##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q

(Mark one)



|[X] | Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
|--- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2002 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: 1-9641

IDENTIX INCORPORATED
(Exact name of registrant as specified in its charter)

|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 94-2842496                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation of organization) |  | (IRS Employer Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|100 Cooper Court, Los Gatos, California  |  | 95032     
|                                         |  |           
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code (408) 335-1400

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 requirement for the past 90 days. YES [X]  NO [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date:

44,893,131 shares of Common Stock
as of April 30, 2002

1



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TABLE OF CONTENTS



|                          |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                          |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                          |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                          |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                          |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                          | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                          | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II OTHER INFORMATION
|                          | Item 1. Legal Proceedings                                                                    
|                          | Item 2. Changes in Securities                                                                
|                          | Item 3. Defaults upon Senior Securities                                                      
|                          | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                          | Item 5. Other                                                                                
|                          | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES               
|EXHIBIT INDEX            
|Exhibit 3.1              
|Exhibit 10.4             
|Exhibit 10.6             
|Exhibit 10.7             
|Exhibit 10.9             
|Exhibit 10.38            
|Exhibit 10.45            
|Exhibit 10.50            
|Exhibit 10.51            



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##### Table of Contents



IDENTIX INCORPORATED

INDEX

|          |  |        |  |                                                                                                       |  |     
|--------- |  | ------ |  | ----------------------------------------------------------------------------------------------------- |  | ----
|          |  |        |  |                                                                                                       |  | Page
|          |  |        |  |                                                                                                       |  |     
|PART I    |  |        |  | FINANCIAL INFORMATION                                                                                 |  |     
|         
|         
|         
|         
|          |  | Item 1 |  | Unaudited Financial Statements                                                                        |  |     
|         
|         
|         
|         
|          |  |        |  | Condensed Consolidated Balance Sheets 
March 31, 2002 and June 30, 2001                              |  | 3   
|         
|         
|         
|         
|          |  |        |  | Condensed Consolidated Statements of Operations -
Three and nine months ended March 31, 2002 and 2001 |  | 4   
|         
|         
|         
|         
|          |  |        |  | Condensed Consolidated Statements of Cash Flows 
Nine months ended March 31, 2002 and 2001           |  | 5   
|         
|         
|         
|         
|          |  |        |  | Notes to Condensed Consolidated Financial Statements                                                  |  | 6   
|         
|         
|         
|         
|          |  | Item 2 |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations                 |  | 14  
|         
|         
|         
|         
|          |  | Item 3 |  | Quantitative and Qualitative Disclosures
about Market Risk                                            |  | 21  
|         
|         
|         
|         
|PART II   |  |        |  | OTHER INFORMATION                                                                                     |  |     
|         
|         
|         
|         
|          |  | Item 1 |  | Legal Proceedings                                                                                     |  | 31  
|         
|         
|         
|         
|          |  | Item 2 |  | Changes in Securities                                                                                 |  | 31  
|         
|         
|         
|         
|          |  | Item 3 |  | Defaults upon
Senior Securities                                                                       |  | 31  
|         
|         
|         
|         
|          |  | Item 4 |  | Submission of
Matters to a Vote of Security Holders                                                   |  | 31  
|         
|         
|         
|         
|          |  | Item 5 |  | Other                                                                                                 |  | 31  
|         
|         
|         
|         
|          |  | Item 6 |  | Exhibits                                                                                              |  | 31  
|         
|         
|         
|         
|Signature |  | 32    

