SAFLINK Corporation Reports Second quarter 2007 Financial Results
KIRKLAND, WA – (August 14, 2007) – Saflink® Corporation (OTC Bulletin Board: SFLK), a leading provider of solutions that verify identity, secure access and increase productivity, today reported its financial results for its second quarter ended June 30, 2007.
Revenue for the second quarter of 2007 was $178,000, compared to $504,000 for the first quarter of 2007 and $944,000 for the second quarter of 2006. Saflink reported a net loss attributable to common stockholders of $3.4 million, or $0.02 per share, in the second quarter of 2007, which included non-cash interest expense of $1.3 million. This is compared to a net loss attributable to common stockholders of $3.5 million, or $0.03 per share, in the first quarter of 2007, which included non-cash interest expense of $2.0 million, and a net loss attributable to common stockholders of $37.7 million, or $0.43 per share, in the second quarter of 2006, which included a non-cash impairment loss on goodwill of $30.7 million.
Non-GAAP operating loss for the second quarter of 2007 was $1.8 million, which excludes stock-based compensation expense. This is compared to a non-GAAP operating loss of $5.7 million for the second quarter of 2006, which excluded certain non-cash charges such as amortization of intangible assets, impairment losses on goodwill, and stock-based compensation expense. Saflink believes that supplementary non-GAAP measures for operating results enhance an investor’s overall understanding of the financial performance of Saflink by reconciling more closely the actual cash expenses of Saflink in its operations, as well as excluding expenses that, in management’s view, are unrelated to the core operations of Saflink. A reconciliation of non-GAAP operating loss and non-GAAP net loss attributable to common stockholders to reported GAAP operating loss and net loss attributable to common stockholders is provided below.
Steve Oyer, Chief Executive Officer of Saflink Corporation, stated, "We took several important steps during the second quarter on our path to restructure and recapitalize Saflink and monetize our assets and intellectual property. As we announced last month, we concluded the sale of our Registered Traveler business to our subsidiary, FLO Corporation, for $6.3 million. The proceeds from this transaction provided us the ability to begin paying our convertible debenture obligations in cash rather than shares of common stock and, consequently, limit the dilution of our stockholders. And with a continuing minority ownership stake in FLO, we continue to have a vested interest in the exciting Registered Traveler market.”
Oyer continued, “We feel that our turnaround efforts are almost complete and are excited to discuss the next steps and our plans to increase shareholder value in our upcoming conference call.”
Saflink is planning to have a conference call on Tuesday, August 28, 2007, to discuss recent developments and its future plans. A follow-up press release will be issued to announce the final timing and details for the call.
About Saflink
Saflink Corporation offers biometric security, smart card and cryptographic technologies that help protect intellectual property and control access to secure facilities. Saflink security technologies are key components in identity assurance management solutions that allow administrators and security personnel to positively confirm a person's identity before access is granted. Saflink cryptographic technologies help to ensure that sensitive information is accessed only by the intended recipient(s). Saflink Corporation is also a minority stockholder in FLO Corporation, a subsidiary focused on the U.S. government's Registered Traveler Program. For more information, please visit http://www.saflink.com or call 800-762-9595.
NOTE: “Saflink” is a registered trademark of Saflink Corporation and “FLO” is a trademark of FLO Corporation.
This release contains information about our management's view of our future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors. For example, we may not participate in or benefit from the Registered Traveler market because we no longer hold a majority a majority of the equity securities of FLO Corporation. Some other factors include, but are not limited to, risks and uncertainties associated with our financial condition, our ability to sell our products, our ability to compete with competitors and the growth of the security market, and those included in our annual report on Form 10-K, as well as other documents we periodically file with the Securities and Exchange Commission.
