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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

Amendment No. 1



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FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT
OF 1934



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

for the fiscal year ended December 31, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File Number 0-20270



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SAFLINK CORPORATION

(Exact Name of
Registrant as Specified in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 95-4346070                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                             |  |           
|-------------------------------------------- |  | ----------
|12413 Willows Road NE Suite 300 Kirkland, WA |  | 98034     
|(Address of principal executive offices)     |  | (Zip Code)

(425) 278-1100

(Registrants Telephone Number, Including Area Code)



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Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value per share



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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes ̈No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes ̈No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange
Act):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes ̈No  x

The aggregate market value of the registrants common stock held by non-affiliates of the registrant as of June 30, 2006, was approximately $28,562,376.

There were 130,657,578 shares of the registrants common stock outstanding as of April 23, 2007.



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EXPLANATORY NOTE

This Amendment to the registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2006, is being filed in order to submit the information required to be included in Part III thereof within
the period required by General Instruction G(3) to Form 10-K. FLO Corporation (FLO), a Delaware corporation organized on March 9, 2007, and Litronic, Inc. (Litronic), a Delaware corporation acquired on August 6, 2004, are wholly-owned
subsidiaries of Saflink Corporation.

Part III of the registrants Annual Report on Form 10-K is hereby amended by deleting the text
thereof in its entirety and substituting the following:

PART III



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

Directors

The following sets forth our current directors and information concerning their age and background as of April 23,
2007:



|                     |  |                                                                                       |  |     |  |               
|-------------------- |  | ------------------------------------------------------------------------------------- |  | --- |  | --------------
|Name                 |  | Principal Occupation                                                                  |  | Age |  | Director Since
|Glenn L. Argenbright |  | President, FLO Corporation                                                            |  | 41  |  | 2001          
|Lincoln D. Faurer    |  | President, LDF, Inc.                                                                  |  | 79  |  | 2004          
|Gordon E. Fornell    |  | United States Air Force Lieutenant General (Retired)                                  |  | 70  |  | 2003          
|Asa Hutchinson       |  | Partner, Venable LLP                                                                  |  | 56  |  | 2005          
|Richard P. Kiphart   |  | Principal, William Blair & Company, LLC                                               |  | 65  |  | 2004          
|Trevor Neilson       |  | Partner, Endeavor Group, LLC                                                          |  | 34  |  | 2005          
|Steven M. Oyer       |  | Interim Chief Executive Officer, Saflink; President,
Capital Placement Holdings, Inc. |  | 51  |  | 2001          

Glenn L. Argenbright has served as a member of Saflinks board of directors since
December 2000 and as president of FLO Corporation since March 2007, when we created FLO Corporation as our wholly-owned subsidiary. Mr. Argenbright served as our chief executive officer from December 2000 until September 2006, at which time he
became general manager of our Registered Traveler Solutions group. From November 1999 to December 2000, Mr. Argenbright served as president and chief executive officer of Jotter Technologies, a firm whose assets we purchased in 2000. From May
1998 to November 1999, Mr. Argenbright served as president and chairman of the board of Spotlight Interactive, Inc., a web-incubator and venture capital firm. From February 1999 to August 1999, while working for Spotlight, Mr. Argenbright
served as a director of and consultant to Todays Communications Inc., a provider and aggregator of web content. From May 1998 to February 1999, Mr. Argenbright was a director and executive vice president of Intelligent Communications,
Inc., a company providing high-speed Internet access over satellite. Mr. Argenbright has also served on the boards of directors of Internet Presence Providers, Internet Extra, Cardzoo!, ProCheer, and AIR, Inc. Mr. Argenbright received a BA
from the University of California at San Diego and a JD from the University of San Diego.

Lincoln D. Faurer, United States Air Force
Lieutenant General (Retired)has served as a member of Saflinks board of directors since September 2004. General Faurer is president of LDF Inc., a firm that provides consulting services on matters concerning command, control,
communications, computing and intelligence (C4I). From 1981 to 1985, he was the director of the National Security Agency. From 1979 to 1981, he was the deputy chairman of NATOs Military Committee and the director of intelligence for
Headquarters U.S. European Command from 1977 to 1979. From 1974 to 1977, General Faurer was the vice director for production for the Defense Intelligence Agency. Between 1973 and 1974, he was the U.S. Air Forces deputy assistant chief of staff
for intelligence and the director of intelligence for the Headquarters U.S. Southern Command from 1971 to 1973. General Faurer received a BS from the United States Military Academy, an MA in Engineering Management from Rennsalaer Polytechnical
Institute and an MA in International Affairs from George Washington University. In his public service work, General Faurer has been President of the National Correlation Working Group, Chairman of the Association of Former Intelligence Officers
(AFIO), President of the Joint Military Intelligence College Foundation (JMICF), Vice Chairman of the National Military Intelligence Association (NMIA) and is currently a member of the USAF Scientific Advisory Board.



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Gordon E. Fornell, United States Air Force Lieutenant General (Retired)has served as a member of
Saflinks board of directors since August 2003. General Fornell served in senior acquisition leadership roles in the U.S. Air Force Systems Command and Air Force Material Command for more than ten years, and worked in research, development, and
acquisition positions for nearly 20 years prior. He was commander of the Electronic Systems Center at Hanscom Air Force base in Massachusetts from 1988 to 1993, and senior military assistant to the Secretary of Defense from 1987 to 1988. He also
commanded the Armament Division at Eglin Air Force Base, Florida from 1985 to 1987.

Asa Hutchinsonhas served as a member of
Saflinks board of directors since March 2005. Mr. Hutchinson is a partner in the law firm Venable LLP, and was a founding member of the U.S. Department of Homeland Security and the nations first Under Secretary of Border and
Transportation Security. Mr. Hutchinson was confirmed by the U.S. Senate as Under Secretary of Homeland Security in January 2003, shortly after the department was created. As one of the nations top-ranking homeland security officials
after Secretary Tom Ridge, Mr. Hutchinson was responsible for more than 110,000 federal employees in such agencies as the Transportation Security Administration, Customs and Border Protection, Immigration and Customs Enforcement, and the
Federal Law Enforcement Training Center. Mr. Hutchinson managed the overall security of U.S. borders and transportation systems, which included oversight for security programs such as US-VISIT and the Transportation Security
Administrations TWIC and Registered Traveler initiatives. From 2001 to 2003, Mr. Hutchinson served as the director of the U.S. Drug Enforcement Administration, and from 1997 to 2001, he served as a member of the U.S. House of
Representatives from Arkansas. Mr. Hutchinson received a BS from Bob Jones University and a JD from the University of Arkansas.

Richard P. Kiphart has served as a member of Saflinks board of directors and as chairman of the board since August 2004 and as co-chairman of the board and lead independent director since November 2005. Since 1995,
Mr. Kiphart has served as head of the corporate finance department and principal of William Blair & Company, L.L.C., an investment firm. He currently sits on the board of directors of First Data Corporation, where he has been a
director since First Datas acquisition of Concord EFS early in 2004. He served on the Concord EFS board of directors from 1997 until 2004 and was chairman of the Concord board of directors from February 2003 until March 2004. Mr. Kiphart
is a member of the board of directors of Photo Control Corp., Advanced Biotherapy, Inc. and Nature Vision, Inc. He is also chairman of the Merit Music School and serves on the board of directors for the Lyric Opera of Chicago, the Erikson Institute
and DATA (Debt AIDS Trade Africa). Mr. Kiphart graduated from Dartmouth College and holds an MBA from Harvard Business School.