2



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##### Table of Contents






IDENTIX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |             |            |            | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------------ | ---------- | ----------- | ---------- | ----------- | ---------- | ---------- | 
|                                     |                                                                                                                                                          |                            |                                            |              | March 31,  |             | June 30,  
|                                     |                                                                                                                                                          |                            |                                            |              | 2002       |             | 2001      
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |           
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|Current assets:                      |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     | Cash and cash equivalents                                                                                                                                |                            | $                                          | 54,003,000   |            |             | $          | 20,777,000  |           
|                                     | Accounts receivable, net                                                                                                                                 |                            |                                            | 17,515,000   |            |             |            | 23,154,000  |           
|                                     | Inventories                                                                                                                                              |                            |                                            | 5,807,000    |            |             |            | 6,089,000   |           
|                                     | Prepaid expenses and other assets                                                                                                                        |                            |                                            | 1,146,000    |            |             |            | 1,768,000   |           
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          | Total current assets       |                                            |              | 78,471,000 |             |            |             | 51,788,000 |           
|Property and equipment, net          |                                                                                                                                                          |                            | 5,510,000                                  |              |            |             | 4,587,000  |            
|Acquired intangible assets           |                                                                                                                                                          |                            | 1,943,000                                  |              |            |             | 2,642,000  |            
|Goodwill                             |                                                                                                                                                          |                            | 22,792,000                                 |              |            |             | 22,792,000 |            
|Other assets                         |                                                                                                                                                          |                            | 2,470,000                                  |              |            |             | 1,645,000  |            
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          |                            | Total assets                               |              | $          | 111,186,000 |            |             | $          | 83,454,000 | 
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     | Accounts payable                                                                                                                                         |                            | $                                          | 8,416,000    |            |             | $          | 10,595,000  |           
|                                     | Accrued compensation                                                                                                                                     |                            |                                            | 5,075,000    |            |             |            | 4,658,000   |           
|                                     | Other accrued liabilities                                                                                                                                |                            |                                            | 914,000      |            |             |            | 1,275,000   |           
|                                     | Deferred revenue                                                                                                                                         |                            |                                            | 3,240,000    |            |             |            | 4,218,000   |           
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          | Total current liabilities  |                                            |              | 17,645,000 |             |            |             | 20,746,000 |           
|Other liabilities                    |                                                                                                                                                          |                            | 277,000                                    |              |            |             | 56,000     |            
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          | Total liabilities          |                                            |              | 17,922,000 |             |            |             | 20,802,000 |           
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|Stockholders equity:                |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     | Convertible preferred stock, $0.01 par value;
2,000,000 shares authorized; 234,558 shares issued and
outstanding at March 31, 2002 and June 30, 2001     |                            |                                            | 3,702,000    |            |             |            | 3,702,000   |           
|                                     | Common stock, $0.01 par value; 100,000,000 shares authorized
44,885,865 and 36,601,242 shares issued and outstanding
at March 31, 2002 and June 30, 2001 |                            |                                            | 449,000      |            |             |            | 366,000     |           
|                                     | Additional paid-in capital                                                                                                                               |                            |                                            | 197,276,000  |            |             |            | 144,604,000 |           
|                                     | Accumulated deficit                                                                                                                                      |                            |                                            | (107,982,000 | )          |             |            | (85,839,000 | )         
|                                     | Accumulated other comprehensive loss                                                                                                                     |                            |                                            | (181,000     | )          |             |            | (181,000    | )         
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          | Total stockholders equity |                                            |              | 93,264,000 |             |            |             | 62,652,000 |           
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            
|                                     |                                                                                                                                                          |                            | Total liabilities and stockholders equity |              | $          | 111,186,000 |            |             | $          | 83,454,000 | 
|                                     |                                                                                                                                                          |                            |                                            |              |            |             |            |            

