UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

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

For the transition period from ______ to ______

Commission File Number: 000-29440

IDENTIV, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	77-0444317
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2201 Walnut Avenue, Suite 100 Fremont, California	94538
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 250-8888

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

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value per share	INVE	The Nasdaq Stock Market LLC

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  ☑    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of May 2, 2022, the registrant had 22,335,003 shares of common stock outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34
SIGNATURES		35

2

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

IDENTIV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value)

	March 31,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	27,614		$	28,553
Restricted cash		1,074			1,254
Accounts receivable, net of allowances of $2,668 and $2,745 as of March 31, 2022    and December 31, 2021, respectively		19,452			19,963
Inventories		20,493			19,924
Prepaid expenses and other current assets		2,673			3,032
Total current assets		71,306			72,726
Property and equipment, net		4,341			4,066
Operating lease right-of-use assets		1,780			2,088
Intangible assets, net		6,182			6,445
Goodwill		10,288			10,268
Other assets		1,012			1,070
Total assets	$	94,909		$	96,663
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,335		$	10,502
Operating lease liabilities		1,143			1,269
Deferred revenue		1,489			2,153
Accrued compensation and related benefits		2,675			3,150
Other accrued expenses and liabilities		3,316			3,774
Total current liabilities		19,958			20,848
Long-term operating lease liabilities		748			938
Long-term deferred revenue		295			280
Other long-term liabilities		74			85
Total liabilities		21,075			22,151
Commitments and contingencies (see Note 15)
Stockholders' equity:
Preferred stock, $0.001 par value: 10,000 shares authorized; 5,000 shares    issued and outstanding as of March 31, 2022 and December 31, 2021		5			5
Common stock, $0.001 par value: 50,000 shares authorized; 23,794 and 23,707 shares    issued and 22,300 and 22,230 shares outstanding as of March 31, 2022 and    December 31, 2021, respectively		24			24
Additional paid-in capital		493,552			492,657
Treasury stock, 1,494 and 1,477 shares as of March 31, 2022 and December 31, 2021,    respectively		(11,533	)		(11,134	)
Accumulated deficit		(409,988	)		(408,989	)
Accumulated other comprehensive income		1,774			1,949
Total stockholders' equity		73,834			74,512
Total liabilities and stockholders' equity	$	94,909		$	96,663

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in thousands, except per share data)

	Three Months Ended March 31,
	2022			2021
Net revenue	$	25,061		$	22,162
Cost of revenue		16,095			14,470
Gross profit		8,966			7,692
Operating expenses:
Research and development		2,529			2,337
Selling and marketing		5,110			4,064
General and administrative		2,488			2,125
Restructuring and severance		(140	)		388
Total operating expenses		9,987			8,914
Loss from operations		(1,021	)		(1,222	)
Non-operating income (expense):
Interest expense, net		(25	)		(245	)
Gain on investment		24			—
Foreign currency gains, net		19			46
Loss before income tax benefit (provision)		(1,003	)		(1,421	)
Income tax benefit (provision)		4			(44	)
Net loss		(999	)		(1,465	)
Other comprehensive loss:
Foreign currency translation adjustment		(175	)		(283	)
Comprehensive loss	$	(1,174	)	$	(1,748	)
Net loss per common share:
Basic	$	(0.06	)	$	(0.09	)
Diluted	$	(0.06	)	$	(0.09	)
Weighted average common shares outstanding, basic and diluted		22,574			18,443

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

	Series B Convertible Preferred Stock				Common Stock					Additional Paid-in		Treasury			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Stock			Deficit			Income			Equity
Balances, December 31, 2020		5,000	$	5		18,055		$	19	$	452,129	$	(9,933	)	$	(410,609	)	$	2,578		$	34,189
Net loss		—		—		—			—		—		—			(1,465	)		—			(1,465	)
Unrealized loss from foreign    currency translation adjustments		—		—		—			—		—		—			—			(283	)		(283	)
Issuance of common stock in connection    with vesting of stock awards		—		—		98			—		—		—			—			—			—
Proceeds from exercise of    stock options		—		—		5			—		34		—			—			—			34
Stock-based compensation		—		—		—			—		758		—			—			—			758
Shares withheld in payment of taxes in    connection with net share settlement of    restricted stock units		—		—		(25	)		—		—		(253	)		—			—			(253	)
Issuance of common stock in connection with    warrant exercise		—		—		28			—		—		—			—			—			—
Balances, March 31, 2021		5,000	$	5		18,161		$	19	$	452,921	$	(10,186	)	$	(412,074	)	$	2,295		$	32,980

