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Microcap & Penny Stocks : Saflink Corp. (ESAF) Biometric Software Provider
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To: GoingHikin who wrote (2525)12/17/1997 4:16:00 PM
From: Jaffo  Read Replies (1) of 4676
 
DLevitt:

NRI's Comptroller offers the following:

The following are in response to questions from D. Levitt.

The deemed dividend is related to the discount at which preferred stock
converts into common stock. The amounts represent the additional number of
common shares that preferred stockholders receive due to the discount. There
is no cash impact on the company and it does not have anything to do with
income from operations. The amount of the deemed dividend reported in a
fiscal period is based upon the % of preferred stock that is convertible
during the period. As an example, 1/3 of the series C preferred was
convertible during the 2nd qtr. so 1/3 of the total deemed dividend was
recognized. The remaining 2/3 of the series C preferred became convertible in
the 3rd qtr. so 2/3 of the deemed dividend was recognized during that period.

The deemed dividend was not a change in accounting method but was the result
of recent SEC rulings. NRI chose to present the financial information in
accordance with the SEC rulings and to restate 1996 (10 K/A) so that the
company is in compliance with the SEC. The SEC has already begun to force
companies to go back and restate prior financial for these deemed dividends.
We are simply trying to stay ahead of the curve.

I hope this has answered your questions.

Thanks,

Tripp Porterfield (Controller)
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