Identiv, Inc. [INVE] Filings

10-Q 1 inve-20240930.htm 10-Q 10-Q

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 September 30, 2024

☐ 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.)

1900-B Carnegie Avenue Santa Ana, California	92705
(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 November 4, 2024, the registrant had 23,885,181 shares of common stock outstanding.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

SIGNATURES		37

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

IDENTIV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value)


	September 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	145,361		$	23,312
Restricted cash		384			1,072
Accounts receivable, net of allowances of $622 and $1,610 as of September 30, 2024 and December 31, 2023, respectively		4,848			7,404
Inventories		10,710			13,560
Prepaid expenses and other current assets		4,700			1,222
Current assets held-for-sale		—			32,916
Total current assets		166,003			79,486
Property and equipment, net		8,203			8,472
Operating lease right-of-use assets		2,110			2,289
Other assets		713			678
Non-current assets held-for-sale		—			18,798
Total assets	$	177,029		$	109,723
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,035		$	4,652
Financial liabilities, net of debt issuance costs of $0 and $51 as of September 30, 2024 and December 31, 2023, respectively		—			9,949
Operating lease liabilities		880			782
Accrued compensation and related benefits		1,321			1,376
Accrued income taxes payable		7,180			104
Other accrued expenses and liabilities		3,595			917
Current liabilities held-for-sale		—			13,002
Total current liabilities		19,011			30,782
Long-term operating lease liabilities		1,251			1,507
Other long-term liabilities		27			26
Non-current liabilities held-for-sale		—			3,136
Total liabilities		20,289			35,451
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 September 30, 2024 and December 31, 2023		5			5
Common stock, $0.001 par value: 50,000 shares authorized; 25,941 and 24,902 shares issued and 23,873 and 23,247 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		26			25
Additional paid-in capital		508,606			500,752
Treasury stock, 2,068 and 1,655 shares as of September 30, 2024 and December 31, 2023, respectively		(14,568	)		(12,969	)
Accumulated deficit		(339,695	)		(414,870	)
Accumulated other comprehensive income		2,366			1,329
Total stockholders' equity		156,740			74,272
Total liabilities and stockholders' equity	$	177,029		$	109,723

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

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net revenue	$	6,532		$	11,732		$	19,931		$	32,097
Cost of revenue		6,294			10,413			18,596			27,928
Gross profit		238			1,319			1,335			4,169
Operating expenses:
Research and development		1,102			1,019			2,965			3,150
Selling and marketing		1,657			1,404			4,654			4,525
General and administrative		7,032			2,215			15,052			6,577
Restructuring and severance		—			—			—			46
Total operating expenses		9,791			4,638			22,671			14,298
Loss from continuing operations		(9,553	)		(3,319	)		(21,336	)		(10,129	)
Non-operating income (expense):
Interest income (expense), net		244			(211	)		8			(351	)
Gain on investment		—			132			—			132
Foreign currency gains (losses), net		340			(249	)		55			(187	)
Loss from continuing operations before income tax provision		(8,969	)		(3,647	)		(21,273	)		(10,535	)
Income tax provision		(360	)		(13	)		(361	)		(15	)
Net loss from continuing operations		(9,329	)		(3,660	)		(21,634	)		(10,550	)
Income (loss) from discontinued operations, net of tax:
Income (loss) from Physical Security Business, net of tax		(4,268	)		3,638			(2,737	)		6,665
Gain on sale of Physical Security Business, net of tax		99,546			—			99,546			—
Total income from discontinued operations, net of tax		95,278			3,638			96,809			6,665
Net income (loss)		85,949			(22	)		75,175			(3,885	)

Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax		1,431			(312	)		1,037			(211	)
Comprehensive gain (loss)	$	87,380		$	(334	)	$	76,212		$	(4,096	)

Net income (loss) per common share:
Basic and diluted - continuing operations	$	(0.40	)	$	(0.17	)	$	(0.95	)	$	(0.50	)
Basic and diluted - discontinued operations	$	4.03		$	0.16		$	4.12		$	0.29
Basic and diluted - net income (loss)	$	3.62		$	(0.01	)	$	3.17		$	(0.21	)

Weighted average common shares outstanding:
Basic and diluted		23,660			23,174			23,496			23,008

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

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)


