SAFLINK Corporation Announces 2000 Operating Results and Bridge Financing

Apr 04, 2001, 01:00 ET from SAFLINK Corporation

    REDMOND, Wash., April 4 /PRNewswire/ -- SAFLINK Corporation (Nasdaq: ESAF)
 today reported that total revenue for the year ended December 31, 2000
 increased to $1.5 million from $1.3 million for the year ended
 December 31, 1999.  Total revenue for the quarter ended December 31, 2000
 decreased to $367,000 from $412,000 for the quarter ended December 31, 1999.
     (Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20000929/SFF014 )
     Total operating expenses for the year ended December 31, 2000 increased to
 $9.9 million from $4.9 million for the year ended December 31, 1999, while
 total operating expenses for the quarter ended December 31, 2000 increased to
 $3.1 million from $1.4 million for the same period in 1999.  These increases
 were primarily due to the expansion of product development, sales and
 marketing activities in connection with the launch of the Company's new
 "Forget Your Password" strategy.  Results for 2000 also included non-recurring
 costs of  $224,000 attributable to the relocation of the Company's
 headquarters to Redmond, Washington and $208,000 of in process research and
 development expenses incurred as part of SAFLINK's purchase of the
 intellectual property of Jotter Technologies Inc. on December 15, 2000.
     Net loss attributable to common stockholders was $9.3 million for the year
 ended December 31, 2000 compared to net loss attributable to common
 stockholders of $4.0 million for the year ended December 31, 1999, while net
 loss attributable to common stockholders for the quarter ended
 December 31, 2000 was $3.1 million compared to $1.2 million for the quarter
 ended December 31, 1999.
     During March 2001, the Company received an additional $413,750 in bridge
 financing from seven accredited investors including two of the Company's
 directors, on substantially similar terms to those of the $2.5 million bridge
 financing completed in November 2000.  The unsecured notes carry an annual
 interest rate of 12% and will mature in May 2001.  Holders of the notes will
 be entitled to participate in any financing undertaken by SAFLINK prior to the
 maturity date of the notes by electing to receive, in lieu of repayment of the
 note, securities of the same class and on the same terms as issued in such
 financing.  The Company also agreed to issue warrants allowing the note
 holders to purchase one share of SAFLINK common stock for each $4.00 invested.
 The two directors elected not to accept the warrants; the Company therefore
 only issued warrants for the purchase of 79,688 shares of common stock
 exercisable for $1.50 per share at any time until March 2006.
     As an additional incentive to investors that had advanced more than
 $100,000 in the November 2000 bridge financing, the Company offered to reduce
 the exercise price of the warrants issued in the November 2000 financing from
 $1.50 to $0.50 per share if the investor agreed to exercise such warrant and
 advance additional bridge funds equal to $0.50 for every warrant share
 exercised before March 22, 2001.  Warrants for 37,500 shares were exercised
 before the deadline.  The securities issued in connection with the bridge
 financing and the exercise of warrants were privately placed to accredited
 investors and the issuance of such securities was not registered under the
 Securities Act of 1933 and may not be offered or sold in the United States
 absent registration or an applicable exemption from the registration
 requirements of the Act.
     SAFLINK Corporation, based in Redmond, Washington, brings "Forget Your
 Password"(SM) solutions to the Internet Economy and enterprise networks
 through biometrics.  The Company provides cost-effective multi-biometric
 software solutions to verify individual identity, to protect business and
 personal information, and to replace passwords and PINs in order to safeguard
 and simplify access to electronic systems and enable new online services for
 customers.  Further information is available through the Company's World Wide
 Web Site (http://www.saflink.com).
 
     The aforementioned remarks contain forward-looking statements that involve
 risks and uncertainties including without limitation those relating to
 industry trends, those relating to the Company's sales strategy, those
 relating to the Company's management strategy, those relating to competition,
 and those relating to completion of future financings.  The Company's actual
 results could differ materially from those discussed above.
     CONTACT:  James W. Shepperd, Chief Financial Officer of SAFLINK
 Corporation, 425-881-6766.
 
                              SAFLINK Corporation
                     Condensed Consolidated Balance Sheets
                     (in thousands, except per share data)
                                  (Unaudited)
 
                                                           December 31,
                                                        2000           1999
                              ASSETS
 
     Current assets:
       Cash and cash equivalents                       $1,108         $5,335
       Accounts receivable, net                           153            180
       Inventory                                           25             38
       Investments                                        102            739
       Prepaid expenses and other current assets          244            286
         Total current assets                           1,632          6,578
     Furniture and equipment, net                         869            204
     Intangible assets, net                             5,102             --
     Other assets                                         394             --
                                                       $7,997         $6,782
 
 
            LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable and accrued liabilities        $2,187           $602
       Bridge notes payable, net of discount            2,437             --
       Deferred revenue                                   286            582
         Total current liabilities                      4,910          1,184
     Long-term debt, net of discount                    1,485             --
         Total liabilities                              6,395          1,184
 
