UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 28, 2003
SAFLINK CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 0-20270 | 95-4346070 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
777 108th Avenue NE, Suite 2100
Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (425) 278-1100
The purpose of this amendment is to provide updated pro forma condensed statements of operations required by Item 7(b) of Form 8-K in connection with the Registrant’s acquisition of certain assets of Information Systems Support, Inc. (“ISS”) and Biometric Solutions Group, Inc. (“BSG”). The pro forma financial information was excluded from the Registrant’s initial filing on Form 8-K, filed with the Securities and Exchange Commission (“SEC”) on December 31, 2003, in reliance upon Item 7(a)(4) of Form 8-K, and was provided by the Registrant’s Form 8-K/A filed with the SEC on March 15, 2004.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro forma financial information.
SAFLINK CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Twelve Months Ended December 31, 2003
(In thousands, except per share data)
| SAFLINK | BSG | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||
Revenue: | |||||||||||||||
Product | $ | 787 | $ | 128 | (15 | )(a) | $ | 900 | |||||||
Service | 1,228 | 157 | (123 | )(a) | 1,262 | ||||||||||
Total revenue | 2,015 | 285 | (138 | ) | 2,162 | ||||||||||
Cost of revenue: | |||||||||||||||
Product | 300 | 1,011 | (1) | (15 | )(a) | 1,334 | |||||||||
| (150 | )(b) | ||||||||||||||
| 188 | (c) | ||||||||||||||
Service | 478 | 104 | (123 | )(a) | 459 | ||||||||||
Total cost of revenue | 778 | 1,115 | (100 | ) | 1,793 | ||||||||||
Gross profit | 1,237 | (830 | ) | (38 | ) | 369 | |||||||||
Operating expenses: | |||||||||||||||
Product development | 2,474 | 452 | — | 2,926 | |||||||||||
Sales and marketing | 5,437 | 44 | — | 5,481 | |||||||||||
General and administrative | 4,113 | 526 | (15 | )(d) | 4,599 | ||||||||||
| 55 | (c) | ||||||||||||||
| (80 | )(b) | ||||||||||||||
Total operating expenses | 12,024 | 1,022 | (40 | ) | 13,006 | ||||||||||
Operating loss | (10,787 | ) | (1,852 | ) | 2 | (12,637 | ) | ||||||||
Interest expense | (14 | ) | (416 | ) | 416 | (d) | (14 | ) | |||||||
Other income, net | 65 | 3 | — | 68 | |||||||||||
Loss before provision for income taxes | (10,736 | ) | (2,265 | ) | 418 | (12,583 | ) | ||||||||
Income tax expense | — | — | (50 | )(e) | (50 | ) | |||||||||
Net loss | (10,736 | ) | (2,265 | ) | 368 | (12,633 | ) | ||||||||
Basic and diluted loss per common share | $ | (0.42 | ) | $ | (0.47 | ) | |||||||||
Weighted average number of common shares outstanding | 25,505 | 1,116 | (f) | 26,621 | |||||||||||
| (1) | Includes an inventory obsolescence charge of $788,000. |
See notes to unaudited pro forma condensed combined financial statements
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
| (a) | Represents the elimination of the intercompany transactions that occurred between SAFLINK Corporation (the “Company”) and BSG for the year ending December 31, 2003. BSG had revenues derived from sales as a subcontractor to the Company of $138,000 that were recorded by the Company as cost of sales of $138,000. |
| (b) | Represents the elimination of BSG’s historical amortization of intangible assets. |
| (c) | Represents the amortization of acquired intangible asset values associated with the Company’s acquisition of certain assets and rights used in connection with the digital identity and biometric-enhanced physical access security business of ISS and BSG assuming the transaction occurred on January 1, 2002. These assets include existing technologies and a non-compete agreement. The existing technologies are being amortized over 8 years and the non-compete agreement is being amortized over 2 years. |
| (d) | Represents the elimination of costs associated with BSG’s financing activities. In the acquisition, the Company did not acquire any of the BSG long-term debt to which these costs are associated. Therefore, all costs associated with financing activities were eliminated. |
| (e) | Represents the income tax effect of Goodwill amortization. For tax purposes the Goodwill is amortized over 15 years. The effective tax rate applied to the Goodwill amortization deductible for tax purposes was 36%. |
| (f) | Unaudited pro forma basic and diluted net loss per share are computed by dividing the unaudited pro forma net loss attributable to common shareholders by the unaudited pro forma weighted average number of common shares outstanding. The number of weighted-average shares outstanding is adjusted by approximately 1,116,000 weighted-average shares related to the acquisition of certain assets and rights from ISS and BSG to reflect the assumption that 1,122,855 shares were issued January 1, 2003 rather than December 29, 2003. Potentially dilutive securities were not included in the computation of pro forma basic and diluted net loss per share because their effect would be antidilutive. |
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(c) Exhibits.
| Exhibit No. | Description | |
| 2.1* | Asset Purchase Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, Information Systems Support, Inc., a Maryland corporation, and Biometric Solutions Group, Inc., a Delaware corporation | |
| 23.1** | Consent of KPMG LLP, Independent Auditors | |
| 23.2** | Consent of Aidman, Piser & Company, P.A. | |
| 99.1* | Escrow Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, Information Systems Support Inc., a Maryland corporation, Biometric Solutions Group, Inc., a Delaware corporation, and Carney Badley Spellman, PS, as escrow agent | |
| 99.2* | Registration Rights Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, and Biometric Solutions Group, Inc., a Delaware corporation | |
| 99.3* | Press release dated December 29, 2003, announcing the Company’s agreement to acquire certain assets of Information Systems Support Inc. and Biometric Solutions Group, Inc. | |
| * | Previously filed with the SEC as an exhibit to Registrant’s Form 8-K filed on December 31, 2003, and incorporated herein by reference. |
| ** | Previously filed with the SEC as an exhibit to Registrant’s Form 8-K/A filed on March 15, 2004, and incorporated herein by reference. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SAFLINK Corporation | ||||
April 21, 2004 | By: | /s/ Glenn Argenbright | ||
Glenn Argenbright President and Chief Executive Officer | ||||
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 2.1* | Asset Purchase Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, Information Systems Support, Inc., a Maryland corporation, and Biometric Solutions Group, Inc., a Delaware corporation | |
| 23.1** | Consent of KPMG LLP, Independent Auditors | |
| 23.2** | Consent of Aidman, Piser & Company, P.A. | |
| 99.1* | Escrow Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, Information Systems Support Inc., a Maryland corporation, Biometric Solutions Group, Inc., a Delaware corporation, and Carney Badley Spellman, PS, as escrow agent | |
| 99.2* | Registration Rights Agreement dated as of December 28, 2003, by and between SAFLINK Corporation, a Delaware corporation, and Biometric Solutions Group, Inc., a Delaware corporation | |
| 99.3* | Press release dated December 29, 2003, announcing the Company’s agreement to acquire certain assets of Information Systems Support Inc. and Biometric Solutions Group, Inc. | |
| * | Previously filed with the SEC as an exhibit to Registrant’s Form 8-K filed on December 31, 2003, and incorporated herein by reference. |
| ** | Previously filed with the SEC as an exhibit to Registrant’s Form 8-K/A filed on March 15, 2004, and incorporated herein by reference. |
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