	Three Months Ended September 30, 2024
	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, July 1, 2024		5,000	$	5		23,448		$	25	$	503,246	$	(13,510	)	$	(425,644	)	$	935	$	65,057
Net income		—		—		—			—		—		—			85,949			—		85,949
Unrealized gain from foreign currency translation adjustments		—		—		—			—		—		—			—			1,431		1,431
Issuance of common stock in connection with vesting of stock awards		—		—		751			1		—		—			—			—		1
Stock-based compensation		—		—		—			—		5,360		—			—			—		5,360
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(326	)		—		—		(1,058	)		—			—		(1,058	)
Balances, September 30, 2024		5,000	$	5		23,873		$	26	$	508,606	$	(14,568	)	$	(339,695	)	$	2,366	$	156,740

	Nine Months Ended September 30, 2024
	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, January 1, 2024		5,000	$	5		23,247		$	25	$	500,752	$	(12,969	)	$	(414,870	)	$	1,329	$	74,272
Net income		—		—		—			—		—		—			75,175			—		75,175
Unrealized gain from foreign currency translation adjustments		—		—		—			—		—		—			—			1,037		1,037
Issuance of common stock in connection with vesting of stock awards		—		—		1,039			1		—		—			—			—		1
Stock-based compensation		—		—		—			—		7,854		—			—			—		7,854
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(413	)		—		—		(1,599	)		—			—		(1,599	)
Balances, September 30, 2024		5,000	$	5		23,873		$	26	$	508,606	$	(14,568	)	$	(339,695	)	$	2,366	$	156,740


	Three Months Ended September 30, 2023
	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, July 1, 2023		5,000	$	5		23,112		$	24	$	498,765	$	(12,457	)	$	(413,244	)	$	1,202		$	74,295
Net loss		—		—		—			—		—		—			(22	)		—			(22	)
Unrealized loss from foreign currency translation adjustments		—		—		—			—		—		—			—			(312	)		(312	)
Issuance of common stock in connection with vesting of stock awards		—		—		54			—		—		—			—			—			—
Stock-based compensation		—		—		—			—		989		—			—			—			989
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(16	)		—		—		(131	)		—			—			(131	)
Balances, September 30, 2023		5,000	$	5		23,150		$	24	$	499,754	$	(12,588	)	$	(413,266	)	$	890		$	74,819

	Nine Months Ended September 30, 2023
	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, January 1, 2023		5,000	$	5		22,623		$	24	$	495,818	$	(12,173	)	$	(409,381	)	$	1,101		$	75,394
Net loss		—		—		—			—		—		—			(3,885	)		—			(3,885	)
Unrealized loss from foreign currency translation adjustments		—		—		—			—		—		—			—			(211	)		(211	)
Issuance of common stock in connection with vesting of stock awards		—		—		308			—		—		—			—			—			—
Stock-based compensation		—		—		—			—		2,973		—			—			—			2,973
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(56	)		—		—		(415	)		—			—			(415	)
Proceeds from exercise of warrants		—		—		275			—		963		—			—			—			963
Balances, September 30, 2023		5,000	$	5		23,150		$	24	$	499,754	$	(12,588	)	$	(413,266	)	$	890		$	74,819

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

IDENTIV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended September 30,
	2024			2023
Cash flows used in operating activities
Net income (loss)	$	75,175		$	(3,885	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		2,176			2,000
Gain on sale of discontinued operations, net of taxes		(99,546	)		—
Gain on investment		—			(132	)
Amortization of debt issuance costs		113			28
Stock-based compensation expense		7,854			2,973
Loss on disposal of property and equipment		99			—
Changes in operating assets and liabilities:
Accounts receivable		5,500			(1,006	)
Inventories		2,005			(512	)
Prepaid expenses and other assets		(2,130	)		(1,206	)
Accounts payable		(2,042	)		(2,715	)
Deferred revenue		311			723
Accrued income taxes payable		(220	)		49
Accrued expenses and other liabilities		1,195			69
Net cash used in operating activities		(9,510	)		(3,614	)
Cash flows from investing activities:
Capital expenditures		(873	)		(3,139	)
Proceeds from sale of discontinued operations, net of cash sold		143,394			—
Proceeds from investment		—			132
Net cash provided by (used in) investing activities		142,521			(3,007	)
Cash flows from financing activities:
Borrowings under revolving loan facility, net of issuance costs		9,887			18,911
Repayments under revolving loan facility		(20,000	)		(9,000	)
Taxes paid related to net share settlement of restricted stock units		(1,599	)		(415	)
Proceeds from exercise of warrants		—			963
Net cash provided by (used in) financing activities		(11,712	)		10,459
Effect of exchange rates on cash, cash equivalents, and restricted cash		62			(47	)
Net increase in cash, cash equivalents, and restricted cash		121,361			3,791
Cash, cash equivalents, and restricted cash at beginning of period		24,384			17,137
Cash, cash equivalents, and restricted cash at end of period	$	145,745		$	20,928

