FLO completes $7.1 million financing

It appears you can make money in helping passengers
go more quickly through airports. In evidence: Chantilly, Virginia-based FLO
Corporation, a leading Registered Traveler (RT) services provider, announced that it has entered
into agreements to sell an additional $5.5 million in principal of its 12
percent senior convertible notes in a private placement to accredited investors
consisting of new and existing investors. When combined with FLO’s initial
closing of a private placement of the notes for $1.6 million in principal on 3 April 2008, the aggregate
principal amount raised in the note financing is $7.1 million. The notes are
convertible by the holders at an initial conversion rate of $0.80 per share,
subject to customary anti-dilution adjustments. FLO also agreed to issue
warrants to purchase 125,000 shares of common stock at an exercise price of
$0.75 per share, and short-term warrants to purchase 100,000 shares of common
stock at an exercise price of $0.60 per share, for every $100,000 of principal
invested. The proceeds from the financing will be used to fund company
expansion and complete the previously announced acquisition of Unisys
Corporation’s solution, rtGO. rtGO is a scalable technology which is certified
by the U.S. Transportation Security Administration (TSA). The acquisition of the
rtGO RT solution will help position FLO as an important player in the RT
industry and strengthen its standing as the only public company focused
exclusively on the RT initiative.

In connection with the financing, FLO agreed to
exchange all of its outstanding Series A preferred stock, with a stated value
of approximately $13.3 million plus accrued dividends, for approximately $13.6
million stated value of Series B preferred stock, which does not pay any
dividends, and an aggregate of approximately 500,000 shares of common stock. In
connection with the exchange, FLO agreed to issue to the holders of Series A
preferred stock short-term warrants to purchase an aggregate of approximately
13.6 million shares of common stock at an exercise price of $0.60 per share,
and to amend the holders’ Series A-1 and Series A-2 warrants to reduce the per
share exercise prices from $3.00 to $1.50, and from $4.00 to $2.00,
respectively. “The completion of this financing provides FLO with the
resources necessary to aggressively pursue its enrollment campaigns,” said
Glenn Argenbright, FLO’s CEO. He continued, “We are focused on providing
the best possible offering in this industry and this financing allows us to
bring more value to our customers and partners.” Business Travel Coalition
Chairman and FLO Board member Kevin Mitchell observed, “As a long-time
Registered Traveler proponent, I am gratified that a new competitive industry
force is now positioned for its aggressive commercial launch. Corporations that
field millions of travelers, individual consumers and airports now have real
choices and alternatives. Importantly, as the only pure-play, publicly-traded
Registered Traveler company, FLO gives investors a way to participate in this
new and growing industry.”