Performance improvements include sequential sales growth of 12% and decline in base operating costs

SANTA ANA, Calif. and ISMANING, Germany, August 7, 2012 - Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV), a provider of products, services and solutions for the identification, security and RFID industries, today announced results for the fiscal second quarter (Q2), ended June 30, 2012.

Q2 2012 Highlights:

• Revenues of $23.9 million, up 12% from the first quarter (Q1) of 2012
• Continued improvement in U.S. government business
• Launched innovative product and service offerings for emerging NFC and payment markets
• Impairment of goodwill and intangibles; reduced impact of depreciation and amortization charges on earnings in future periods

"Our Q2 results were in line with expectations, despite ongoing weakness in the global economic environment. Continued recovery in sales of both ID products and identity management systems in the U.S. government sector helped offset slowdown of citizen ID programs in Europe and continued customer project delays in our transponder sales," stated Ayman S. Ashour, CEO and Chairman of Identive. "Our ongoing focus on reducing expenses, together with our restructuring program put in place in June, helped drive a sequential decline in base operating expenses, and we expect further savings as we realize the full effect of our restructuring actions later this year. We also reinforced our position in both existing and emerging markets with the launch of several important new products that represent the fruits of our investments in new technology. These industry-first offerings included tomPAY™ cashless payment cards that can be converted into NFC tags for mobile devices; desktop readers for integrated physical and cyber security; and our secure cloud-based, NFC tag management platform."

Q2 Results
As reported in accordance with U.S. generally accepted accounting principles (GAAP), revenues were $23.9 million in Q2 2012, up 12% from $21.2 million in Q1 2012 and down 7% from $25.6 million in Q2 2011. By segment, Identity Management Services and Solutions (Identity Management) revenues were $14.2 million and ID Products revenues were $9.7 million in Q2 2012.

GAAP gross profit margin was 40% in Q2 2012, compared with 41% in Q1 2012 and 40% in Q2 2011. Total research and development, sales and marketing and general and administrative expenses (referred to in this release as base operating expenses) were $13.3 million in Q2 2012, down 11% from $15.0 million in Q1 2012 and unchanged from $13.3 million in Q2 2011. Total base operating expenses in Q2 2012 reflect a significant increase in technology investment compared with the same quarter a year ago, partially offset by lower general and administrative spending.

During the quarter we experienced a sharp and sustained decline in our market capitalization, triggering a required impairment analysis of our goodwill, intangible and long-lived assets. Based on this review, we concluded that some assets are impaired and recognized preliminary non-cash charges totaling $45.4 million in the quarter. These charges have no impact on our day-today operations or liquidity and will not result in any future cash expenditures. However, the amount of amortization and depreciation will be significantly reduced and consequently there will be lower non-cash charges to net earnings in future quarters.
The non-cash impairment charges contributed to a net loss of $(41.9) million, or $(0.70) per share in Q2 2012, compared with a net loss of $(1.6) million, or $(0.03) per share in Q2 2011 and a net loss of $(6.2) million, or $(0.11) per share in Q1 2012. The impairment charges and other non-cash adjustments related to the above referenced review accounted for $(0.66) per share of the net loss per share recorded in Q2 2012.

Non-GAAP gross profit margin was 45% in Q2 2012, up from 44% in Q1 2012, reflecting a higher contribution of systems, software and services sales. Non-GAAP base operating expenses were $11.9 million in Q2 2012, compared with $12.8 million in Q1 2012. Adjusted EBITDA was $(1.2) million in Q2 2012, compared with $(3.5) million in Q1 2012.

Non-GAAP gross profit margin, non-GAAP operating expenses and adjusted EBITDA all exclude various items that are detailed in the financial table and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Cash and cash equivalents at June 30, 2012 were $6.3 million, in line with management guidance and compared with $13.3 million at March 31, 2012, reflecting funding of operational losses, reductions in accounts payable associated with seasonal commitments to stadium concessions, and funding of financial liabilities.

David Wear, CFO of Identive added, "We remain on target to achieve cost reductions of $4.0 million to $5.0 million by the end of 2012, which annualized, are expected to be close to $7.0 million. At the same time we continue to commit to investment in the future growth of the Company. With the reduction in our EBITDA loss in the current quarter and the stabilization of our cash position after the first four months of the year, we believe we can continue to support our operational cash flow requirements through internal means. However, we will also seek to strengthen the balance sheet by a moderate amount to allow us to withstand unexpected or unforeseen market changes."