Trevor Neilson has served as a member of Saflinks board of directors since August 2005 and as non-executive co-chairman of the board since November 2005. Mr. Neilson is currently a partner in a private equity and
consulting firm, Endeavor Group LLC. Mr. Neilson previously served as executive director of the Global Business Coalition on HIV/AIDS (GBC), a coalition of 200 international companies from over 50 countries that have interests related to global
health, biotechnology, life sciences, and corporate social responsibility. Prior to working for the GBC, Mr. Neilson served in the press and travel offices of the Clinton White House. Additionally, Mr. Neilson served as director of public
affairs for the Bill & Melinda Gates Foundation. In this role, Mr. Neilson managed all government affairs, public policy and communications for the foundation dealing extensively with members of Congress and the White House. He also
worked directly for Bill and Melinda Gates on a variety of personal projects including corporate governance, investments, property acquisitions, and political involvement.

Steven M. Oyer has served as a member of Saflinks board of directors since December 2001 and as our interim chief executive officer since
September 2006. Mr. Oyer is president and principal of Capital Placement Holdings, Inc., a New York advisory firm. Mr. Oyer previously served as senior managing director for PlusFunds Group, Inc., a New York investment manager. From
October 2001 to August 2005, Mr. Oyer served as managing director of Standard & Poors Investment Services, responsible for global business development. He served as our interim chief financial officer from June 2001 until
December 2001. From October 1995 to November 2000, Mr. Oyer served as the vice president regional director for Murray Johnstone International Ltd., a Scottish investment firm. Mr. Oyer is a member of the board of directors of Salton, Inc.,
has been active in industry associations such as Family Office Exchange and has served on the leadership council of the Institute for Private Investors.

Audit Committee

The current members of our audit committee are Messrs. Faurer (Chairman), Fornell and Hutchinson.
Our board of directors has determined that each member of the audit committee meets the independence criteria set forth in the applicable rules of the Securities and Exchange Commission for audit committee membership. The board of directors has also
determined that at least one member of the audit committee, Mr. Hutchinson, is qualified as an audit committee financial expert as defined by the SEC.



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Executive Officers

Our executive officers are generally elected annually at the meeting of our board of directors held in conjunction with the annual meeting of stockholders. The following sets forth our current executive officers and
information concerning their age and background as of April 23, 2007:



|                     |  |                                          |  |     |  |               
|-------------------- |  | ---------------------------------------- |  | --- |  | --------------
|Name                 |  | Position                                 |  | Age |  | Position Since
|Steven M. Oyer       |  | Interim Chief Executive Officer          |  | 51  |  | 2006          
|Jeffrey T. Dick      |  | Chief Financial Officer                  |  | 35  |  | 2006          
|Steven D. Rishel     |  | General Manager, Core Technologies Group |  | 55  |  | 2004          
|Glenn L. Argenbright |  | President, FLO Corporation               |  | 41  |  | 2006          

Steven M. Oyer for a biographical summary of Mr. Oyer, see the
Directors section of this Item 10.

Jeffrey T. Dick has served as our Chief Financial Officer since March 2007, and
served as our interim Chief Financial Officer since November 2006. Mr. Dick joined us in August 2002 as corporate controller and has been responsible for our accounting and finance functions since that time. Mr. Dick was promoted to Vice
President of Finance in March 2006. Prior to joining Saflink, Mr. Dick held finance and accounting positions for Lumera Corporation, Mercata, Inc. and Captaris, Inc.

Steven D. Rishel has served as our Senior Vice President of Operations since October 2004. Since joining us in October 2003, Mr. Rishel has served in various capacities, including as our Chief Operating
Officer and Vice President of Customer Services. As Senior Vice President of Operations, Mr. Rishel leads our technical support, implementation services, technical training, fulfillment and information technology departments. Prior to joining
us, Mr. Rishel ran Paragon Operations Partnership, offering consulting services to technology companies in the areas of support operations, supply chain management, order fulfillment, and cross-functional integration. Mr. Rishel has
extensive experience in executive management, including roles of increasing responsibility at Captaris, Inc., a software company specializing in voice and fax message management, finishing his over ten year tenure there as senior vice president of
operations.

Glenn L. Argenbright  for a biographical summary of Mr. Argenbright, see the Directors section
of this Item 10.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who beneficially own more than 10% of
our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing
requirements applicable to our executive officers, directors and greater-than-10% stockholders were complied with, except that Messrs. Faurer, Fornell, Hutchison, Kiphart and Neilson each filed three late reports with respect to three transactions;
Mr. Oyer filed four late reports with respect to four transactions; Mr. Dick filed one late report with respect to one transaction; and former director Frank J. Cilluffo filed three late reports with respect to three transactions.

Code of Ethics

Our board of directors has adopted a code of business conduct that outlines the principles of legal and ethical business conduct under which Saflink does business. The code of business conduct is applicable to all of our
directors, employees and officers. Our board of directors has also adopted a code of ethics that applies to our senior financial officers. These materials are available free of charge by writing to our corporate secretary at 12413 Willows Road NE,
Suite 300, Kirkland, Washington 98034. Any substantive amendment or waiver of these codes may be made only by the board of directors upon a recommendation of the audit committee, and we intend to disclose any such amendment or waiver on our website
at www.saflink.com.



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|Item 11. | Executive Compensation.
|-------- | -----------------------

Compensation Discussion and Analysis

The goals of our compensation policies are to attract, retain and reward executive officers who contribute to our success, to align
executive officer compensation with our performance and to motivate executive officers to achieve our business objectives. We use salary, bonus compensation, option grants, stock appreciation rights, performance share awards and restricted stock
awards to attain these goals.

We strongly believe that equity ownership by executive officers provides incentives to build stockholder
value and aligns the interests of executive officers with those of the stockholders, and therefore the compensation committee makes periodic grants of stock options under our stock incentive plans. The size of an option grant to an executive officer
has generally been determined with reference to competitive practice, the responsibilities and expected future contributions of the executive officer, previous grants to that officer, as well as recruitment and retention considerations.

In order to ensure that our executive compensation levels and targets are consistent with the compensation philosophy of the board of directors and
aligned with, and designed to achieve, our strategic and operating objectives, the compensation committee generally reviews the recommendations of management and outside consultants. In April 2004, the compensation committee engaged the services of
Watson Wyatt & Company, an independent compensation consultant, which reported directly to the compensation committee to assist in the determination of appropriate levels of compensation for our executive officers, including our chief
executive officer.

Elements of Compensation

Executive compensation consists of following elements:

Base Salary

Base salaries for our executives are established based on the scope of their responsibilities, taking into account competitive market compensation paid by
other companies for similar positions. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities at comparable companies, in line
with our compensation philosophy. Base salaries are reviewed and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

Equity Awards

We strongly
believe that equity ownership by executive officers provides incentives to build stockholder value and aligns the interests of executive officers with those of the stockholders. Our stock incentive plan authorizes us to grant options to purchase
shares of common stock to our employees, directors and consultants. Our compensation committee is the administrator of the plan. Periodic stock option grants are made at the discretion of the compensation committee to eligible employee and, in
appropriate circumstances, the compensation committee considers the recommendations of members of management, such as Mr. Oyer, our Interim Chief Executive Officer. The size of an option grant to an executive officer has generally been
determined with reference to the responsibilities and expected future contributions of the executive officer, previous grants to that officer, as well as recruitment and retention considerations.