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

3



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##### Table of Contents






IDENTIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |       |   |            |            | 
|------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------- | - | ------------------------------------------ | ------------------------ | - | ------------------ | ---------- | ----------------- | - | ---------- | ----------- | ----- | - | ---------- | ----------- | ----- | - | ---------- | ---------- | 
|                                                                                                                               |                                                                   |   |                                            |                          |   | Three months ended |            | Nine months ended
|                                                                                                                               |                                                                   |   |                                            |                          |   | March 31,          |            | March 31,        
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                  
|                                                                                                                               |                                                                   |   |                                            |                          |   | 2002               |            | 2001              |   | 2002       |             | 2001 
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |      
|Revenues:                                                                                                                      |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                               |                                                                   |   | Product revenues                           |                          | $ | 8,839,000          |            |                   | $ | 8,113,000  |             |       | $ | 21,423,000 |             |       | $ | 24,204,000 |           
|                                                                                                                               |                                                                   |   | Services revenues                          |                          |   | 10,393,000         |            |                   |   | 12,111,000 |             |       |   | 34,086,000 |             |       |   | 37,089,000 |           
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                               |                                                                   |   |                                            | Total revenues           |   |                    | 19,232,000 |                   |   |            | 20,224,000  |       |   |            | 55,509,000  |       |   |            | 61,293,000 | 
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|Cost and expenses:                                                                                                             |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                               |                                                                   |   | Cost of product revenues                   |                          |   | 6,103,000          |            |                   |   | 5,565,000  |             |       |   | 14,199,000 |             |       |   | 15,118,000 |           
|                                                                                                                               |                                                                   |   | Cost of services revenues                  |                          |   | 10,140,000         |            |                   |   | 10,344,000 |             |       |   | 31,872,000 |             |       |   | 32,077,000 |           
|                                                                                                                               |                                                                   |   | Research, development and engineering      |                          |   | 2,358,000          |            |                   |   | 2,758,000  |             |       |   | 7,224,000  |             |       |   | 7,309,000  |           
|                                                                                                                               |                                                                   |   | Marketing and selling                      |                          |   | 3,851,000          |            |                   |   | 4,291,000  |             |       |   | 10,799,000 |             |       |   | 11,764,000 |           
|                                                                                                                               |                                                                   |   | General and administrative                 |                          |   | 4,340,000          |            |                   |   | 3,949,000  |             |       |   | 11,990,000 |             |       |   | 10,199,000 |           
|                                                                                                                               |                                                                   |   | Amortization of acquired intangible assets |                          |   | 233,000            |            |                   |   | 832,000    |             |       |   | 699,000    |             |       |   | 2,497,000  |           
|                                                                                                                               |                                                                   |   | Restructuring and other special charges    |                          |   |                   |            |                   |   | 1,172,000  |             |       |   | 1,712,000  |             |       |   | 1,172,000  |           
|                                                                                                                               |                                                                   |   | Preferred stock and warrant expense        |                          |   |                   |            |                   |   |           |             |       |   |           |             |       |   | 1,259,000  |           
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                               |                                                                   |   |                                            | Total costs and expenses |   |                    | 27,025,000 |                   |   |            | 28,911,000  |       |   |            | 78,495,000  |       |   |            | 81,395,000 | 
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|Loss from operations                                                                                                           |                                                                   |   | (7,793,000                                 | )                        |   |                    | (8,687,000 | )                 |   |            | (22,986,000 | )     |   |            | (20,102,000 | )    
|Interest and other income (expense), net                                                                                       |                                                                   |   | 261,000                                    |                          |   |                    | 315,000    |                   |   |            | 661,000     |       |   |            | 1,158,000   |      
|Interest expense                                                                                                               |                                                                   |   |                                           |                          |   |                    | (21,000    | )                 |   |            |            |       |   |            | (85,000     | )    
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|Loss before income taxes, equity interest in income of joint
venture and cumulative effect of a change in accounting principle |                                                                   |   | (7,532,000                                 | )                        |   |                    | (8,393,000 | )                 |   |            | (22,325,000 | )     |   |            | (19,029,000 | )    
|Provision for income taxes                                                                                                     |                                                                   |   | (7,000                                     | )                        |   |                    | (27,000    | )                 |   |            | (6,000      | )     |   |            | (83,000     | )    
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|Loss before equity interest in income of joint venture
and cumulative effect of a change in accounting principle               |                                                                   |   | (7,539,000                                 | )                        |   |                    | (8,420,000 | )                 |   |            | (22,331,000 | )     |   |            | (19,112,000 | )    
|Equity interest in income of joint venture                                                                                     |                                                                   |   | 75,000                                     |                          |   |                    | 51,000     |                   |   |            | 188,000     |       |   |            | 187,000     |      
|Loss before cumulative effect of a change in accounting
principle                                                              |                                                                   |   | (7,464,000                                 | )                        |   |                    | (8,369,000 | )                 |   |            | (22,143,000 | )     |   |            | (18,925,000 | )    
|Cumulative effect of a change in accounting principle                                                                          |                                                                   |   |                                           |                          |   |                    |           |                   |   |            |            |       |   |            | (1,998,000  | )    
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|Net loss                                                                                                                       |                                                                   | $ | (7,464,000                                 | )                        |   | $                  | (8,369,000 | )                 |   | $          | (22,143,000 | )     |   | $          | (20,923,000 | )    
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|                                                                                                                              
|Basic and diluted net loss per share:                                                                                          |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                               | Loss before cumulative effect of a change in accounting
principle |   | $                                          | (0.17                    | ) |                    | $          | (0.25             | ) |            | $           | (0.56 | ) |            | $           | (0.56 | )
|                                                                                                                               | Cumulative effect of a change in accounting principle             |   |                                            |                         |   |                    |            |                  |   |            |             |      |   |            |             | (0.06 | )
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|                                                                                                                               | Net loss per share                                                |   | $                                          | (0.17                    | ) |                    | $          | (0.25             | ) |            | $           | (0.56 | ) |            | $           | (0.62 | )
|                                                                                                                               |                                                                   |   |                                            |                          |   |                    |            |                   |   |            |             |       |   |            |             |      
|Weighted average common shares used in basic
and diluted loss per share computation                                            |                                                                   |   | 44,814,000                                 |                          |   |                    | 33,954,000 |                   |   |            | 39,809,000  |       |   |            | 33,530,000  |      

