Combo of two RFID firms may open up the market

Saturday, January 1, 2005

DELRAY BEACH, Fla. - Applied Digital has signed a letter of intent to acquire Richmond, British Columbia-based eXI Wireless in a stock deal valued at CAD 16.2 million ($13.7 million).

Once completed, Applied Digital will incorporate eXI Wireless’ RFID tracking technology into its wholly owned subsidiary VeriChip, a provider of an internal RFID chip used in healthcare and security applications. The deal is expected to close during the first quarter of this year.

eXI Wireless provides automatic identification, control, and location applications, infrastructure and services based on bar code, RFID and real-time location technologies for use in hospitals, nursing homes and commercial customer sectors.

“The combination of eXI and VeriChip opens up a world of possibilities for both companies,” said Kevin McLaughlin, president and chief operating officer at Applied Digital.

Through its acquisition, Applied Digital has attained a wider distribution chain, particularly, in the area of healthcare.

eXI’s revenues for the first six-months of 2004 were $3.3 million, and the company’s revenues for all of 2003 were $7 million. Earnings for those time-periods were $140,000 and $80,000, respectively.

Once completed, Applied Digital will transfer approximately 200 dealers and distributors to VeriChip.

“They see value in the distribution we have set up,” said Malik Talib, chief executive officer at eXI. “I think this is a brilliant marriage of companies.” Talib will continue to work for the merged company, but his position has yet to be determined.

VeriChip markets its product for use in nursing home facilities, where a portion of the population is unable to communicate. This community, which equals about 20 percent, according to McLaughlin, is a prime user of the product that provides access to patient information.

eXI’s application’s are also marketed in the healthcare industry - for those patients that can communicate and need to possess identification credentials, in some cases in the form of a wrist band.

Applied Digital will retain eXI’s 50 employees and its office in Richmond, British Columbia, according to McLaughlin. VeriChip will be the corporate identity moving forward for the two companies. However, McLaughlin said it is unclear if eXI’s current product line would be rebranded.