Compensation Committee

The current members of our
compensation committee are Messrs. Kiphart (Chairman) and Fornell. Mr. Oyer served as a member of the compensation committee until September 2006, when he became our interim Chief Executive Officer. Each of the members of the compensation
committee meets the independence criteria set forth in the applicable rules of Nasdaq for compensation committee membership and outside directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

The primary purpose of the compensation committee is to discharge the boards responsibilities relating to compensation and benefits of our
executive officers. In carrying out these responsibilities, the compensation committee reviews all components of executive officer compensation for consistency with the committees compensation philosophy as in effect from time to time. The
compensation committee determines all compensation for our chief executive officer, including incentive-based and equity-based compensation. In addition, the compensation committee reviews and approves salary and bonus criteria for other executive
officers, and approves stock option grants to executive officers. The board of directors has delegated to Mr. Oyer the authority to approve stock option grants to any eligible person who is not an executive officer under our stock incentive
plan, not to exceed 50,000 shares of our common stock to any one person within any fiscal year. The compensation committee also oversees and recommends director compensation to the board of directors.



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The committee has the authority to obtain advice or assistance from consultants, legal counsel,
accounting or other advisors as appropriate, to perform its duties and to determine the terms, costs and fees for such engagements. The committee has the sole authority to retain or terminate any consulting firm used to evaluate director, chief
executive officer or executive compensation, and to determine and approve the terms of engagement the fees and costs for such engagements. We pay the fees and costs of any consultant or advisor engaged by the committee to assist in it in performing
any of its duties. The compensation committee does not currently engage any consultant related to executive or director compensation matters.

The committee meets as often as it deems appropriate, but not less frequently than once each year, to review the compensation of our executive officers, and to otherwise perform its duties under its charter.

To fulfill its responsibilities and duties, the committee:



| |  |  | Determines all compensation for our chief executive officer, including incentive-based and equity-based compensation. Our chief executive officer may not be present
during such voting or deliberations.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reviews and approves annual performance objectives and goals relevant to compensation for our chief executive officer and evaluates the performance of our chief
executive officer in light of these goals and objectives.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Considers, in determining the long-term incentive component of compensation for our chief executive officer, the performance of Saflink and relative stockholder
return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to our chief executive officer in past years.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Makes recommendations to the board regarding incentive-based or equity-based compensation plans in which our executive officers participate, reviews and approves
salaries, incentive and equity awards for other executive officers and oversees the evaluation of management.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approves all employment, severance, or change-in-control agreements, special or supplemental benefits applicable to our executive officers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Periodically reviews and advises the board concerning both regional and industry-wide compensation practices and trends in order to assess the adequacy and
competitiveness of our compensation programs for our chief executive officer and our other executive officers relative to comparable companies in our industry.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Internal Revenue Code Section 162(m)

Saflink has considered the provisions of
Section 162(m) of the Internal Revenue Code and related treasury department regulations which restrict deductibility of executive compensation paid to our chief executive officer and each of the four other most highly compensated executive
officers holding office at the end of any year to the extent such compensation exceeds $1,000,000 for any of such officers in any year and does not qualify for an exception under the statute or regulations. Income from options granted under the 2000
Stock Incentive Plan would generally qualify for an exemption from these restrictions so long as the options are granted by a committee whose members are non-employee directors. We expect that the compensation committee will generally be comprised
of non-employee directors, and that to the extent that the committee is not so constituted for any period of time, the options granted during such period will not be likely to result in compensation exceeding $1,000,000 in any year. To the extent
that total non-exempt compensation exceeds $1,000,000 in fiscal 2006 or any subsequent year, it will not be deductible. The committee does not believe that in general other components of our compensation will be likely to exceed $1,000,000 for any
executive officer in the foreseeable future and therefore concluded that no further action with respect to qualifying such compensation for deductibility was necessary at this time. In the future, the committee will continue to evaluate the
advisability of qualifying its executive compensation for deductibility of such compensation. The committees policy is to qualify its executive compensation for deductibility under applicable tax laws as practicable.

Chief Executive Officer Compensation

Mr. Oyers compensation as Interim Chief Executive Officer includes base salary and stock option grants. Mr. Oyers compensation is based upon market analysis, assessments of individual performance and achievement of
operating goals that are established by the board of directors. Assessments of individual performance include objective standards and subjective evaluations of the value of Mr. Oyers contributions.

We pay Mr. Oyer $25,000 per month in base salary for his service as Interim Chief Executive Officer. On September 29, 2006, we granted
Mr. Oyer a fully-vested and exercisable non-statutory option to purchase 350,000 shares of our common stock under our 2000 stock incentive plan and a non-statutory option to purchase 700,000 shares of our common stock that becomes



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exercisable upon the achievement of specified performance objectives. The options have an exercise price of $0.37 per share, which is equal to the last sale
price per share of our common stock as reported on the Nasdaq Capital Market on the last trading day prior to the date of grant. In addition, on November 17, 2006, we granted Mr. Oyer a fully-vested and exercisable non-statutory option to
purchase 300,000 shares of our common stock under our 2000 stock incentive plan. The options have an exercise price of $0.14 per share, which is equal to the last sale price per share of our common stock as reported on the Nasdaq Capital Market on
the last trading day prior to the date of grant.

We paid Mr. Argenbright a base salary of $240,000 for his service as President and
Chief Executive Officer until September 29, 2006, after which Mr. Argenbright ceased serving as our Chief Executive Officer and began serving as President and General Manager of our Registered Traveler Solutions division.

Summary Compensation Table

The following table sets
forth information concerning the compensation earned during fiscal 2006 by our Interim Chief Executive Officer, our former Chief Financial Officer, our Chief Financial Officer, our other most highly-compensated executive officer, and two former
executive officers who would have been included among the other most highly-compensated executive officers had they continued to serve as executive officers through December 31, 2006:

2006 SUMMARY COMPENSATION TABLE



|                                                              |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|------------------------------------------------------------- |  | ---- |  | ---------- | ------- | --- | --------- | - | --------------- |  | ------------------- | - |  | ---------------------------------------- | ------- | ------------------------- |  | - | --------- |  | - | ------- | ---- |  | - | -------
|Name and
Principal Position                                   |  | Year |  | Salary ($) |         |     | Bonus ($) |   | StockAwards ($) |  | OptionAwards ($)(1) |   |  | Non-EquityIncentive PlanCompensation ($) |         | All OtherCompensation
($) |  |   | Total ($)
|                                                              |  |      |  |            |         |     |          
|Steven M. Oyer (2)                                            |  | 2006 |  | $          | 75,000  | (3) |           | $ |                |  | $                   |  |  | $                                        | 168,000 | (4)                       |  | $ |          |  | $ |        |      |  | $ | 243,000
|Interim Chief Executive Officer                               |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Jeffrey T. Dick                                               |  | 2006 |  |            | 130,208 |     |           |   |                |  |                     |  |  |                                          | 20,426  |                           |  |   |          |  |   |         |      |  |   | 150,634
|Chief Financial Officer                                       |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Glenn L. Argenbright                                          |  | 2006 |  |            | 240,000 |     |           |   |                |  |                     |  |  |                                          |        |                           |  |   |          |  |   | 9,230   | (5)  |  |   | 249,230
|President, FLO Corporation and Former Chief Executive Officer |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Steven D. Rishel                                              |  | 2006 |  |            | 185,000 |     |           |   |                |  |                     |  |  |                                          | 47,654  |                           |  |   |          |  |   | 27,181  | (6)  |  |   | 259,835
|Senior Vice President of Operations                           |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Former Officers:                                              |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Jon C. Engman (7)                                             |  | 2006 |  |            | 179,282 |     |           |   |                |  |                     |  |  |                                          | 97,022  |                           |  |   |          |  |   | 274,349 | (8)  |  |   | 550,653
|Former Chief Executive Officer                                |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        
|                                                              |  |      |  |            |         |     |           |  
|Kris Shah (9)                                                 |  | 2006 |  |            | 197,795 |     |           |   |                |  |                     |  |  |                                          |        |                           |  |   |          |  |   | 288,243 | (10) |  |   | 486,038
|Former President, Litronic, Inc.                              |  |      |  |            |         |     |           |   |                 |  |                     |   |  |                                          |         |                           |  |   |           |  |   |         |      |  |   |        

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|(1) | Represents compensation expense related to shares granted to each executive officer calculated based on the grant date fair value estimated in accordance with the provisions of
Statement of Financial Standards No. 123R, Share-Based Payments.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Oyer, a member of our board of directors since 2001, became the interim chief executive officer of Saflink on September 28, 2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents payments made to Mr. Oyers consulting firm Capital Placement Holdings, Inc., from September 28, 2006, through December 31, 2006, for his services as
interim chief executive officer.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Represents options to purchase shares of our common stock granted to Mr. Oyer for his role as interim chief executive officer. Option awards to Mr. Oyer in connection with
his role as director during 2006 was $1,145 (see Director Compensation Table in Item 11).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents a partial payment of Mr. Argenbrights paid time-off balance.
|--- | ------------------------------------------------------------------------

|(6) | Represents sales commission payments to Mr. Rishel.
|--- | ---------------------------------------------------

|(7) | Mr. Engman resigned as chief financial officer of Saflink effective November 24, 2006.
|--- | --------------------------------------------------------------------------------------

|(8) | Includes a lump-sum severance payment of $190,000 paid in connection with Mr. Engmans resignation from Saflink $51,666 paid in connection with additional tax imposed by
Section 409A of the Internal Revenue Code and a gross paid time-off payment of $32,683.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Mr. Shah resigned from our board of directors and his employment with our wholly-owned subsidiary Litronic, Inc. was terminated in October 2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Includes a lump-sum severance payment of $22,308 paid in connection with Mr. Shahs termination from Litronic, Inc. and a gross paid time-off payment of $70,936.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

Employment Agreements

On September 28, 2006, our board of directors approved the terms of an executive consulting agreement with Capital Placement Holdings, Inc. under which Mr. Oyer, the president and principal of Capital Placement Holdings agreed to
serve as our Interim Chief Executive Officer until such time as we find a qualified Chief Executive Officer. We agreed to pay Capital Placement Holdings a fee of $25,000 per month for the length of the agreement. The agreement commenced as of
September 29, 2006, and continues until either party terminates the agreement upon 30 days advance written notice.

Until
September 29, 2006, Mr. Argenbright served as our Chief Executive Officer under the terms of an employment agreement which provided for a base salary of $240,000. Effective September 29, 2006, Mr. Argenbright was reassigned to
serve as President and General Manager of Registered Traveler Solutions, a division within Saflink focused exclusively on the national Registered Traveler program, and no longer served as our Chief Executive Officer.

On October 23, 2003, we entered into an employment agreement with Steven D. Rishel, our General Manager, Core Technology Group. The agreement
provides for the payment to Mr. Rishel of an annual salary of $185,000. In accordance with the terms of the agreement, Mr. Rishels employment with us is at will and his employment may be terminated anytime with or without
cause.

On August 21, 2002, we entered into an employment agreement with Jeffrey T. Dick, our Chief Financial Officer. The agreement
provides for the payment to Mr. Dick of an annual salary of $175,000. In accordance with the terms of the agreement, Mr. Dicks employment with us is at will and his employment may be terminated anytime with or without
cause.



8



---

Grants of Plan-Based Awards

The following table sets forth certain information with respect to stock and option awards granted during fiscal 2006 to our named executive officers:

2006 GRANTS OF PLAN-BASED AWARDS



|                     |  |            |  |                                                                |  |                                        |      |                                                  |   |         |    
|-------------------- |  | ---------- |  | -------------------------------------------------------------- |  | -------------------------------------- | ---- | ------------------------------------------------ | - | ------- | ---
|Name                 |  | Grant Date |  | All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions (#) |  | Exerciseor BasePrice ofOptionAwards($) |      | Grant DateFair Value ofStock andOptionAwards ($) |  
|Steven M. Oyer       |  | 9/28/2006  |  | 350,000                                                        |  | $                                      | 0.37 |                                                  | $ | 126,662 |    
|                     |  | 9/28/2006  |  | 700,000                                                        |  |                                        | 0.37 |                                                  |   |        | (1)
|                     |  | 11/17/2006 |  | 300,000                                                        |  |                                        | 0.14 |                                                  |   | 41,091  |    
|                     |  |            |  |                                                               
|Jeffrey T. Dick      |  | 1/2/2006   |  | 94,500                                                         |  |                                        | 0.79 |                                                  |   | 59,100  |    
|                     |  | 11/17/2006 |  | 200,000                                                        |  |                                        | 0.14 |                                                  |   | 19,900  |    
|                     |  |            |  |                                                               
|Glenn L. Argenbright |  |           |  |                                                               |  |                                        |     |                                                  |   |        |    
|                     |  |            |  |                                                               
|Steven D. Rishel     |  | 1/2/2006   |  | 225,000                                                        |  |                                        | 0.79 |                                                  |   | 143,617 |    
|                     |  |            |  |                                                               
|Jon C. Engman        |  | 1/2/2006   |  | 152,000                                                        |  |                                        | 0.79 |                                                  |   | 97,021  |    
|                     |  |            |  |                                                               
|Kris Shah            |  |           |  |                                                               |  |                                        |     |                                                  |   |        |    

---

|(1) | These options are not exercisable until certain performance objectives have been met. As none of the objectives were met during 2006, the grant date fair value of these options was
considered to be $0.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9



---

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information with respect to the value of all unexercised options previously awarded to our named executive officers
as of December 31, 2006:

