EANS-Adhoc: Identive Group Inc. / Identive Group announces second quarter 2010 results

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ad-hoc disclosure pursuant to section 15 of the WpHG transmitted by euro
adhoc with the aim of a Europe-wide distribution. The issuer is solely
responsible for the content of this announcement.
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quarterly report

16.08.2010

+++ 93% Revenue Growth, Cost Reductions Drive Positive Adjusted
EBITDA +++ Plans to move from Prime Standard to Entry Standard
segment

SANTA ANA, Calif. and ISMANING, Germany, August 16, 2010 - Identive
Group, Inc. (NASDAQ: INVE; Frankfurt Stock Exchange: INV), a provider
of products, services and solutions for the security, identification
and RFID industries, today announced results for the second quarter
(Q2) of fiscal 2010, ended June 30, 2010. The Company also announced
plans to move its German stock listing to the Entry Standard segment
of the Frankfurt Stock Exchange.

Q2 2010 Results

Identive´s Q2 2010 results include the operating results of acquired
companies since the dates of their respective acquisition. These
include Hirsch Electronics Corporation, acquired April 30, 2009;
Bluehill ID AG, acquired January 4, 2010; and RockWest Technology
Group, Inc., acquired April 14, 2010. All figures are reported in
U.S. GAAP, except as noted. A discussion of non-GAAP measures and
reconciliation to the applicable GAAP measures is included below.

Revenue in Q2 2010 was $21.2 million, up 93% from $11.0 million in Q2
2009 and up 39% from $15.3 million in the first quarter (Q1) of 2010.
The year over year increase primarily was due to the inclusion of
additional revenue from the acquired Hirsch, Bluehill ID and RockWest
businesses, while sequential growth was driven by strong sales levels
within the Company´s Identity Management Solutions & Services segment
and the addition of RockWest.

Sales in the Americas accounted for 66%, sales in EMEA accounted for
24% and sales in the Asia/Pacific region accounted for 10% of total
Q2 2010 revenue. Sales in EMEA are mostly denominated in euro and the
relative weakness of this currency in Q2 impacted the geographic mix,
as did strong sales to the U.S. government and the addition of
RockWest to Americas revenue.

Highlights in Q2 2010 included more than $4.0 million in U.S.
government agency orders for Hirsch security systems, which reflect
the continued high activity of government agencies to enhance their
security systems as mandated under programs such as Homeland Security
Presidential Directives 5 and 12. Sales from the Company´s Multicard
business remained stable overall in the second quarter, and Multicard
Germany received a large order for products and services to support
the German electronic ID program, for which delivery is expected to
begin in November 2010 and continue over a twelve-month period. The
Company´s SCM Microsystems business will also participate in this
program as the original design architect and manufacturer of the RFID
based contactless card readers. SCM´s U.S. government business
remained stable in Q2 2010, although semiconductor shortages
constrained sales of SCM readers in Asia. Sales of RFID inlays within
the Company´s TagStar business showed good improvement in Q2 and
orders activity was strong. Identive´s most recent acquisition,
RockWest, performed as expected, generating approx $2.1 million in
sales, and experienced increased integration activity in the state
and local government and education markets during the quarter.

Non-GAAP gross profit margin, excluding overhead allocation,
amortization and equity-based compensation expense, was 51% in Q2
2010 compared with 57% in Q2 2009 and 49% in Q1 2010. Strong and
stable margins at Hirsch and improved margins at SCM were partially
offset by low margins due to unfavorable product mix in the Company´s
Multicard and TagStar businesses.

Non-GAAP overhead costs (operating expenses before amortization,
depreciation, overhead allocation, equity-based compensation,
acquisition, transition and integration costs), were $10.1 million in
Q2 2010, up 40% from $7.2 million in Q2 2009 and basically flat with
$10.0 million in Q1 2010. The increase in overhead costs in Q2 2010
compared with the previous year is due to the inclusion of the
incremental expenses from the acquired businesses, offset by cost
reductions initiated in the previous quarter. The cost reduction
measures implemented in Q1 2010 included facility consolidations,
streamlining of the Company´s existing and acquired organizations in
Germany and India, and reductions in headcount, executive salaries
and Board of Director fees. Additionally, during Q2 2010 Identive
began consolidating administrative services and programs including
payroll, banking and health benefits across all employees in the
U.S., which the Company expects will yield incremental savings going
forward. All together, the Company expects its cost reduction
programs will result in savings of approximately $6.0 million per
year, of which approximately $4.5 million will be realized in 2010.
Benefits from the cost savings measures were limited in Q1, more
fully realized in Q2 and expected to be fully realized in the second
half of 2010. Savings in overhead costs in Q2 were offset by the
additional overheads associated with RockWest.

Non-GAAP adjusted EBITDA (EBITDA before equity-based compensation,
acquisition, transition and integration costs) was $0.7 million in Q2
2010, compared with a loss of $(1.0) million in Q2 2009 and a loss of
$(2.5) million in Q1 2010. Cash and cash equivalents at the end of Q2
2010 were $4.6 million, down from $6.8 million at the end of the
previous quarter, reflecting limited changes in working capital and
funding of the acquisition, transition and integration costs. On a
GAAP basis, gross profit margin in Q2 2010 was 46%, compared with 53%
in Q2 2009 and 44% in Q1 2010. Total GAAP operating expenses in Q2
2010 were $11.5 million, compared with $7.6 million in Q2 2009 and
$12.2 million in Q1 2010. GAAP operating loss was $(1.7) million in
Q2 2010, compared with $(1.9) million in Q2 2009 and $(5.5) million
in Q1 2010.

GAAP loss from continuing operations attributable to Identive Group,
Inc, in Q2 2010 was $(0.9) million, or $(0.02) per share, compared
with $(0.6) million, or $(0.03) per share in Q2 2009 and $(6.0)
million, or $(0.15) per share in Q1 2010.

Move to Entry Standard Listing on Frankfurt Stock Exchange

Identive has decided to apply to the Frankfurt Stock Exchange to move
its German stock listing from the regulated market/Prime Standard to
the Entry Standard market of the German Stock Exchange. The process
is expected to take approximately four months from the date of
application, which has not yet occurred. The Group expects to retain
the same symbol, "INV", and anticipates normal trading on the German
exchanges during the application and transition process.

end of announcement euro adhoc
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ots Originaltext: Identive Group Inc.
Im Internet recherchierbar: http://www.presseportal.de

Further inquiry note:

Mr. Fabien B. Nestmann

+41 44 839 7007 & +1 949 610-5114

fnestmann@identive-group.com

Branche: Computing & Information Technology
ISIN: US45170X1063
WKN: A1C0ZG
Index: Prime All Share, NASDAQ
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / free trade
Hamburg / free trade
Stuttgart / free trade
Düsseldorf / free trade
München / free trade
New York / regulated dealing