekahau. That's how!
Ekahau RTLS (Real-Time Location System) automatically tracks assets and people via your existing Wi-Fi network. Control costs and improve asset management with Ekahau. For more information, visit us at www.ekahau.com. | | | Products & Services | PCB Tracking & Visibility Solution from Omnitrol Networks
Off-the-shelf solution provides automated real-time visibility and complete electronic pedigree for traceability on parts and WIP providing real-time dashboards, alerts and reports for shop-floor management. The pedigree information is automatically programmed into Texas Instruments' RFID tag for access to critical data without the need for connection to a back-end database. Learn more. | Employees steal over $1 billion per week from employers
the American Management Association reports. 95% of businesses are victimized by employee theft. Managers are reluctant to ask questions, because trusted employees may feel offended, leaving business owners in a difficult situation. What can you do? Nox: Intelligent Perimeter Defense from Simply RFID provides advanced security and protection for business assets. | | | RFID Tags & Labels | Ferroxtag HF tags: Smart on Metal!
Ferroxtag is a new family of HF RFID tags suitable for operation on metallic surfaces. Ferroxtag's special ferrite antenna was developed using Ferroxcube's years of experience in ferrite technology. The high performance antenna means longer read range with a smaller tag. Visit www.ferroxtag.com | Confidence in RFID - Confidex tags and tickets
The challenges of various industries lead Confidex to develop a comprehensive offering of special tags and labels. Confidex tags are used in a variety of applications ranging from tracking items in the retail supply chain to automotive manufacturing and petrochemical installations. Confidex designs and manufactures contactless tickets for public transport. Visit www.confidex.fi | | | Employment | RFID Recruiters - 100% Focused on RFID Recruiting
Whether your company is looking for the best RFID talent or you have the best RFID talent and are looking for the best RFID employer, RFID Recruiters offers the most focused approach to your objective. To learn how the RFID industry and the RFID job market are evolving, visit www.rfidrecruiters.com | | | Upcoming Events | AWA PABS08 N. America Conference, Sept 11-12, Chicago, IL
AWA is organizing the Product Authentication & Brand Security Conference 2008 on September 11-12 in Chicago, IL. The event includes presentations and panel discussions with brand owners, legal authorities, associations, converters and suppliers; also networking sessions, a supplier forum, a social program and more. Find more on the program here. | AWA PABS08 Asia Conference, Dec 4-5 - Hong Kong, China
AWA presents the Asian Product Authentication & Brand Security Conference 2008, to be held on 4 & 5 December in Hong Kong, China. PABS08 Asia focuses on the threats specific to the Asia Pacific region, various elements of IP Theft, and leading-edge solutions. Find more on the program here. | SCAN & RFID CHINA 2008, June 19-21, Guangzhou, China
As one of the earliest, most specialized and authoritative exhibitions in China, approved and supported directly from State Ministry, the 8th SCAN & RFID CHINA 2008 will present you the impressive up-dated development and market of RFID technology in rising China. To know more, please go to www.scan-china.com. | | | Research & Whitepapers | RFID Marketing Strategies Report
Thirty-nine pages of original research on RFID audience perceptions, including 30+ figures of tactics, content & messaging, and recommendations to guide marketing strategy. Also, Top-10 RFID company rankings based on 550+ survey respondents. View the executive summary free, with Top-3 sample rankings. Only $495 Individual License or $795 Corporate License. Available now |
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RFID Update is the RFID industry daily. Launched in early 2004 to provide timely analysis of RFID industry news, RFID Update publishes editorial briefings every weekday for the growing ranks of top level executives involved in the deployment of RFID. Each issue delivers the breaking news and analysis most pertinent to successful RFID implementations, allowing readers to understand global RFID developments as they happen.
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