Q2 2012 Business Highlights
Sales and product highlights from the 2012 second quarter include:
• The announcement of an innovative cloud-based, NFC (near field communication) tag management platform that allows advertisers, retailers and organizations in the education, hospitality and other markets to securely manage the delivery of dynamic, targeted content and services to consumers' NFC-enabled mobile devices.
• Continued expansion of the user base for Identive's cashless payment products and solutions globally, with new customer wins in India and significant growth in Europe.
• Expanded penetration of transponders into the Japanese market with more than 300,000 inlays supplied for payment and loyalty applications.
• The introduction of tomPay™, an innovative convertible contactless payment card / NFC tag that enables consumers to add NFC cashless payment capabilities to their existing mobile phones.
• The introduction of a new line of NFC magnets and dual-sided window stickers that provide retailers with new ways to advertise to and communicate with their customers using NFC technology.
• The launch of a new NFC tag online customization service that allows customers to order NFC tags, stickers and smart posters personalized with their own designs, photos or logos, as well as a URL destination, phone number or other data.

Mr. Ashour concluded, "Identive's true strength in Secure ID is our core vision of identity as a fundamental industry serving multiple verticals. Our global presence and our strong position across the many identity markets provide resilience to weather fluctuations in any single sector. These strengths also put us at the head of the pack as the industry prepares to capitalize on emerging opportunities for mass deployments of consumer ID, citizen ID and employee ID solutions. We remain convinced that NFC, cashless payment and cloud-based identity management are emerging mega trends and that Identive is uniquely positioned in these markets. This propels our strategy to provide new ID products, software and services that these potential hyper-growth areas will require. Our cost reduction program and the changes we made in our balance sheet should help improve our financial position as we continue to work to lower our breakeven point."

Outlook for Q3 2012
Based on its current expectations, management expects revenues of $24.0 million to $27.0 million, non-GAAP, adjusted EBITDA of $(0.7) million to $0.7 million, and non-GAAP EPS of $(0.03) to $(0.02) in the third quarter of 2012.

Conference Call and Webcast Information
Identive Group will host a conference call and webcast today at 10:00 AM Eastern Time, which can be accessed by dialing 800.638.4930 (toll free within the U.S.) or +1 617.614.3944 (for international callers) and using pass code 37733064. A webcast of the call that includes presentation slides can be accessed by visiting the investor relations section of the Company's website at www.identive-group.com, and by clicking on "Presentations, Reports & Webcasts," where it also will be archived for those unable to listen to the live webcast.  An audio replay of the call also will be available for one week and can be accessed by dialing 888.286.8010 (toll free within the U.S.) or +1 617.801.6888 (for international callers) and using pass code 92565832.

About Identive Group
Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV) is focused on building the world's signature company in Secure ID. The company's products, software, systems and services address the markets for identity management, physical and logical access control, cashless payment, NFC solutions and a host of RFID-enabled applications for customers in the government, enterprise, consumer, education and healthcare sectors. Identive's mission is to build a lasting business of scale and technology based on a combination of strong technology-driven organic growth and disciplined acquisitive expansion. The company delivers up-to-date information on its activity as well as industry trends through its industry-leading social media initiatives and educational resource, AskIdentive.com. For additional information, please visit www.identive-group.com or follow on Twitter at @IdentiveGroup.

Non-GAAP Financial Measures
Identive has provided in this release financial information that has not been prepared in accordance with GAAP, including non-GAAP operating expenses, non-GAAP gross profit margin and adjusted EBITDA. Identive uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Identive's ongoing operational performance. Identive believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. As noted, the non-GAAP financial results discussed above exclude various items which are detailed in the reconciliation table and accompanying footnotes contained within this release. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed in this release.

Note Regarding Forward Looking Information:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as "anticipates," "believes," "plans," "will," "intends," "expects," and similar references to the future. Examples of such statements include, without limitation, statements we make regarding our expectations regarding continued demand for our products, solutions and services, our expectations regarding market acceptance of our NFC, cashless payment and cloud-based solutions, our ability to realize savings from our cost savings and restructuring plans, our ability to capitalize on our technology portfolio, our expectations regarding future results, including Q3 2012 results, our preliminary estimate of impairment charges, and our expectations for future growth and profitability. Readers should not unduly rely on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of risks and uncertainties, many of which are outside our control, which could cause our actual business and operating results to differ. Factors that could cause actual results to differ materially from those in the forward-looking statements include our ability to grow our company based on a strategy of providing products, components and services for the secure identification market; to successfully develop and commercialize new products and solutions that satisfy the evolving and increasingly complex requirements of customers; whether the markets in which we participate or target may grow, converge or standardize at anticipated rates or at all, including the markets that we are targeting; our ability to successfully integrate acquired businesses; our ability to successfully compete in the markets in which we participate or target; our ability to meet our sales forecasts and general global political and economic factors which are beyond our control but may unduly impact our markets and our business. For a discussion of further risks and uncertainties related to our business, please refer to our public company reports, including our Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent reports filed with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update such statements.

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Contacts:
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