	Series B Convertible Preferred Stock				Common Stock					Additional Paid-in		Treasury			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Stock			Deficit			Income			Equity
Balances, December 31, 2021		5,000	$	5		22,230		$	24	$	492,657	$	(11,134	)	$	(408,989	)	$	1,949		$	74,512
Net loss		—		—		—			—		—		—			(999	)		—			(999	)
Unrealized loss from foreign    currency translation adjustments		—		—		—			—		—		—			—			(175	)		(175	)
Issuance of common stock in connection    with vesting of stock awards		—		—		88			—		—		—			—			—			—
Stock-based compensation		—		—		—			—		895		—			—			—			895
Shares withheld in payment of taxes in    connection with net share settlement of    restricted stock units		—		—		(18	)		—		—		(399	)		—			—			(399	)
Balances, March 31, 2022		5,000	$	5		22,300		$	24	$	493,552	$	(11,533	)	$	(409,988	)	$	1,774		$	73,834

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(999	)	$	(1,465	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Depreciation and amortization		509			466
Gain on investment		(24	)		—
Accretion of interest on contractual payment obligation		—			19
Amortization of debt issuance costs		—			68
Stock-based compensation expense		895			758
Impairment of right-of-use operating lease asset		—			281
Changes in operating assets and liabilities:
Accounts receivable		501			20
Inventories		(541	)		977
Prepaid expenses and other assets		417			(223	)
Accounts payable		816			(736	)
Contractual payment obligation liability		—			(271	)
Deferred revenue		(649	)		(401	)
Accrued expenses and other liabilities		(959	)		96
Net cash used in operating activities		(34	)		(411	)
Cash flows from investing activities:
Capital expenditures		(510	)		(1,131	)
Proceeds from investment		24			—
Net cash used in investing activities		(486	)		(1,131	)
Cash flows from financing activities:
Borrowings under revolving loan facility, net of issuance costs		—			3,975
Repayments under revolving loan facility		—			(1,793	)
Taxes paid related to net share settlement of restricted stock units		(399	)		(253	)
Proceeds from exercise of stock options		—			34
Net cash provided by (used in) financing activities		(399	)		1,963
Effect of exchange rates on cash, cash equivalents, and restricted cash		(200	)		(312	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(1,119	)		109
Cash, cash equivalents, and restricted cash at beginning of period		29,807			11,409
Cash, cash equivalents, and restricted cash at end of period	$	28,688		$	11,518
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	3		$	170
Taxes paid, net	$	32		$	15

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

IDENTIV, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Identiv, Inc. and its wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements have been included. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date, but does not include all disclosures required by U.S. GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

2. Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

No material changes have been made to the Company's significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvement to Topic 326, Financial Instruments – Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU 2016-13, the FASB issued ASU 2019-10 Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU 2016-13.

In February 2020, the FASB issued ASU 2020-02, which provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. The subsequent amendments will have the same effective date and transition requirements as ASU No. 2016-13. Early adoption is permitted. Topic 326 requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company adopted this standard on January 1, 2022, and it did not have a material impact on the Company’s condensed consolidated financial statements.

7

3. Revenue

Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of its products, software licenses, and services, which are generally capable of being distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation, generally on a relative basis using its standalone selling price. The stated contract value is generally the transaction price to be allocated to the separate performance obligations. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities.

Nature of Products and Services

The Company derives revenues from sales of hardware products, software licenses, subscriptions, professional services, software maintenance and support, and extended hardware warranties.

Hardware Product Revenue — The Company generally has two performance obligations in arrangements involving the sale of hardware products. The first performance obligation is to transfer the hardware product (which includes software integral to the functionality of the hardware product). The second performance obligation is to provide assurance that the product complies with its agreed-upon specifications and is free from defects in material and workmanship for a period of one to three years (i.e., assurance warranty). The entire transaction price is allocated to the hardware product and is generally recognized as revenue at the time of shipment because the customer obtains control of the product at that point in time. The Company has concluded that control generally transfers at that point in time because the customer has title to the hardware, and a present obligation to pay for the hardware. None of the transaction price is allocated to the assurance warranty component, as the Company accounts for these product warranty costs in accordance with Accounting Standards Codification (“ASC”) 460, Guarantees (“ASC 460”).

Software License Revenue — The Company’s license arrangements grant customers the perpetual right to access and use the licensed software products at the outset of an arrangement. Technical support and software updates are generally made available throughout the term of the support agreement, which is generally one to three years. The Company accounts for these arrangements as two performance obligations: (1) the software licenses, and (2) the related updates and technical support. The software license revenue is recognized when the license is delivered to the customer or made available for download, while the software updates and technical support revenue is recognized over the term of the support contract.

