Palm Beach, Fla.-Based Microchip Maker Applied Digital Is under Investigation
Apr 04, 2003 (The Miami Herald - Knight Ridder/Tribune Business News via
COMTEX) -- Applied Digital Solutions, the embattled maker of the implantable ID
microchip for human use, disclosed that it is under investigation by the
Securities and Exchange Commission in its annual report filed with the agency
earlier this week.
The Palm Beach-based company didn't return phone calls seeking additional
information about the investigation.
In the filing, Applied Digital referred to the investigation as "informal" and
said it was cooperating.
The SEC's Miami regional office, which is conducting the Applied investigation,
according to the company's 10-K filing, would neither confirm or deny that it's
investigating the company.
It's SEC policy not to comment on on-going investigations.
The annual report also disclosed that the company received a "going concern"
letter from its accountants, Eisner LLP, a firm hired last summer after it had
fired two previous auditors.
The Eisner letter notes that given a substantial net loss, a working capital
deficit, a net capital deficiency and a lender that said a loan agreement with
Applied was in default, there's "substantial doubt" about the company's ability
to continue as a going concern.
For 2002, Applied posted a net loss of $112.5 million on revenues of $99.6
million, according to the filing.
While the loss is substantially lower than the 2001 net loss of $215.6 million,
the company's losses for the past three years total $444.3 million. It reported
net income of $5.4 million in 1999.
In the 10-K filing, Applied Digital said it has not recognized any revenue from
VeriChip, the implantable microchip it released last year with much fanfare.
Applied also said the settlement of a consolidated class-action shareholder
lawsuit against the company will cost its insurers $5.6 million. Applied had
announced the planned settlement last month.
Fourteen shareholder suits had been filed against Applied Digital in federal
district court last May and June after the company's stock shot up to $2.40 on
the media hype leading up to the first implants of its VeriChips.
Then the shares plunged when the company confirmed that no local hospitals had
agreed to use the scanners needed to read the information on the implanted
chips.
By Beatrice E. Garcia |
