8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

March 15, 2005

Date of report (date of earliest event reported)

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)	(I.R.S. Employer Identification No.)

777 108th Avenue NE, Suite 2100

Bellevue, Washington 98004

(Address of principal executive offices) (Zip code)

(425) 278-1100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On March 15, 2005, SAFLINK Corporation issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2004. The press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

Use of Non-GAAP Financial Information

To supplement the information that is presented in accordance with U.S. generally accepted accounting principles (GAAP), in our historical information for the period presented in the press release and conference call, we provide certain non-GAAP financial measures that exclude from the directly comparable GAAP measures certain non-cash charges, including charges related to acquisitions such as amortization of intangibles and stock-based compensation expense. We believe that these non-GAAP measures enhance an investor’s 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, or as a substitute for, 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.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.	Description
99.1	Press release of SAFLINK Corporation dated March 15, 2005

2

SIGNATURES

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
Dated: March 15, 2005	By:	/s/    JON C. ENGMAN
	Name:	Jon C. Engman
	Title:	Chief Financial Officer

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

SAFLINK^® CORPORATION REPORTS FOURTH QUARTER AND

FISCAL 2004 FINANCIAL RESULTS

BELLEVUE, WA – (March 15, 2005) – SAFLINK^® Corporation (NASDAQ: SFLK), a leading developer, marketer, and integrator of biometric security solutions and smart cards, today reported its financial results for its fourth quarter and fiscal year ended December 31, 2004.

Fourth Quarter Results

Revenue for the fourth quarter of 2004 was $2.3 million, compared to $2.4 million for the third quarter of 2004 and $488,000 for the fourth quarter of 2003. The Company reported a net loss attributable to common stockholders of $6.6 million, or $0.08 per share, in the fourth quarter of 2004. This is compared to a net loss attributable to common stockholders of $7.2 million, or $0.12 per share, in the third quarter of 2004, which included a $2.2 million non-cash charge related to the modification of warrants in connection with the Company’s special warrant offer in July 2004, and a net loss attributable to common stockholders of $2.9 million, or $0.11 per share, in the fourth quarter of 2003.

Non-GAAP operating loss for the fourth quarter of 2004 was $5.4 million, which excludes certain non-cash charges such as the amortization of intangible assets and stock-based compensation expense. This compared to a non-GAAP operating loss of $2.9 million for the fourth quarter of 2003. SAFLINK believes that supplementary non-GAAP measures for operating results enhance an investor’s overall understanding of the Company’s financial performance by reconciling more closely the actual cash expenses of the Company in its operations, as well as excluding expenses that, in management’s view, are unrelated to the Company’s core operations. 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.

Fiscal 2004 Results

Revenue for fiscal 2004 was $6.4 million, compared to $2.0 million for fiscal 2003. The Company reported a net loss attributable to common stockholders of $18.1 million, or $0.36 per share, for fiscal 2004, as compared to a net loss attributable to common stockholders of $10.7 million, or $0.42 per share, for fiscal 2003.

Non-GAAP operating loss for fiscal 2004 was $15.7 million, which excludes certain non-cash charges such as the amortization of intangible assets and stock-based compensation expense. This compared to a non-GAAP operating loss of $10.1 million for fiscal 2003. 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.

Glenn Argenbright, President and CEO of SAFLINK commented, “2004 was a pivotal year for SAFLINK from a strategic perspective. Prior to entering the year, we identified the key technology components that we believed would garner the greatest sales opportunities for the Company in the long run. We then set out and acquired those components such as physical access, smart card middleware and PKI technologies. Combined with our biometric expertise and middleware, we believe we have been able to assemble a suite of solutions that is helping define the emerging market known as credentialing.”

Argenbright continued, “We believe our vision and foresight was supported by the types of major government initiatives launched during the year such as US-VISIT and the Transportation Security Administration’s TWIC and Registered Traveler programs. With our new comprehensive offerings, we were able to gain significant positioning on the first two programs, and we will be pursuing the third program in the near term, in concert with an impressive group of partners.”

“We plan to leverage our positioning on these programs with the goal of accelerating deployment on these and other credentialing programs,” said Glenn Argenbright, SAFLINK President and CEO.

SAFLINK will hold a conference call to discuss financial results today at 5:00 PM EST. SAFLINK may provide forward-looking information on this call. To listen to the conference, please call 1-800-257-1836, domestically, or 303-262-2137, internationally. A recording of the call will be available on the Investors page of SAFLINK’s web site for ten business days after the call.

About SAFLINK

SAFLINK Corporation offers biometric security and smart card solutions that protect intellectual property, secure information assets, and eliminate passwords. SAFLINK’s software provides Identity Assurance Management^™, allowing administrators to verify the identity of users and control their access to: computer networks; physical facilities; applications; manufacturing process control systems; and time and attendance systems. We also offer protection for popular applications such as e-mail, instant messaging, web transactions, and individual files. For more information, please see www.saflink.com or call SAFLINK at 800-762-9595.

NOTE: “SAFLINK,” “SAFsolution,” and “The Power of Biometric Authentication” are registered trademarks of SAFLINK Corporation.

This release contains information about management’s view of the company’s 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 including, but not limited to, risks and uncertainties associated with government programs and contracts, which are often non-standard and may be subject to cancellation without penalty and may produce volatility in earnings and revenue, the company’s financial condition, its ability to complete new sales contracts entered into this quarter, its ability to convert any backlog or potential sales opportunities into definitive agreements and revenue-producing relationships, the possibility that the merger with SSP-Litronic could disrupt the company’s business because of problems combining certain aspects of the companies and diversion of management’s attention from it core business, the failure of the combined company to retain key employees, the failure of the combined company to manage the cost of integrating the businesses and assets of SSP-Litronic, the combined company’s ability to sufficiently anticipate market needs and develop products and product enhancements that achieve market acceptance, SAFLINK’s ability to sell its products, its ability to compete with competitors and the growth of the biometrics market as well as other factors that are discussed in the company’s Annual Report on Form 10-K, as well as other documents periodically filed with the Securities and Exchange Commission.

SAFLINK COMPANY CONTACT:

SAFLINK Corporation

Jon C. Engman, Chief Financial Officer

(800) 762-9595

investorrelations@saflink.com

INVESTOR RELATIONS CONTACT

MKR Group, LLC

Todd Kehrli or Marie Dagresto

(818) 556-3700

investorrelations@saflink.com

- Continued on Next Page -

SAFLINK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three months ended December 31,						Twelve months ended December 31,
	2004			2003			2004			2003
Revenue:
Product	$	1,708		$	99		$	4,580		$	787
Service		559			389			1,818			1,228
Total revenue		2,267			488			6,398			2,015
Cost of revenue:
Product		758			84			2,211			300
Service		367			140			1,131			478
Amortization of intangibles		670			—			1,227			—
Total cost of revenue		1,795			224			4,569			778
Gross profit		472			264			1,829			1,237
Operating expenses:
Product development		2,284			601			5,637			2,474
Sales and marketing		2,180			1,616			7,176			5,255
General and administrative		2,113			910			5,898			3,615
Amortization of intangibles		39			—			97			—
Stock-based compensation		460			19			859			680
Total operating expenses		7,076			3,146			19,667			12,024
Operating loss		(6,604	)		(2,882	)		(17,838	)		(10,787	)
Interest expense		(37	)		(3	)		(59	)		(14	)
Other income, net		96			14			203			65
Change in fair value of outstanding warrants		—			—			1,808			—
Loss before income taxes		(6,545	)		(2,871	)		(15,886	)		(10,736	)
Income tax provision		12			—			51			—
Net loss		(6,557	)		(2,871	)		(15,937	)		(10,736	)
Modification of outstanding equity instruments		—			—			(2,167	)		—
Net loss attributable to common stockholders	$	(6,557	)	$	(2,871	)	$	(18,104	)	$	(10,736	)
Basic and diluted loss per common share	$	(0.08	)	$	(0.11	)	$	(0.36	)	$	(0.42	)
Weighted average number of common shares outstanding		78,472			27,062			50,125			25,505

SAFLINK CORPORATION

Supplemental Non-GAAP Information

(Unaudited)

(In thousands, except per share data)

	Three months ended December 31,						Twelve months ended December 31,
	2004			2003			2004			2003
Operating loss	$	(6,604	)	$	(2,882	)	$	(17,838	)	$	(10,787	)
Adjustments to reconcile operating loss in the financial statements to non-GAAP operating loss:
Amortization of intangibles – cost of sales		670			—			1,227			—
Amortization of intangibles – general and administrative		39			—			97			—
Stock-based compensation		460			19			859			680
Non-GAAP operating loss	$	(5,435	)	$	(2,863	)	$	(15,655	)	$	(10,107	)
Net loss attributable to common stockholders	$	(6,557	)	$	(2,871	)	$	(18,104	)	$	(10,736	)
Adjustments to reconcile net loss attributable to common shareholders in the financial statements to non-GAAP net loss attributable to common stockholders:
Amortization of intangibles – cost of sales		670			—			1,227			—
Amortization of intangibles – general and administrative		39			—			97			—
Stock-based compensation		460			19			859			680
Change in fair value of outstanding warrants		—			—			(1,808	)		—
Modification of outstanding equity instruments		—			—			2,167			—
Income tax provision		12			—			51			—
Non-GAAP net loss attributable to common stockholders	$	(5,376	)	$	(2,852	)	$	(15,511	)	$	(10,056	)
Non-GAAP net loss attributable to common stockholders	$	(0.07	)	$	(0.11	)	$	(0.31	)	$	(0.39	)
Weighted average number of common shares outstanding		78,472			27,062			50,125			25,505

Statement Regarding Non-GAAP Disclosures:

To supplement the information that is presented in accordance with U.S. generally accepted accounting principles (GAAP), in our historical information for the period presented in the press release and conference call, we provide certain non-GAAP financial measures that exclude from the directly comparable GAAP measures certain non-cash charges including amortization of intangibles and stock-based compensation expense. We believe that these non-GAAP measures enhance an investor’s overall understanding of our financial performance by reconciling more closely the actual cash expenses of the Company in its 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, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled items reported by other companies.

SAFLINK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	December 31, 2004			December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	22,217		$	7,099
Accounts receivable, net		1,737			610
Inventory		672			295
Other current assets		1,034			454
Total current assets		25,660			8,458
Furniture and equipment, net		1,153			622
Intangible assets, net		24,186			1,610
Goodwill		95,223			2,158
Total assets	$	146,222		$	12,848
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,665		$	547
Accrued expenses		2,207			1,087
Convertible note payable		1,250			—
Other current obligation		937			—
Deferred revenue		340			113
Total current liabilities		6,399			1,747
Deferred tax liability		628			—
Stockholders’ equity:
Preferred stock		—			—
Common stock		797			281
Deferred stock-based compensation		(1,841	)		—
Additional paid-in capital		254,328			106,805
Accumulated deficit		(114,089	)		(95,985	)
Total stockholders’ equity		139,195			11,101
Total liabilities and stockholders’ equity	$	146,222		$	12,848