Supplemental disclosures of cash flow information:
Interest paid	$	324		$	335
Taxes paid, net	$	1,747		$	58
Non-cash investing and financing activities:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	368		$	2,306

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

IDENTIV, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2023 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, 2023, as amended.

On September 6, 2024, the Company completed the sale of its physical security, access card, and identity reader operations and assets, including all outstanding shares of Identiv Private Limited, its wholly-owned subsidiary (the “Physical Security Business"), to Hawk Acquisition, Inc., a Delaware corporation (“Buyer”) and a wholly-owned subsidiary of Vitaprotech SAS, a French société par actions simplifiée and provider of security solutions. Due to the sale of its Physical Security Business in the third quarter of 2024, the Company has classified the results of the Physical Security Business as discontinued operations on its condensed consolidated statements of comprehensive income (loss) for all periods presented. See Note 3, Discontinued Operations for additional disclosure related to discontinued operations. The discussion in the notes to these condensed consolidated financial statements, unless otherwise noted, relates solely to the Company's continuing operations.

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, 2023, as amended.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” Adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures.

3. Discontinued Operations

Sale of Physical Security Business

On September 6, 2024, the Company completed the sale of its Physical Security Business to Buyer, and Buyer assumed certain of the Company’s liabilities related to the Physical Security Business (collectively, the “Asset Sale”) pursuant to that certain Stock and Asset Purchase Agreement, dated as of April 2, 2024 (the “Purchase Agreement”), by and between the Company and Buyer. As consideration for the Asset Sale, the Company received approximately $144.3 million in cash, subject to further customary adjustments as set forth in the Purchase Agreement.

In connection with the closing of the Asset Sale, the Company and Buyer entered into a transition services agreement (the “Transition Services Agreement”). The Transition Services Agreement outlines the information technology, people, and facility support the Company will provide to Buyer for a period of 12 months to 18 months after the transaction closing date. The agreed upon charges for such services are intended to allow the Company and Buyer, respectively, to recover all costs and expenses of providing such services. Fees earned and incurred under the Transition Services Agreement for the three months ended September 30, 2024 were immaterial.

The following summarizes the components of the gain on sale of the Physical Security Business, net of taxes (in thousands):


Cash proceeds	$	144,262
Assets sold:
Cash		868
Accounts receivable		11,610
Inventories		15,969
Prepaid expenses and other current assets		1,640
Property and equipment		861
Other assets		2,963
Total assets sold		33,911
Liabilities divested:
Accounts payable		4,179
Deferred revenue		3,579
Other accrued expenses and liabilities		718
Other liabilities		2,482
Total liabilities divested		10,958
Other:
Goodwill written off related to sale of Physical Security Business		(10,196	)
Intangible assets written off related to sale of Physical Security Business		(3,595	)
Transaction and other costs		(676	)
Total other		(14,467	)
Income tax provision		7,296
Gain on sale of Physical Security Business, net of taxes	$	99,546

The gain on sale of the Physical Security Business is subject to adjustment as the Company completes its tax analysis on the ability to utilize net operating loss and credit carryforwards to reduce the amount of income tax provision. Any adjustment to the income tax provision recorded in connection with the Sale of the Physical Security Business will be completed by December 31, 2024.

Discontinued Operations

As the sale of the Company's Physical Security Business represented a significant strategic shift that has a material effect on the Company's operations and financial results, the Company has separately reported the results of its Physical Security Business as discontinued operations in the condensed consolidated statements of comprehensive income (loss) for all periods presented.