VeriChip Sells Xmark to Stanley for $47.9M

July 23, 2008

VeriChip, a provider of radio frequency identification (RFID) systems for healthcare and patient-related needs, has completed the sale of its wholly-owned Canadian subsidiary, Xmark, to Stanley Canada Corporation, a wholly-owned subsidiary of The Stanley Works ("Stanley") for $47.9 million in cash, which consists of the $45 million purchase price plus a balance sheet adjustment of $2.9 million.

Under the terms of the Stock Purchase Agreement between the Company and The Stanley Works, the Company will use the proceeds of the sale of Xmark to retire all of the Company’s outstanding debt. The Company expects to realize net proceeds, after retiring its outstanding debt, paying transaction related costs, and other contractual commitments, of approximately $24.8 million. Under the terms of the Stock Purchase Agreement, $4.5 million of the proceeds will be held in escrow for a period of 12 months. The Company intends to fund a special dividend to stockholders currently estimated to be at least $15 million.

Scott R. Silverman, departing Chairman and Chief Executive Officer of VeriChip, said, "We are pleased to have completed the sale of Xmark to The Stanley Works. We believe the transaction, which provided an excellent valuation for Xmark, was in the best interest of our stockholders. It will enable us to pay off all of our outstanding debt and issue a special cash dividend to our stockholders. Furthermore, the search for potential buyers of our VeriMed Health Link business continues. The Company looks forward to updating you on the possible sale of that business or the entire Company and any additional cash dividend that may be paid to stockholders."

"I want to thank Bill Caragol, Dan Gunther, Mike Feder, the Board of Directors and the entire VeriChip team for their hard work and dedication," continued Silverman. "It has been an honor to work with all of you. You have taught me a lot and I wish you all the best."

As previously announced, Scott R. Silverman and the Company mutually agreed that at the closing of the transaction Mr. Silverman would no longer be an officer or director of the Company. William J. Caragol continues as the Company’s President and Chief Financial Officer. Joseph J. Grillo, President and Chief Executive Officer of Digital Angel Corporation (NASDAQ: DIGA), the Company’s 48% stockholder, has replaced Mr. Silverman as Chairman of the Company’s Board of Directors.

Commenting on the transaction and Mr. Silverman’s departure, Joseph J. Grillo, Chief Executive Officer of Digital Angel Corporation and new Chairman of VeriChip Corporation stated, "I share Scott’s views about the completion of the sale of the Xmark business. Not only does it benefit VeriChip’s stockholders but it also significantly strengthens Digital Angel’s balance sheet. I look forward to working with the current VeriChip Board. On behalf of both Boards and on behalf of all our stockholders, I want to thank Scott for his years of service to VeriChip, Applied Digital, Digital Angel and all related companies. His professionalism, tenacity and perseverance for 13 years exemplifies his dedication to the success of these businesses. We wish him the best of luck."