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2006



|                     |  |                                                                |     |  |                                                                      |     |  |                         |      |                       |           
|-------------------- |  | -------------------------------------------------------------- | --- |  | -------------------------------------------------------------------- | --- |  | ----------------------- | ---- | --------------------- | ----------
|Name                 |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable |     |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#) (1)Unexercisable |     |  | OptionExercisePrice ($) |      | OptionExpiration Date
|Steven M. Oyer       |  | 350,000                                                        | (2) |  |                                                                     |     |  | $                       | 0.37 |                       | 9/28/2016 
|                     |  |                                                               |     |  | 700,000                                                              | (3) |  |                         | 0.37 |                       | 9/28/2016 
|                     |  | 300,000                                                        | (4) |  |                                                                     |     |  |                         | 0.14 |                       | 11/17/2016
|                     |  |                                                                |     | 
|Jeffrey T. Dick      |  | 35,500                                                         |     |  |                                                                     |     |  |                         | 0.79 |                       | 8/22/2012 
|                     |  | 10,000                                                         |     |  |                                                                     |     |  |                         | 0.79 |                       | 3/4/2014  
|                     |  | 10,000                                                         |     |  |                                                                     |     |  |                         | 0.79 |                       | 7/1/2014  
|                     |  | 28,874                                                         |     |  | 65,626                                                               |     |  |                         | 0.79 |                       | 1/2/2016  
|                     |  | 5,555                                                          |     |  | 194,445                                                              |     |  |                         | 0.14 |                       | 11/17/2016
|                     |  |                                                                |     | 
|Glenn L. Argenbright |  | 8,572                                                          |     |  |                                                                     |     |  |                         | 0.79 |                       | 2/15/2011 
|                     |  | 35,715                                                         |     |  |                                                                     |     |  |                         | 0.79 |                       | 6/29/2011 
|                     |  | 217,665                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 2/11/2012 
|                     |  | 436,120                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 2/25/2013 
|                     |  |                                                                |     | 
|Steven D. Rishel     |  | 125,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 10/24/2013
|                     |  | 100,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 6/23/2014 
|                     |  | 68,749                                                         |     |  | 156,251                                                              |     |  |                         | 0.79 |                       | 1/2/2016  
|                     |  |                                                                |     | 
|Jon C. Engman        |  | 182,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 11/24/2007
|                     |  | 116,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 11/24/2007
|                     |  | 152,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 11/24/2007
|                     |  |                                                                |     | 
|Kris Shah            |  | 15,750                                                         |     |  |                                                                     |     |  |                         | 0.79 |                       | 1/20/2007 
|                     |  | 120,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 1/20/2007 
|                     |  | 500,000                                                        |     |  |                                                                     |     |  |                         | 0.79 |                       | 10/20/2007

---

|(1) | Except as otherwise noted each option vests at the rate of 36 equal monthly installments over three years.
|--- | ----------------------------------------------------------------------------------------------------------

|(2) | This option grant to purchase shares of our common stock was fully-vested upon grant.
|--- | -------------------------------------------------------------------------------------

|(3) | This grant includes performance-based vesting and no performance objectives were met during 2006.
|--- | -------------------------------------------------------------------------------------------------

|(4) | This option grant to purchase shares of our common stock was fully-vested upon grant.
|--- | -------------------------------------------------------------------------------------



10



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Option Exercises and Stock Vested During Last Fiscal Year

None of our named executive officers exercised stock options during fiscal 2006.

Pension Benefits

None of our named executive officers participate in or have account balances in
qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

None of our named executive officers participate in or have account balances in non-qualified defined contribution plans or other deferred compensation
plans maintained by us. The compensation committee, which is comprised solely of outside directors as defined for purposes of Section 162(m) of the Internal Revenue Code, may elect to provide our officers and other employees with
non-qualified defined contribution or deferred compensation benefits if the compensation committee determines that doing so is in our best interests.

Potential Payments upon Termination or Change in Control

Involuntary Termination or Termination for Good Reason in
Connection with a Change in Control

The reassignment of Mr. Argenbright from Chief Executive Officer to President and General
Manager of our Registered Traveler division in September 2006 triggered certain severance provisions contained in his employment agreement and, as a result, we determined that Mr. Argenbright was entitled to severance pay of $240,000, or twelve
months base salary. In full settlement of this severance obligation, Mr. Argenbright agreed to accept $40,000 less than the full twelve months base salary, and we agreed to (i) pay Mr. Argenbright $60,000 in cash and
(ii) issue to him a $140,000 promissory note bearing interest at 8% per year and maturing and coming due and payable in four equal quarterly installments beginning on April 1, 2008.

Severance Plan. In November 2006, our board approved the Saflink severance plan. Under the severance plan, if a full-time employees
employment is involuntarily terminated, the employee is eligible to receive the severance benefits specified in the plan. The employment termination is involuntary if we initiate it, but it is not involuntary if the termination is due to retirement,
death or disability of the employee, or if the termination is for cause. The severance benefits payable under the plan include a lump sum payment based on the employees weekly base salary and years of service, ranging from two times weekly
salary to five times weekly salary. An employee will be required to sign a release of claims and to return all of our property and equipment prior to receiving any severance payments under the plan.

Retention Agreements. We have entered into retention agreements with each of Messrs. Dick and Rishel. These retention agreements
provide that if the employee is terminated as a result of an involuntary termination (as defined in the retention agreements), then he shall be entitled to receive the compensation, accrued but unused vacation and benefits earned through the date of
termination of employment, and severance payments equal to six months salary payable in accordance with our standard payroll practices. However, if the employee is terminated as a result of an involuntary termination within two months prior
to, upon or within twelve months following a change-of-control, then he will be entitled to receive the following: (a) the compensation, accrued but unused vacation and benefits earned through the date of termination; (b) severance
payments equal to six months salary, payable in a lump sum within thirty days of the date of termination; (c) vesting of 100% of any unvested options as of the date of termination; (d) reimbursement of any COBRA premiums paid by the
employee for continued group health insurance coverage of employee and his dependents for a period of up to twelve months after the date of termination; and (e) the laptop or other portable computer device used by the employee, if any, as of
the date of termination.



11



---

Assuming the employment of our named executive officers were to be terminated involuntarily or terminated
for good reason on December 31, 2006, or within two months prior to, upon or within twelve months of a change in control, they would be entitled to payments in the amounts set forth opposite their name in the following table:



|                     |  |                |         |    
|-------------------- |  | -------------- | ------- | ---
|Officer              |  | Cash Severance |        
|Steven M. Oyer       |  | $              |        |    
|Jeffrey T. Dick      |  |                | 87,500  |    
|Glenn L. Argenbright |  |                | 240,000 | (1)
|Steven D. Rishel     |  |                | 92,500  |    

---

|(1) | As a result of our decision to engage Mr. Oyer as interim chief executive officer, Mr. Argenbright was reassigned effective September 29, 2006, and no longer served
as our president and chief executive officer. Mr. Argenbright continues to serve as a member of our board of directors and as chairman of the board of directors, and he also serves as president of FLO Corporation. The reassignment of
Mr. Argenbright triggered certain severance provisions contained in Mr. Argenbrights employment agreement and, as a result, we determined that Mr. Argenbright was entitled to severance pay of $240,000, or twelve months
base salary. On April 16, 2007, in full settlement of this severance obligation, Mr. Argenbright agreed to accept $40,000 less than the full twelve months base salary, and we agreed to (i) pay Mr. Argenbright $60,000 in cash and
(ii) issue to him a $140,000 promissory note bearing interest at 8% per year and maturing and coming due and payable in four equal quarterly installments beginning on April 1, 2008. In connection with FLO Corporations convertible
promissory note issuance on April 16, 2007, Mr. Argenbright agreed to assign this $140,000 promissory note to FLO Corporation in exchange for a $140,000 convertible promissory note issued by FLO Corporation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Health Care Benefits

Following a named executive officers termination upon change in control, we will provide the executive with continued health and other group insurance benefits for the executives benefit period, twelve months, after the
executives termination.