     Stockholders' equity:
       Series A Preferred stock,
        $.01 par value, convertible                        --              1
       Series D Preferred stock,
        $.01 par value, convertible                        --              1
       Common stock, $.01 par value                       262            186
       Shares to be issued in
        connection with asset purchase                  3,228
       Additional paid-in capital                      56,784         54,577
       Accumulated other comprehensive income              --            201
       Accumulated deficit                            (58,672)       (49,368)
                                                        1,602          5,598
                                                       $7,997         $6,782
 
 
                              SAFLINK Corporation
                Condensed Consolidated Statements of Operations
                 (in thousands except share and per share data)
                                  (Unaudited)
 
                                      Three Months Ended        Year Ended
                                         December 31,          December 31,
                                       2000        1999       2000        1999
    Revenue:
      Products and services:
       Software                         $80       $266        $717       $786
       Hardware                          21         71         278        313
       Services and other               266         75         528        109
                                        367        412       1,523      1,208
     Post contract services
      - government                       --         --          --         95
         Total revenue                  367        412       1,523      1,303
 
     Cost of revenue:
       Software                          20         27          79         57
       Hardware                          17         53         224        213
         Services and other              73          8         178         42
       Post contract services
        - government                     --         --          --         47
           Total cost of revenue        110         88         481        359
 
         Gross profit                   257        324       1,042        944
 
     Operating expenses:
       Product development              852        526       4,186      1,375
       Sales and marketing              538        362       1,756      1,332
       Minimum royalty payments          --         --          --        375
       Relocation                         8         --         224         --
       Purchased in process
        research and development        208         --         208         --
       General and administrative     1,498        509       3,494      1,815
         Total operating expenses     3,104      1,397       9,868      4,897
 
         Loss from operations        (2,847)    (1,073)     (8,826)    (3,953)
     Interest and
      other income (expense)           (205)        22        (130)        26
         Net loss                    (3,052)    (1,051)     (8,956)    (3,927)
 
     Preferred stock dividend            --        104         348        104
         Net loss attributable
          to common stockholders    $(3,052)   $(1,155)    $(9,304)   $(4,031)
     Basic and diluted
      loss per common share          $(0.11)    $(0.06)     $(0.43)    $(0.23)
     Weighted average number
      of basic and diluted
      common shares              27,531,497 18,540,964  21,602,000 17,540,589
 
     Certain prior period amounts have been reclassified to conform with the
 current period presentation.
 
 

SOURCE SAFLINK Corporation
    REDMOND, Wash., April 4 /PRNewswire/ -- SAFLINK Corporation (Nasdaq: ESAF)
 today reported that total revenue for the year ended December 31, 2000
 increased to $1.5 million from $1.3 million for the year ended
 December 31, 1999.  Total revenue for the quarter ended December 31, 2000
 decreased to $367,000 from $412,000 for the quarter ended December 31, 1999.
     (Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20000929/SFF014 )
     Total operating expenses for the year ended December 31, 2000 increased to
 $9.9 million from $4.9 million for the year ended December 31, 1999, while
 total operating expenses for the quarter ended December 31, 2000 increased to
 $3.1 million from $1.4 million for the same period in 1999.  These increases
 were primarily due to the expansion of product development, sales and
 marketing activities in connection with the launch of the Company's new
 "Forget Your Password" strategy.  Results for 2000 also included non-recurring
 costs of  $224,000 attributable to the relocation of the Company's
 headquarters to Redmond, Washington and $208,000 of in process research and
 development expenses incurred as part of SAFLINK's purchase of the
 intellectual property of Jotter Technologies Inc. on December 15, 2000.
     Net loss attributable to common stockholders was $9.3 million for the year
 ended December 31, 2000 compared to net loss attributable to common
 stockholders of $4.0 million for the year ended December 31, 1999, while net
 loss attributable to common stockholders for the quarter ended
 December 31, 2000 was $3.1 million compared to $1.2 million for the quarter
 ended December 31, 1999.
     During March 2001, the Company received an additional $413,750 in bridge
 financing from seven accredited investors including two of the Company's
 directors, on substantially similar terms to those of the $2.5 million bridge
 financing completed in November 2000.  The unsecured notes carry an annual
 interest rate of 12% and will mature in May 2001.  Holders of the notes will
 be entitled to participate in any financing undertaken by SAFLINK prior to the
 maturity date of the notes by electing to receive, in lieu of repayment of the
 note, securities of the same class and on the same terms as issued in such
 financing.  The Company also agreed to issue warrants allowing the note
 holders to purchase one share of SAFLINK common stock for each $4.00 invested.
 The two directors elected not to accept the warrants; the Company therefore
 only issued warrants for the purchase of 79,688 shares of common stock
 exercisable for $1.50 per share at any time until March 2006.
     As an additional incentive to investors that had advanced more than
 $100,000 in the November 2000 bridge financing, the Company offered to reduce
 the exercise price of the warrants issued in the November 2000 financing from
 $1.50 to $0.50 per share if the investor agreed to exercise such warrant and
 advance additional bridge funds equal to $0.50 for every warrant share
 exercised before March 22, 2001.  Warrants for 37,500 shares were exercised
 before the deadline.  The securities issued in connection with the bridge
 financing and the exercise of warrants were privately placed to accredited
 investors and the issuance of such securities was not registered under the
 Securities Act of 1933 and may not be offered or sold in the United States
 absent registration or an applicable exemption from the registration
 requirements of the Act.
     SAFLINK Corporation, based in Redmond, Washington, brings "Forget Your
 Password"(SM) solutions to the Internet Economy and enterprise networks
 through biometrics.  The Company provides cost-effective multi-biometric
 software solutions to verify individual identity, to protect business and
 personal information, and to replace passwords and PINs in order to safeguard
 and simplify access to electronic systems and enable new online services for
 customers.  Further information is available through the Company's World Wide
 Web Site (http://www.saflink.com).
 