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

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##### Table of Contents






IDENTIX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                     |                                                                              |                                            |            |                   |            |      |            |             |            |  
|---------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ----------------- | ---------- | ---- | ---------- | ----------- | ---------- | -
|                                                     |                                                                              |                                            |            | Nine months ended
|                                                     |                                                                              |                                            |            | March 31,        
|                                                     |                                                                              |                                            |            |                  
|                                                     |                                                                              |                                            |            | 2002              |            | 2001
|                                                     |                                                                              |                                            |            |                   |            |     
|Cash flows from operating activities:                |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Net loss                                                                     |                                            | $          | (22,143,000       | )          |      | $          | (20,923,000 | )         
|                                                     | Adjustments to reconcile net loss to net cash used for operating
activities: |                                            |            |                   |            |      |            |             |           
|                                                     |                                                                              | Depreciation and amortization              |            |                   | 2,581,000  |      |            |             | 4,148,000  |  
|                                                     |                                                                              | Loss on disposal of property and equipment |            |                   | 53,000     |      |            |             | 7,000      |  
|                                                     |                                                                              | Recognition of deferred revenue            |            |                   | (6,638,000 | )    |            |             | (5,329,000 | )
|                                                     |                                                                              | Equity interest in income of joint venture |            |                   | (188,000   | )    |            |             | (187,000   | )
|                                                     |                                                                              | Stock compensation expenses                |            |                   | 443,000    |      |            |             | 877,000    |  
|                                                     |                                                                              | Write-off of intangible assets             |            |                   |           |      |            |             | 971,000    |  
|                                                     |                                                                              | Allowance for doubtful accounts            |            |                   | 578,000    |      |            |             | 935,000    |  
|                                                     |                                                                              | Preferred stock and warrant expense        |            |                   |           |      |            |             | 1,259,000  |  
|                                                     | Changes in assets and liabilities:                                           |                                            |            |                   |            |      |            |             |           
|                                                     |                                                                              | Restricted cash                            |            |                   |           |      |            |             | (2,159,000 | )
|                                                     |                                                                              | Accounts receivable                        |            |                   | 5,061,000  |      |            |             | 1,861,000  |  
|                                                     |                                                                              | Inventories                                |            |                   | 282,000    |      |            |             | (2,002,000 | )
|                                                     |                                                                              | Prepaid expenses and other assets          |            |                   | 622,000    |      |            |             | (1,743,000 | )
|                                                     |                                                                              | Accounts payable                           |            |                   | (2,179,000 | )    |            |             | 2,419,000  |  
|                                                     |                                                                              | Accrued compensation                       |            |                   | (26,000    | )    |            |             | (422,000   | )
|                                                     |                                                                              | Other accrued liabilities                  |            |                   | (172,000   | )    |            |             | (566,000   | )
|                                                     |                                                                              | Deferred revenue                           |            |                   | 5,660,000  |      |            |             | 11,300,000 |  
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Net cash used for operating activities                                       |                                            |            | (16,066,000       | )          |      |            | (9,554,000  | )         
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|Cash flows from investing activities:                |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Capital expenditures                                                         |                                            |            | (2,810,000        | )          |      |            | (2,153,000  | )         
|                                                     | Proceeds from the sale of property and equipment                             |                                            |            | 16,000            |            |      |            |            |           
|                                                     | Additions to intangibles and other assets                                    |                                            |            | (669,000          | )          |      |            | (1,593,000  | )         
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Net cash used for investing activities                                       |                                            |            | (3,463,000        | )          |      |            | (3,746,000  | )         
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|Cash flows from financing activities:                |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Borrowings under bank lines of credit                                        |                                            |            |                  |            |      |            | 4,914,000   |           
|                                                     | Payments under bank lines of credit                                          |                                            |            |                  |            |      |            | (5,344,000  | )         
|                                                     | Proceeds from sales of common and preferred stock                            |                                            |            | 52,755,000        |            |      |            | 7,958,000   |           
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Net cash provided by financing activities                                    |                                            |            | 52,755,000        |            |      |            | 7,528,000   |           
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|Net increase (decrease) in cash and cash equivalents |                                                                              |                                            | 33,226,000 |                   |            |      | (5,772,000 | )          
|Cash and cash equivalents at period beginning        |                                                                              |                                            | 20,777,000 |                   |            |      | 15,620,000 |            
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|Cash and cash equivalents at period end              |                                                                              | $                                          | 54,003,000 |                   |            | $    | 9,848,000  |            
|                                                     |                                                                              |                                            |            |                   |            |      |            |            
|Supplemental disclosures of cash flow information:   |                                                                              |                                            |            |                   |            |      |            |            
|                                                     | Cash paid during the period for interest                                     |                                            | $          |                  |            |      | $          | 85,000      |           