Equity Acceleration

Pursuant to our 2000 stock incentive plan, in the event of a change in control, if the acquiring company does not assume, or substitute new options for,
all outstanding options, all shares subject to outstanding options will become fully vested and exercisable prior to the change-in-control.

On June 23, 2004, Mr. Argenbright acquired 301,928 restricted shares of our common stock. We may reacquire Mr. Argenbrights shares of restricted common stock in the event that his service is terminated for
cause, or if he voluntarily ceases to provide services to us without good reason, before June 23, 2007. In the event of a change in control, these shares will become unrestricted and will no longer be subject to a right of repurchase.

280G Tax Adjustment

If any payment or benefit received or to be received by any participant under the severance plan or otherwise would constitute an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code,
then the compensation and benefits payable upon a change in control will be determined in a manner that maximizes the aggregate present value of the payments without causing any payment to be nondeductible by us under Section 280G.

Release of Claims

As a
condition to each executives entitlement to receive the severance payments referenced in the tables above, the executive is required to execute a release of claims against Saflink.

Termination for Cause or Not in Connection with Change in Control

We are not obligated to make any cash payment to these executives if their employment is terminated by us for cause or by the executive without cause or
if the termination is not in connection with or within twelve months of a change in control.



12



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Director Compensation

Our directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the board of directors and committee meetings. In addition, members of the board of directors who are not employees
receive the following equity compensation grants as consideration for board and committee service:



| |  |  | each new non-employee director receives an initial stock option grant for 40,000 shares upon commencement of service on the board; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | each continuing non-employee director receives stock option grants as follows on the date of the annual stockholders meeting:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | 56,000 shares for service as a member of the board of directors;
| | - |  | ----------------------------------------------------------------



| |  |  | 33,600 shares for service as a member of each of the audit committee, the compensation committee and the nominating and corporate governance committee; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 44,800 shares for service as the chairman of the audit committee, the compensation committee and the nominating and corporate governance committee.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

All director stock option awards are automatically granted on the date of the annual stockholder meeting each year, with
all such stock option grants having an exercise price equal to the closing price per share of our common stock as reported on the applicable exchange or quotation service on the last trading day prior to the date of grant. The stock options become
exercisable in twelve equal monthly installments following the date of grant if such person is still serving as a director at such time. In the event of a change in control, each outstanding non-employee director option will become immediately
vested exercisable in full.

Effective as of June 29, 2006, the board of directors suspended until further notice any cash
compensation for the non-employee members of our board of directors. In lieu of the suspended cash compensation for the third quarter of 2006, we granted each non-employee director stock options on August 31, 2006, to purchase 10,000 shares of
our common stock. These stock option grants have an exercise price of $0.41 per share, which is equal to the last sale price per share of our common stock as reported on the Nasdaq Capital Market on the last trading day prior to the date of grant,
and will become exercisable in twelve equal monthly installments following the date of grant if board member is still serving on the board at such time.

On November 9, 2005, the board of directors appointed Trevor Neilson to serve as non-executive co-chairman of the board. Mr. Neilson received an initial annual salary of $140,000 for his services as
non-executive co-chairman of the board. Effective as of June 29, 2006, the board of directors suspended until further notice Mr. Neilsons annual salary. In lieu of his suspended salary for the third quarter of 2006, we granted
Mr. Neilson stock options on August 31, 2006, to purchase 10,000 shares of our common stock with the same terms as those granted to our non-employee board members as described above. Also, due to the suspension of his salary,
Mr. Neilson received an equity compensation grant consistent with those granted to our non-employee directors on October 27, 2006, the date of the 2006 annual stockholders meeting.

We paid $100,000 in consulting fees during 2006 to The Pennant Group, formerly known as Campbell, Cilluffo & Furlow, LLC for consulting services
focused on the Homeland Security sector. Frank J. Cilluffo, a former member of our board of directors, is a principal of The Pennant Group. We also reimbursed the firm for its reasonable expenses incurred in providing services to us.

The following table sets forth information concerning the compensation earned during the last fiscal year by each individual who served as a non-employee
director at any time during the fiscal year:

2006 DIRECTOR COMPENSATION TABLE



|                   |  |                                 |        |                       |   |        |                            |  |   |           |     |  |   |       
|------------------ |  | ------------------------------- | ------ | --------------------- | - | ------ | -------------------------- |  | - | --------- | --- |  | - | ------
|Name               |  | Fees Earned or Paid in Cash ($) |        | Option Awards ($) (1) |   |        | All Other Compensation ($) |  |   | Total ($)
|Frank J. Cilluffo  |  | $                               | 29,500 |                       | $ | 3,675  |                            |  | $ |          |     |  | $ | 33,176
|                   |  |                                 |        |                      
|Lincoln D. Faurer  |  |                                 | 25,000 |                       |   | 4,941  |                            |  |   |          |     |  |   | 29,941
|                   |  |                                 |        |                      
|Gordon E. Fornell  |  |                                 | 51,500 |                       |   | 6,838  |                            |  |   |          |     |  |   | 58,339
|                   |  |                                 |        |                      
|Asa Hutchinson     |  |                                 | 24,250 |                       |   | 2,727  |                            |  |   |          |     |  |   | 26,977
|                   |  |                                 |        |                      
|Richard P. Kiphart |  |                                 | 33,500 |                       |   | 4,941  |                            |  |   |          |     |  |   | 38,441
|                   |  |                                 |        |                      
|Trevor Neilson     |  |                                 |       |                       |   | 17,553 | (2)                        |  |   | 75,833    | (3) |  |   | 78,560
|                   |  |                                 |        |                      
|Steven M. Oyer     |  |                                 | 52,000 |                       |   | 1,145  | (4)                        |  |   |          |     |  |   | 53,146

---

|(1) | Represents compensation expense related to the shares granted to each non-employee director on August 31, 2006, in lieu of cash compensation for the third quarter of 2006, and
on the date of the 2006 annual shareholder meeting, calculated based on the grant date fair value estimated in accordance with the provisions of Statement of Financial Standards No. 123R, Share-Based Payments.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes an option grant to purchase 70,000 shares of our common stock on January 2, 2006, for his role as non-executive co-chairman of the board of directors. This stock option
grant has an exercise price of $0.79 per share, which is equal to the last sale price per share of our common stock as reported on the Nasdaq Capital Market on the last trading day prior to the date of grant, and becomes exercisable in thirty-six
(36) equal monthly installments following the date of grant if he is still serving on the board at such time.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents Mr. Neilsons annual salary paid during 2006 prior to the suspension of his salary, which was approved by the board of directors on June 29, 2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents shares granted to Mr. Oyer for his role as director. Option awards to Mr. Oyer in connection with his role as interim chief executive officer was $168,000 (see
the 2006 Summary Compensation Table in Item 11).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13



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2000 Stock Incentive Plan

Our 2000 Stock Incentive Plan (the 2000 Plan) is administered by our compensation committee. The purpose of the 2000 Plan is to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to employees, directors, and consultants and to promote the success of our business.