     The aforementioned remarks contain forward-looking statements that involve
 risks and uncertainties including without limitation those relating to
 industry trends, those relating to the Company's sales strategy, those
 relating to the Company's management strategy, those relating to competition,
 and those relating to completion of future financings.  The Company's actual
 results could differ materially from those discussed above.
     CONTACT:  James W. Shepperd, Chief Financial Officer of SAFLINK
 Corporation, 425-881-6766.
 
                              SAFLINK Corporation
                     Condensed Consolidated Balance Sheets
                     (in thousands, except per share data)
                                  (Unaudited)
 
                                                           December 31,
                                                        2000           1999
                              ASSETS
 
     Current assets:
       Cash and cash equivalents                       $1,108         $5,335
       Accounts receivable, net                           153            180
       Inventory                                           25             38
       Investments                                        102            739
       Prepaid expenses and other current assets          244            286
         Total current assets                           1,632          6,578
     Furniture and equipment, net                         869            204
     Intangible assets, net                             5,102             --
     Other assets                                         394             --
                                                       $7,997         $6,782
 
 
            LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable and accrued liabilities        $2,187           $602
       Bridge notes payable, net of discount            2,437             --
       Deferred revenue                                   286            582
         Total current liabilities                      4,910          1,184
     Long-term debt, net of discount                    1,485             --
         Total liabilities                              6,395          1,184
 
     Stockholders' equity:
       Series A Preferred stock,
        $.01 par value, convertible                        --              1
       Series D Preferred stock,
        $.01 par value, convertible                        --              1
       Common stock, $.01 par value                       262            186
       Shares to be issued in
        connection with asset purchase                  3,228
       Additional paid-in capital                      56,784         54,577
       Accumulated other comprehensive income              --            201
       Accumulated deficit                            (58,672)       (49,368)
                                                        1,602          5,598
                                                       $7,997         $6,782
 
 
                              SAFLINK Corporation
                Condensed Consolidated Statements of Operations
                 (in thousands except share and per share data)
                                  (Unaudited)
 
                                      Three Months Ended        Year Ended
                                         December 31,          December 31,
                                       2000        1999       2000        1999
    Revenue:
      Products and services:
       Software                         $80       $266        $717       $786
       Hardware                          21         71         278        313
       Services and other               266         75         528        109
                                        367        412       1,523      1,208
     Post contract services
      - government                       --         --          --         95
         Total revenue                  367        412       1,523      1,303
 
     Cost of revenue:
       Software                          20         27          79         57
       Hardware                          17         53         224        213
         Services and other              73          8         178         42
       Post contract services
        - government                     --         --          --         47
           Total cost of revenue        110         88         481        359
 
         Gross profit                   257        324       1,042        944
 
     Operating expenses:
       Product development              852        526       4,186      1,375
       Sales and marketing              538        362       1,756      1,332
       Minimum royalty payments          --         --          --        375
       Relocation                         8         --         224         --
       Purchased in process
        research and development        208         --         208         --
       General and administrative     1,498        509       3,494      1,815
         Total operating expenses     3,104      1,397       9,868      4,897
 
         Loss from operations        (2,847)    (1,073)     (8,826)    (3,953)
     Interest and
      other income (expense)           (205)        22        (130)        26
         Net loss                    (3,052)    (1,051)     (8,956)    (3,927)
 
     Preferred stock dividend            --        104         348        104
         Net loss attributable
          to common stockholders    $(3,052)   $(1,155)    $(9,304)   $(4,031)
     Basic and diluted
      loss per common share          $(0.11)    $(0.06)     $(0.43)    $(0.23)
     Weighted average number
      of basic and diluted
      common shares              27,531,497 18,540,964  21,602,000 17,540,589
 
     Certain prior period amounts have been reclassified to conform with the
 current period presentation.
 
 SOURCE  SAFLINK Corporation