INVESTOR RELATIONS CONTACT:
Tony Schor
(847) 945-2222
www.investorawareness.com
SAFLINK PRESS CONTACT:
Sterling Communications
Katie James
(206) 388-5758
kjames@sterlingpr.com
SAFLINK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue:
Product $85 $786 $460 $1,542
Service 93 158 222 259
--------- --------- --------- ---------
Total revenue 178 944 682 1,801
Cost of revenue:
Product 78 366 205 693
Service 56 130 109 256
Amortization of
intangible assets -- 671 -- 1,342
--------- --------- --------- ---------
Total cost of revenue 134 1,167 314 2,291
--------- --------- --------- ---------
Gross profit (loss) 44 (223) 368 (490)
Operating expenses:
Product development 310 2,423 496 4,842
Sales and marketing 374 2,053 792 3,931
General and
administrative 1,329 1,956 2,571 4,013
Impairment loss on
goodwill -- 30,700 -- 60,400
--------- --------- --------- ---------
Total operating expenses 2,013 37,132 3,859 73,186
--------- --------- --------- ---------
Operating loss (1,969) (37,355) (3,491) (73,676)
Interest expense (1,394) (323) (3,420) (362)
Other income, net 2 59 7 171
--------- --------- --------- ---------
Loss before income taxes (3,361) (37,619) (6,904) (73,867)
Income tax provision -- 13 -- 26
--------- --------- --------- ---------
Net loss (3,361) (37,632) (6,904) (73,893)
Modification of
outstanding warrants -- (76) -- (585)
--------- --------- --------- ---------
Net loss attributable to
common stockholders $(3,361) $(37,708) $(6,904) $(74,478)
========= ========= ========= =========
Basic and diluted loss per
common share attributable
to common stockholders $(0.02) $(0.43) $(0.06) $(0.85)
Weighted average number of
common shares outstanding 138,018 88,106 125,207 88,101
SAFLINK CORPORATION
Supplemental Non-GAAP Information
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Operating loss $(1,969) $(37,355) $(3,491) $(73,676)
Adjustments to reconcile
operating loss in the
financial statements to
non-GAAP operating loss:
Amortization of
intangible assets - cost
of sales -- 671 -- 1,342
Amortization of
intangible assets - general
and administrative -- 25 -- 50
Impairment loss on
goodwill -- 30,700 -- 60,400
Stock-based
compensation 120 216 246 518
--------- --------- --------- ---------
Non-GAAP operating loss $(1,849) $(5,743) $(3,245) $(11,366)
========= ========= ========= =========
Net loss attributable to
common shareholders $(3,361) $(37,708) $(6,904) $(74,478)
Adjustments to reconcile
net loss attributable to
common shareholders in
the financial statements
to non-GAAP net loss
attributable to common
stockholders:
Amortization of
intangible assets - cost
of sales -- 671 -- 1,342
Amortization of
intangibles assets - general
and administrative -- 25 -- 50
Impairment loss on
goodwill -- 30,700 -- 60,400
Stock-based
compensation 120 216 246 518
Non-cash interest
expense 1,300 228 3,287 228
Modification of
outstanding warrants -- 76 -- 585
Deferred income tax
associated with
acquisition -- 13 -- 26
--------- --------- --------- ---------
Non-GAAP net income
attributable to
common shareholders $(1,941) $(5,779) $(3,371) $(11,329)
========= ========= ========= =========
Non-GAAP basic and diluted
net loss per share $(0.01) $(0.07) $(0.03) $(0.13)
Weighted average number of
common shares outstanding 138,018 88,106 125,207 88,101
Statement Regarding Non-GAAP Disclosures:
To supplement the financial information that is presented in accordance U.S. generally accepted accounting principles (GAAP), we present certain financial measures that exclude certain non-cash charges, including charges related to acquisitions such as amortization of intangible assets, impairments of goodwill and intangible assets and stock-based compensation expense which would otherwise be required by GAAP. We believe that these non-GAAP measures facilitate evaluation by management and investors of our ongoing operating business and enhance overall understanding of our financial performance by reconciling more closely our actual cash expenses in operations as well as excluding expenses that in management's view are unrelated to our core operations, the inclusion of which may make it more difficult for investors to compare our results from period to period.
Non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial information presented in compliance with GAAP, and non-GAAP financial measures we report may not be comparable to similarly titled items reported by other companies.
SAFLINK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, December 31,
ASSETS 2007 2006
------------- -------------
Current assets:
Cash and cash equivalents $760 $1,407
Accounts receivable, net 7 390
Inventory, net 111 86
Prepaid expenses and other current assets 611 601
------------- -------------
Total current assets 1,489 2,484
Furniture and equipment, net 181 420
Debt issuance costs, net 345 550
------------- -------------
Total assets $2,015 $3,454
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $1,014 $1,186
Accrued expenses 1,413 1,308
Convertible debt, net of discount 4,796 4,619
Current portion of notes payable to
related party 1,450 1,250
Other current obligation -- 213
Deferred revenue 708 229
------------- -------------
Total current liabilities 9,381 8,805
Long-term note payable to related party 200 --
------------- -------------
Total liabilities 9,581 8,805
Stockholders' deficit:
Common stock 1,502 975
Common stock subscribed -- 163
Additional paid-in capital 279,746 275,421
Accumulated deficit (288,814) (281,910)
------------- -------------
Total stockholders' deficit (7,566) (5,351)
------------- -------------
Total liabilities and stockholders'
deficit $2,015 $3,454
============= =============