Options Available for Issuance

The 2000 Plan provides for a maximum of 15,000,000 shares of common stock to be
available for issuance. As of December 31, 2006, there were 1,089,119 shares available for issuance under the plan. The 2000 Plan provides for the granting of incentive stock options and nonstatutory stock options, as determined by the
administrator at the time of grant.

Excerise Price for Options

The exercise price per share for an incentive stock option grant shall be no less than 100% of the fair market value per share on the date of grant. The
exercise price per share for an Incentive Stock Option grant to an employee who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of stock of Saflink or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per share on the date of grant. In the case of a nonstatutory stock option grant, the exercise price per share shall be determined by the administrator.

Payment of Exercise Price

Generally, the option exercise price may be paid in cash, by check, by promissory note, or by tender of shares, which (A) in the case of shares acquired upon exercise of an option, have been owned by the optionee for more than six
months on the date of surrender, and (B) have a fair market value on the date of surrender equal to the aggregate exercise price of the shares as to which said option shall be exercised, consideration received by us under a cashless exercise
program, a reduction in the amount of any company liability to the optionee, any combination of the foregoing methods of payment or such other consideration and method of payment for the issuance of shares to the extent permitted by applicable laws.

Vesting Schedule

At the time an option is granted, the administrator shall fix the period within which the option may be exercised and shall determine any conditions that must be satisfied before the option may be exercised.

Term of Options

The maximum
term of an option granted under the 2000 Plan is ten years.

Transferability of Options

Options are nontransferable by the optionee other than by will or by the laws of descent and distribution and are exercisable during the optionees
lifetime only by the optionee.

Change in Control

The 2000 Plan provides that in the event of a merger of Saflink with or into another corporation, or the sale of substantially all of our assets, each
outstanding option and stock purchase right shall be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation.

Amendment and Termination

The
board may at any time amend, alter, suspend or terminate the 2000 Plan.

Compensation Committee Report

The compensation committee of the board of directors of Saflink has reviewed and discussed the Compensation Discussion and Analysis contained in this
annual report on Form 10-K with management. Based on such review and discussion, we have recommended to the board of directors that the Compensation Discussion and Analysis be included in Saflinks annual report on Form 10-K for the fiscal year
ended December 31, 2006.



THE COMPENSATION COMMITTEERichard P. Kiphart (Chairman)Gordon E. Fornell




14



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|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

Beneficial Ownership

The following table sets forth, as of April 23, 2007, certain information
with respect to the beneficial ownership of our common stock by (i) each stockholder known by us to be the beneficial owner of more than 5% of our common stock, (ii) each member of our board of directors, (iii) each executive officer
named in the summary compensation table, and (iv) all of our directors and executive officers as a group.



|                                                         |  |                                     |  |                                                    |  |                                           |  |                           |  
|-------------------------------------------------------- |  | ----------------------------------- |  | -------------------------------------------------- |  | ----------------------------------------- |  | ------------------------- | -
|Name of Beneficial Owner (1)                             |  | Number ofShares ofCommonStock Owned |  | Number ofSharesUnderlyingConvertibleSecurities (2) |  | TotalNumber ofSharesBeneficiallyOwned (3) |  | Percent ofCommonStock (4) |  
|Richard P. Kiphart (5)                                   |  | 7,392,394                           |  | 1,926,462                                          |  | 9,318,856                                 |  | 7.1                       | %
|Kris Shah                                                |  |                                    |  | 500,000                                            |  | 500,000                                   |  |                           | *
|Glenn L. Argenbright                                     |  | 333,500                             |  | 698,072                                            |  | 1,031,572                                 |  |                           | *
|Frank J. Cilluffo                                        |  |                                    |  | 110,699                                            |  | 110,699                                   |  |                           | *
|Lincoln D. Faurer                                        |  |                                    |  | 162,565                                            |  | 162,565                                   |  |                           | *
|Gordon E. Fornell                                        |  |                                    |  | 296,765                                            |  | 296,765                                   |  |                           | *
|Asa Hutchinson                                           |  |                                    |  | 120,165                                            |  | 120,165                                   |  |                           | *
|Steven M. Oyer                                           |  | 15,000                              |  | 956,357                                            |  | 971,357                                   |  |                           | *
|Jon C. Engman                                            |  |                                    |  | 450,000                                            |  | 450,000                                   |  |                           | *
|Jeffrey T. Dick                                          |  |                                    |  | 139,012                                            |  | 139,012                                   |  |                           | *
|Trevor Neilson                                           |  |                                    |  | 453,220                                            |  | 453,220                                   |  |                           | *
|Steven D. Rishel                                         |  | 10,000                              |  | 331,249                                            |  | 341,249                                   |  |                           | *
|Timothy A. Wudi                                          |  |                                    |  | 399,999                                            |  | 399,999                                   |  |                           | *
|Directors and executive officers as a group (13 persons) |  | 7,750,894                           |  | 6,544,565                                          |  | 14,295,459                                |  | 10.4                      | %

---

|* | Less than 1%
|- | ------------

|(1) | Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable and to the information contained in the footnotes to this table.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Under the rules of the SEC, a person is deemed to be the beneficial owner of shares that can be acquired by such person within 60 days upon the exercise of options or warrants or
upon conversion of securities convertible into common stock.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the aggregate number of shares beneficially owned by each stockholder.
|--- | ---------------------------------------------------------------------------------

|(4) | Calculated on the basis of 130,657,578 shares of common stock outstanding as of April 23, 2007, provided that any additional shares of common stock that a stockholder has the
right to acquire within 60 days after April 23, 2007, are deemed to be outstanding for the purpose of calculating that stockholders percentage beneficial ownership.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 1,760,564 shares of common stock underlying the principal balance of, and estimated interest on, a convertible promissory note. Mr. Kipharts mailing address is
c/o William Blair & Company, L.L.C., 222 West Adams Street, Chicago, IL 60606.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15



---

Equity Compensation Plan Information

We currently maintain two compensation plans that provide for the issuance of our common stock to officers and other employees, directors and consultants. These are our 1992 stock incentive plan and our 2000 stock
incentive plan, each of which has been approved by our stockholders. The following table sets forth information regarding outstanding options and shares reserved for future issuance under the foregoing plans as of December 31, 2006:



|                                                       |  |                                                                                      |  |                                                                            |      |                                                                                                                                 |           |    
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------- | --------- | ---
|Plan Category(1)                                       |  | Number ofshares to beissued uponexercise
ofoutstandingoptions,warrants andrights (a) |  | Weighted-average exerciseprice
ofoutstandingoptions,warrants andrights (b) |      | Number ofshares remainingavailable forfuture
issuanceunder equitycompensationplans (excludingshares reflectedin column (a)) (c) |          
|Equity compensation plans approved by stockholders     |  | 9,504,644                                                                            |  | $                                                                          | 0.80 |                                                                                                                                 | 1,089,119 | (2)
|Equity compensation plans not approved by stockholders |  |                                                                                     |  |                                                                            |     |                                                                                                                                 |          |    
|                                                       |  |                                                                                      |  |                                                                            |      |                                                                                                                                 |           |    
|Total                                                  |  | 9,504,644                                                                            |  | $                                                                          | 0.80 |                                                                                                                                 | 1,089,119 |    