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

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IDENTIX INCORPORATED
NINE MONTHS ENDED MARCH 31, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

These accompanying condensed consolidated financial statements and related
notes are unaudited. However, in the opinion of management, all adjustments
(consisting only of normal recurring adjustments) which are necessary for a
fair presentation of the financial position and results of operations for the
interim periods presented have been included. These condensed consolidated
financial statements should be read in conjunction with the audited condensed
consolidated financial statements and notes thereto for the fiscal year ended
June 30, 2001 included in the Companys Form 10-K. The results of operations
for the nine months ended March 31, 2002 are not necessarily indicative of
results to be expected for the entire fiscal year, which ends on June 30,
2002.

Certain prior period amounts have been reclassified to conform to current
period presentation.

Prior to fiscal 2002, amounts were invoiced to
customers when the products were shipped. In connection with the
Company's adoption of Staff Accounting Bulletin No. 101
(SAB 101), a cumulative effect adjustment was
recognized to reflect an adjustment to the timing of revenue
recognition on product sales that require final installation and
acceptance. Commencing with fiscal 2002, the Company began invoicing
customers for Imaging equipment sales that require installation and
acceptance once the installation is complete and acceptance has been
obtained. As a result, the Company changed its presentation of
deferred revenues and the related accounts receivable for these
equipment sales requiring installation to exclude such amounts from
the consolidated financial statements. Prior year's amounts have been
reclassified to conform to the current year's presentation, as
follows:

|                                                            |  |           |            |          |  |   |            |  
|----------------------------------------------------------- |  | --------- | ---------- | -------- |  | - | ---------- | -
|                                                            |  | March 31, |            | June 30,
|                                                            |  | 2002      |            | 2001    
|                                                            |  |           |            |         
|Accounts receivable gross                                   |  | $         | 18,458,000 |          |  | $ | 25,608,000 |  
|Deferred revenue offset against related accounts receivable |  |           | (943,000   | )        |  |   | (2,454,000 | )
|                                                            |  |           |            |          |  |   |            |  
|Accounts receivable per balance sheet                       |  | $         | 17,515,000 |          |  | $ | 23,154,000 |  
|                                                            |  |           |            |          |  |   |            |  

2. Revenue Recognition Policy

In December 1999, the Securities and Exchange Commission Staff (SEC staff)
issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements (SAB 101). The Company implemented the provisions of SAB 101 in
the fourth quarter of fiscal 2001, retroactive to July 1, 2000. As a result
of this change in accounting principle, the Company recorded a charge of
$1,998,000 to reflect the cumulative effect of the change on prior years as
of July 1, 2000. The results for the first three quarters of fiscal 2001 have
been restated to reflect the adoption of SAB 101 as of July 1, 2000.

The portion of the Companys revenues impacted
by SAB 101 is product
revenue derived from the sale of equipment that requires installation.
Certain of the Companys Imaging segment equipment sales such as its
TouchPrint Live Scan Systems generally require installation subsequent to
shipment and transfer of title. Previously, the Company had generally
recognized revenue upon shipment of equipment to customers, regardless of
installation requirements, provided final customer acceptance and collection
of the related receivable were probable. The Companys interpretation of the
requirements of SAB 101 resulted in changes to the Companys accounting method
for revenue recognition related to equipment sales that require installation,
since the installation is not considered perfunctory. Under the Companys
new accounting method, product revenue related to equipment sales that
require installation is deferred until installation is complete and customer
acceptance has been obtained. Revenue related to product sales that require
no installation such as printers and other peripheral devices as well as the
Companys Security segment products including DFR-300, DFR-200 and FingerScan
V20 continue to be recognized in accordance with the terms of the sale,
generally upon shipment by the Company, provided no significant obligations
remain and collection of the receivable is deemed reasonably assured.
Revenues from sales of products via authorized representatives, dealers,
distributors or other third party sales channels are recognized at the time
the risks and rewards have transferred or, in the case of TouchPrint Live
Scan Systems that generally require installation, upon the final installation
and acceptance from the end user.

The Company also sells several stand-alone software products including
BioLogon and software developer kits. Revenue is recognized on software
products in accordance with Statement of Position (SOP) 97-2, Software
Revenue Recognition, as amended. The Company recognizes revenue on software
products when persuasive evidence of an arrangement exists, delivery has
occurred, the vendors fee is fixed or determinable and vendor-specific
objective evidence

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(VSOE) exists to allocate the total fee to all undelivered elements of the
arrangement and collection is determined to be probable. VSOE is established
based upon either sales of the element (e.g. maintenance, training or
consulting) in individual transactions, or, in certain cases for maintenance,
based upon substantive renewal rates. In cases where the Company does not
have VSOE for all delivered elements in the transaction (e.g., for licenses),
the fees from these multiple-element agreements are allocated using the
residual value method. Maintenance revenue is deferred and recognized
rateably over the life of the service period of the related agreement.

The
majority of the Companys services are performed for the U.S. Government
under various firm fixed-price (FFP), time-and-material (T&M) and cost
reimbursement contracts. Revenues on FFP contracts are generally recognized
on the percentage-of-completion method based on costs incurred in relation to
total estimated costs. Revenues on T&M contracts are recognized to the
extent of billable rates multiplied by hours worked plus materials expense
incurred. Revenues for cost plus fixed fee (CPFF) contracts are recognized
as costs are incurred, including a proportionate amount of the fee earned.
Unbilled accounts receivable represent revenue accrued which becomes billable
per the terms of contract. Provisions for estimated contract losses are
recorded in the period such losses are determined.

Services revenues directly from contracts with the U.S. Government,
principally with the Department of Defense (DOD), and from subcontracts
with other U.S. Government contractors, were approximately 86% and 84% of
total services revenue for the three and nine months ended March 31, 2002 and
approximately 90% of total services revenue for the same periods in the prior
fiscal year. Contract costs for services revenues to the U.S. Government,
including indirect expenses, are subject to audit and subsequent adjustment
by negotiation between the Company and U.S. Government representatives.
Revenues are recorded in amounts expected to be realized upon final
settlement. Identix Public Sector (IPS) is currently being audited by the Defense Contract Audit
Agency for the period from July 1, 1997 to June 30, 2000. While the Company
believes that the results of such audit will have no material effect on the
Companys financial position or results of the operations, there can be no
assurance that no adjustment will be made and that, if made, such adjustments
will not have a material effect the Companys financial position or results
of operations.

3. Cash and Liquidity

In December 2001, the Company sold 7,390,000 shares of its Common Stock in a
private placement to new and existing institutional investors, pursuant to a stock purchase agreement. The shares
were sold at $7.00 per share and resulted in net cash proceeds to the Company
of $48,159,000. The purchase price was based on the closing price of the
Companys common stock in the period prior to the execution of the agreement, and represented a discount of 11.8% to the prior day closing price, 8.7% to the 20-day
straight average or 10.8% to the 20-day volume weighted average price, each of which were considered by the Company
to be competitively priced for the size of the transaction. The Company was
advised by its financial advisors that the discount applied to the
exchange-traded price is common for comparable transactions.

The Identix bank line of credit (Identix Line of Credit) entered into in
September 2001 was amended on March 28, 2002. The Identix Line of Credit now
provides for up to the lesser of $15,000,000 or 80% of the Companys eligible
accounts receivable including Identix IPS, its wholly
owned subsidiary. Loans under the Identix Line of Credit are secured by
substantially all of the assets of the Company and bear interest at the
banks prime rate of interest plus 50 basis points (5.25% at March 31, 2002).
The Identix Line of Credit expires on March 28, 2003. At March 31, 2002,
there was no amount outstanding and $7,445,000 was available to borrow. The
Identix Line of Credit agreement contains financial and operating covenants,
including restrictions on the Companys ability to pay dividends on its
common stock.

During the nine months ended March 31, 2002, IPS had a bank line of credit,
(IPS Line of Credit), of $6,000,000 collateralized by IPS accounts
receivable and certain other assets. At March 31, 2002, the Company was in
technical default of one of the financial covenants on the IPS Line of
Credit, which required that the Companys maximum quarterly net loss not
exceed $4 million on a consolidated basis. There were minimal amounts
outstanding under the IPS bank line of credit during the nine months ended
March 31, 2002. With the consolidation of the Companys bank lines of credit
on March 28, 2002, as noted above, the Company terminated the IPS line of
credit on April 1, 2002.

While the Company believes that cash flows from operations, together with
existing working capital and available lines of credit, may be adequate to
fund the Companys current cash requirements, the Company may need to raise
additional debt or equity financing in the future. The Company may not be
able to obtain additional debt or equity financing. If successful in raising
additional financing, the Company may not be able to do so on terms that are
not excessively dilutive to existing stockholders or less costly than
existing sources of financing. Failure to secure additional financing in a
timely manner and on favorable terms in the future could have a material
adverse impact on the Companys financial performance and stock price and
require the Company to implement certain cost reduction initiatives and
curtail certain of its operations.

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4. Inventories

Inventories are stated at the lower of standard cost (which approximates
actual cost determined on a first-in, first-out method) or market and
consisted of the following:

|                                 |  |           |           |          |  |   |           | 
|-------------------------------- |  | --------- | --------- | -------- |  | - | --------- | 
|                                 |  | March 31, |           | June 30,
|                                 |  | 2002      |           | 2001    
|                                 |  |           |           |         
|Purchased parts and materials    |  | $         | 3,401,000 |          |  | $ | 1,603,000 | 
|Work-in-process                  |  |           | 656,000   |          |  |   | 1,260,000 | 
|Finished goods, including spares |  |           | 1,750,000 |          |  |   | 3,226,000 | 
|                                 |  |           |           |          |  |   |           | 
|                                 |  | $         | 5,807,000 |          |  | $ | 6,089,000 | 
|                                 |  |           |           |          |  |   |           | 

The Company provides for obsolete, slow moving or excess inventories in the
period when obsolescence or inventory in excess of expected demand is first
identified. During the three and nine months ended March 31, 2002, the
Company physically disposed of $438,000 and $956,000, respectively, of
inventory which had been provided for at June 30, 2001 due to the respective
products end of life. In addition, during the three months ended September
30, 2001, the Company sold or used $205,000 of inventory, which had been
previously provided for at June 30, 2001.

5. Restructuring and Other Special Charges

Fiscal 2002

In June 2001, the Company initiated a restructuring of its worldwide
operations to reduce costs and increase operational efficiencies. In
connection with the restructuring, in July 2001, the Company initiated a
workforce reduction of approximately 42 employees, or 10% of its workforce to
streamline its worldwide functions, operations and resources primarily in
marketing, selling and administration. The workforce reduction resulted in a
$1,712,000 charge during the quarter ended September 30, 2001 relating
primarily to severance and fringe benefits. Related cash payments of
$1,476,000 were made during the nine months ended March 31, 2002. The
remaining liability at March 31, 2002 of $236,000 is included in accrued
compensation in the condensed consolidated balance sheets. The Company
expects that this amount will be paid by June 30, 2002.

Fiscal 2001

In light of continued deteriorating general economic conditions, during
the third quarter ended March 31, 2001, the Company initiated a review of its
asset carrying values, forecasted sales and the timing of introductions and
end of lives of its products. The Company recorded charges during the third
quarter ended March 31, 2001 totaling $2,356,000 consisting of
$1,172,000 for
the write-off of certain IPS intangible assets related to software and other
capitalized costs that the Company no longer plans to market/use;
$675,000
for the write-down of inventory related primarily
to the introduction and end-of-life of certain Imaging and Security products
including the introduction of TouchPrint 2000 and the end-of-life of
TouchPrint 600 and BioLogon version 2.0 and a
$509,000 provision to write-off certain accounts receivables for customers
whose financial condition deteriorated subsequent to the revenue being
recognized.

