This sounds like a good move. It reduces the companies cash burn and allows them to fully concentrate on their roll out of iglucose.
PositiveID Corporation Enters into a Letter of Intent to Sell Non-Core Assets Sale to Complete Company's Restructuring, Resulting in Reduction in Annual Cash Burn of Over $1.2 Million
DELRAY BEACH, Fla., Dec. 19, 2011 (GLOBE NEWSWIRE) -- PositiveID Corporation ("PositiveID" or "Company") (OTCBB: PSID.OB - News), a developer of medical technologies for diabetes management and molecular diagnostic systems, announced today it has entered into a non-binding Letter of Intent to sell non-core assets including the Company's VeriChip and Health Link businesses. This asset sale completes the Company's restructuring efforts, including its new management team, allowing it to focus on its core strategies of diabetes management and rapid biological detection.
PositiveID expects the sale to VeriTeQ Acquisition Corporation ("VeriTeQ"), an entity owned by Scott R. Silverman, PositiveID's former Chairman and CEO, to close by year-end. The potential sale is subject to approval by a special committee of PositiveID's board of directors, and consideration to the Company includes a note for $200,000, a continuing interest of 10% in VeriTeQ, possible future royalty payments from technology licenses, and a shared services agreement. PositiveID will use any future proceeds from the sale for the continued development of its diabetes management and rapid biological detection products. The shared services agreement will reduce the Company's annual cash burn by approximately $400,000, which, in combination with the other restructuring actions taken over the past several months, reduces the Company's total cash burn by over $1.2 million annually.
The sale will include assets that are not related to the Company's diabetes management or molecular diagnostic products. PositiveID will divest the VeriChip business, including an implantable radio frequency identification microchip for patient identification, and the Health Link personal health record, which assets the Company has not marketed for over two years. The VeriChip business does not include GlucoChip(TM), PositiveID's glucose-sensing microchip currently under development, and the assets being sold are expressly prohibited from being used for blood glucose detection or diabetes management.
PositiveID Chairman and CEO William J. Caragol, said, "This sale of non-core assets, which have not been a part of our focus for the past couple of years, will enable PositiveID to continue to focus our efforts on our key areas of growth. We expect to launch our FDA-cleared iglucose system in early 2012 and continue to position our MicroFluidic Systems subsidiary and our M-BAND early bio-threat warning system for potential contract awards from the federal government, including the opportunity to participate in the $3 billion BioWatch procurement."
PositiveID's diabetes management products under development include GlucoChip; Easy Check(TM), a non-invasive breath glucose detection device; and the iglucose(TM) glucometer, a blood glucose meter with PositiveID's FDA-cleared iglucose technology built inside the device.
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