Subscription Revenue — Subscription revenue consist of fees received in consideration for providing customers access to one or more of the Company’s software-as-a-service (“SaaS”) based solutions. These SaaS arrangements include access to the Company’s licensed software and, in certain arrangements, use of various hardware devices over the contract term. These SaaS arrangements do not provide the customer the right to take possession of the software supporting the subscription service, or if applicable, any hardware devices at any time during the contract period, and as such are not considered separate performance obligations. Revenue is recognized ratably on a straight-line basis over the term of the contract beginning when the service is made available to the customer. Subscription contract terms range from month-to-month to six years in length and billed monthly or annually.

Professional Services Revenue — Professional services revenue consists primarily of programming customization services performed relating to the integration of the Company’s software products with the customers other systems, such as human resources systems. Professional services contracts are generally billed on a time and materials basis and revenue is recognized as the services are performed.

Software Maintenance and Support Revenue — Support and maintenance contract revenue consists of the services provided to support the specialized programming applications performed by the Company’s professional services group. Support and maintenance contracts are typically billed at inception of the contract and recognized as revenue over the contract period, typically over a one-or three-year period.

Extended Hardware Warranties Revenue — Sales of the Company’s hardware products may also include optional extended hardware warranties, which typically provide assurance that the product will continue to function as initially intended. Extended hardware warranty contracts are typically billed at inception of the contract and recognized as revenue over the respective contract period, typically over one-to-two-year periods after the expiration of the original assurance warranty.

8

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Hardware products	When customer obtains control of the product (point-in-time)	Within 30-60 days of shipment	Observable in transactions without multiple performance obligations
Software licenses	When license is delivered to customer or made available for download, and the applicable license period has begun (point-in-time)	Within 30-60 days of the beginning of license period	Established pricing practices for software licenses bundled with software maintenance, which are separately observable in renewal transactions
Subscriptions	Ratably over the course of the subscription term (over time)	In advance of subscription term	Contractually stated or list price
Professional services	As services are performed and/or when contract is fulfilled (point-in-time)	Within 30-60 days of delivery	Observable in transactions without multiple performance obligations
Software maintenance    and support services	Ratably over the course of the support contract (over time)	Within 30-60 days of the beginning of the contract period	Observable in renewal transactions
Extended hardware    warranties	Ratably over the course of the support contract (over time)	Within 30-60 days of the beginning of the contract period	Observable in renewal transactions

Significant Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price (“SSP”).

Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, the Company estimates SSP using historical transaction data. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSPs reflect current information or trends.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers based on the timing of transfer of goods or services to customers (point-in-time or over time) and geographic region based on the shipping location of the customer. The geographic regions that are tracked are the Americas, Europe and the Middle East, and Asia-Pacific regions. 

Total net revenue based on the disaggregation criteria described above is as follows (in thousands):

	Three Months Ended March 31,
	2022						2021
	Point-in- Time		Over Time		Total		Point-in- Time		Over Time		Total
Americas	$	15,898	$	993	$	16,891	$	14,396	$	752	$	15,148
Europe and the Middle East		3,669		125		3,794		2,364		96		2,460
Asia-Pacific		4,376		—		4,376		4,554		—		4,554
Total	$	23,943	$	1,118	$	25,061	$	21,314	$	848	$	22,162

9

Contract Balances

Amounts invoiced in advance of services being provided are accounted for as deferred revenue. Nearly all of the Company’s deferred revenue balance is related to software maintenance contracts. Payment terms and conditions vary by contract type, although payment is typically due within 30 to 60 days of contract inception. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers.

Changes in deferred revenue during the three months ended March 31, 2022 and March 2021 were as follows (in thousands):

	Three Months Ended March 31,
	2022			2021
Deferred revenue, beginning of period	$	2,433		$	2,366
Deferral of revenue billed in current period, net of recognition		381			392
Recognition of revenue deferred in prior periods		(1,030	)		(793	)
Deferred revenue, end of period	$	1,784		$	1,965

Unsatisfied Performance Obligations

Revenue expected to be recognized in future periods related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, and contracts where revenue is recognized as invoiced, was approximately $0.5 million as of March 31, 2022. Since the Company typically invoices customers at contract inception, this amount is included in the deferred revenue balance. As of March 31, 2022, the Company expects to recognize 43% of the revenue related to these unsatisfied performance obligations during the remainder of 2022, 30% during 2023, and 27% thereafter.

10

4. Fair Value Measurements

The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. Under ASC 820, Fair Value Measurement and Disclosures, the fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

● Level 1 – Quoted prices (unadjusted) for identical assets and liabilities in active markets;

● Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly; and

● Level 3 – Unobservable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis