Revenue for the third quarter of 2006 was $1.7 million, compared to $944,000 for the second quarter of 2006 and $2.4 million for the third quarter of 2005. Saflink reported a net loss attributable to common stockholders of $21.5 million, or $0.24 per share, in the third quarter of 2006, which included a non-cash impairment charge of $14.6 million related to its intangible assets and other long-lived assets. This is compared to a net loss attributable to common stockholders of $37.7 million, or $0.43 per share, in the second quarter of 2006, and a net loss attributable to common stockholders of $26.1 million, or $0.30 per share, in the third quarter of 2005.

Non-GAAP operating loss for the third quarter of 2006 was $4.9 million, which excludes certain non-cash charges such as amortization of intangible assets, impairments of goodwill and long-lived assets, and stock-based compensation expense. This is compared to a non-GAAP operating loss of $5.5 million for the third quarter of 2005. 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, Saflink's Interim CEO commented, "We were pleased to see a strong increase in sales from our preceding quarter. This development, along with our recent expense reduction activities, will improve our operating cash burn results in the next couple quarters. We believe our continued focus on monetizing our core biometric logical and physical access technologies through strategic distribution partners for the public and private sector is beginning to bear fruit."

Oyer continued, "We are encouraged by the clarity coming out of the Transportation Security Administration (TSA) with respect to the Registered Traveler (RT) program. We believe the build-out of the RT infrastructure by the TSA is an important step in the market's evolution and expect this to result in active RT programs at several major airports in the near term, which we will be aggressively competing for through the FLO Alliance."