---

|(1) | The information presented in this table excludes options we assumed in connection with acquisitions of other companies. As of December 31, 2006, 727,065 shares of our common
stock were issuable upon exercise of these assumed options, at a weighted average exercise price of $1.55 per share.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The number of shares that may be optioned and sold under our 2000 stock incentive plan is increased such that the maximum number of shares available to be optioned and sold under
the plan is equal to the lesser of (i) 15,000,000 shares of our common stock or (ii) 20% of the number of shares of our common stock (on an as converted basis) outstanding on the immediately preceding December 31. On December 31,
2006, there were 142,149,386 shares of common stock outstanding (on an as converted basis).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

On December 15, 2006, we sold to RDSK, Inc. certain assets related to our Litronic business which we determined were not core to our business. In exchange for the assets, RDSK agreed to assume certain liabilities
related to the assets and KRDS, Inc. agreed to terminate and cancel the lease agreement for Litronics facility in Irvine, California. Each of RDSK and KRDS is an entity that is majority-owned by three former employees of Litronic, one of whom
is Kris Shah, a former member of our board of directors and the former president of Litronic. Mr. Shah resigned from our board and as president of Litronic on October 13, 2006.

The assets we sold to RDSK included the tangible assets and inventory located at the Irvine facility, as well as the material contracts and intellectual
property used in the Litronic business. RDSK also assumed certain liabilities related to the Litronic business, including liabilities under the assumed contracts and warranty obligations. In addition, KRDS agreed to terminate the lease for the
Irvine facility, and to release us from any liabilities or obligations under the lease. As a result of the termination of the lease, we expect to reduce operating expenses by approximately $2.8 million over the 74 month period from January 2007
through February 2012, the original termination date of the Irvine lease.

On September 28, 2006, our board of directors approved the
terms of an executive consulting agreement with Capital Placement Holdings, Inc. under which Steven Oyer, the president and principal of Capital Placement Holdings, Inc. and a member of our board of directors, agreed to serve as our interim chief
executive officer until such time that we can find a qualified successor to Glenn L. Argenbright, our former president and chief executive officer. For compensation details see the Chief Executive Officer Compensation section in Item 11.

On April 27, 2006, we amended our retention agreement with Jon C. Engman, our former chief financial officer. The retention agreement
provided that if Mr. Engmans employment is terminated as a result of an involuntary termination, death or disability within one year from the date of the agreement, then he is entitled to receive the compensation, accrued but unused
vacation and benefits earned through the date of termination of employment, a lump sum severance payment equal to twelve



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months salary, vesting of any unvested options, reimbursement of any COBRA premiums paid by Mr. Engman for continued group health insurance
coverage and the laptop or other portable computer device used by Mr. Engman. In addition, if Mr. Engman terminated his employment by voluntary resignation within one year from the date of the agreement and he provided us at least 60-days
notice prior to such termination, he is entitled to receive the severance payments and benefits listed above. All other terms of the retention agreement remain unchanged. On September 25, 2006, Mr. Engman submitted his resignation as our
chief financial officer, effective November 24, 2006, for personal reasons and to pursue other interests.

On January 25, 2006,
we amended our consulting agreement with The Pennant Group, formerly known as Campbell, Cilluffo & Furlow, LLC, to extend the term of the agreement through June 30, 2006. Frank J. Cilluffo, a former member of our board of directors, is
a principal of The Pennant Group. All other terms of the consulting agreement remained unchanged. We paid $100,000 in consulting fees during 2006 to The Pennant Group. We also reimbursed the firm for its reasonable expenses incurred in providing
services to us. Mr. Cilluffo resigned from our board on February 27, 2007.

Procedures for Approval of Related Person Transactions

Pursuant to our code of business conduct and ethics, our directors, officers and employees are encouraged to avoid situations in which
their personal, family or financial interests conflict or even appear to conflict with those of Saflink. Our audit committee charter provides that the audit committee shall review and approve any related-party transactions, after reviewing each such
transaction for potential conflicts of interests and other improprieties.

Director Independence

The board of directors has determined that Messrs. Faurer, Fornell, Hutchinson and Kiphart are independent directors within the meaning of
Rule 4200 of the National Association of Securities Dealers, Inc.



|Item 14. | Principal Accountant Fees and Services.
|-------- | ---------------------------------------

The
following table sets forth the aggregate fees billed to us for the fiscal years ended December 31, 2006, and 2005, by KPMG LLP, our independent auditors:



|                   |  |             |         |             |   |        
|------------------ |  | ----------- | ------- | ----------- | - | -------
|                   |  | Fiscal 2006 |         | Fiscal 2005
|Audit Fees (1)     |  | $           | 368,000 |             | $ | 529,200
|                   |  |            
|Audit-Related Fees |  | $           |        |             | $ |       
|                   |  |            
|Tax Fees (2)       |  | $           | 30,000  |             | $ | 20,900 
|                   |  |            
|All Other Fees     |  | $           |        |             | $ |       

---

|(1) | Audit Fees consist of fees billed for professional services rendered for the audit of our consolidated annual financial statements and review of the interim consolidated financial
statements included in quarterly reports and services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning (domestic and international). These services include assistance
regarding federal, state and international tax compliance and international tax planning.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our audit committees policy
is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one
year and any pre-approval is detailed as to the particular category of services. The independent auditor and management are required to periodically report to the audit committee regarding the extent of services provided by the independent auditor
in accordance with this pre-approval. The chairman of the audit committee is also authorized, pursuant to delegated authority, to pre-approve additional services and such approvals are communicated to the full audit committee at its next meeting.



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The audit committee has considered the role of KPMG LLP in providing tax services to us and has concluded
that such services are compatible with KPMGs independence as our auditors.

For the fiscal years ended December 31, 2006, and
2005, the audit committee pre-approved all services described above in the captions Audit Fees and Tax Fees. For fiscal 2006, no hours expended on KPMG LLPs engagement to audit our financial statements were attributed to work performed by
persons other than full-time, permanent employees of KPMG LLP.



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PART IV



|Item 15. | Exhibits and Financial Statement Schedules.
|-------- | -------------------------------------------



|            |             |                                                                                                    |  |                |  |             |  |                           |  |             |  | 
|----------- | ----------- | -------------------------------------------------------------------------------------------------- |  | -------------- |  | ----------- |  | ------------------------- |  | ----------- |  | 
|Exhibit No. |             |                                                                                                    |  | Filed Herewith |  |             |  | Incorporated by Reference |  |            
|            | Description |                                                                                                    |  | Form           |  | Exhibit No. |  | File No.                  |  | Filing Date
|31.1        |             | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | X              |  |             |  |                           |  |             |  | 
|            |             |                                                                                                    |  |                |  |            
|31.2        |             | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | X              |  |             |  |                           |  |             |  | 



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Amendment No. 1 to its Annual Report on Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                     |  |                                             
|-------------------- |  |  |  | ------------------- |  | --------------------------------------------
|                     |  |  |  | SAFLINK CORPORATION
|                     |  |  | 
|Date: April 30, 2007 |  |  |  |                     |  |                                             
|                     |  |  | 
|                     |  |  |  | By:                 |  | /s/ Steven M. Oyer                          
|                     |  |  |  |                     |  | Steven M. Oyer                              
|                     |  |  |  |                     |  | Interim Chief Executive Officer and Director



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