Charges recorded during the third quarter ended March 31, 2001 in connection
with its review activities, substantially all of which were non-cash in
nature, are summarized as follows:

|                                          |       |   |           |           | 
|----------------------------------------- | ----- | - | --------- | --------- | 
|Write-off of intangibles and other assets |       | $ | 1,172,000 |          
|Inventory write-offs and reserves         |       |   | 675,000   |          
|Allowance for doubtful accounts           |       |   | 509,000   |          
|                                          |       |   |           |          
|                                          | Total |   | $         | 2,356,000 | 
|                                          |       |   |           |          

These charges were included in the Companys consolidated statement of
operations as follows:

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|                                        |       |   |           |           | 
|--------------------------------------- | ----- | - | --------- | --------- | 
|Cost of product revenues                |       | $ | 675,000   |          
|General and administrative              |       |   | 509,000   |          
|Restructuring and other special charges |       |   | 1,172,000 |          
|                                        |       |   |           |          
|                                        | Total |   | $         | 2,356,000 | 
|                                        |       |   |           |          

6. Sale of Series A Convertible Preferred Stock and Warrant

In July 2000, the Company entered into a Securities Purchase Agreement with
Motorola, Inc. (Motorola), whereby the Company sold 234,558 shares of
Series A Convertible Preferred Stock (the Series A Preferred Stock) at
$15.99 per share, resulting in cash proceeds to the Company of $3,702,000,
net of issuance costs. The sale of the Series A Preferred Stock was exempt
from registration under applicable securities laws. However, Motorola has
demand registration rights, which were effective beginning on January 7,
2001.

In connection with the issuance of the Series A Preferred Stock, the Company
also issued Motorola a warrant to purchase 187,647 shares of the Companys
common stock at $17.11 per share. The warrant was immediately exercisable and
expires on July 7, 2005. The Company determined the fair value of the
warrant using the Black-Scholes option pricing model. Based on the net cash
proceeds received from the sale of Series A Preferred Stock of $3,702,000,
the relative fair values of the Series A Preferred Stock and the warrant
totaled $2,443,000 and $1,259,000, respectively. The relative fair market
value of the warrant was credited to additional paid-in capital within
stockholders equity. The Company recognized a one-time preferred stock and
warrant expense of $1,259,000 relating to the embedded beneficial conversion
feature within the Series A Preferred Stock.

7. Earnings Per Share

Basic earnings per share are computed by dividing net income (loss) available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share gives effect to all
dilutive potential common shares outstanding during the period, including
convertible preferred stock as well as stock options and warrants, using the
treasury stock method.

Options and warrants to purchase 6,816,000 and 6,866,000 shares of common
stock were outstanding at March 31, 2002 and 2001, respectively, but were not
included in the computation of diluted net loss per share as their effect was
anti-dilutive. Also 234,558 shares of convertible preferred stock were
outstanding at March 31, 2002 and are convertible into 235,553 shares of
common stock, but were not included in the computation of diluted net loss
per share as their effect was anti-dilutive.

Shares held under the Companys employee stock ownership plan are treated as
outstanding for purposes of computing earnings per share amounts.

8. Comprehensive Loss

Other comprehensive loss includes charges or credits to equity that are not
the result of transactions with owners. Accumulated other comprehensive loss
consists of foreign currency translation adjustments. As the Company
substantially liquidated its foreign operation in February 1998, there has
been no other comprehensive income (loss) from that date.

9. Adoption of SFAS No. 142, Goodwill and Other Intangible Assets

The results of operations for the three and nine months ended March 31, 2002
include the effect of adopting the Financial Accounting Standards Board, or
FASB, Statement of Financial Accounting Standards No. 142, or SFAS No. 142,
Goodwill and Other Intangible Assets as of July 1, 2001. The adoption of
SFAS No. 142 resulted in a reduction of goodwill amortization expense of
$599,000 and $1,797,000, respectively, for the three and nine months ended
March 31, 2002. This reduction represents the amount of amortization of
goodwill that, in accordance with SFAS No. 142, is no longer subject to
amortization. Goodwill is no longer subject to amortization, but is instead
subject to periodic (at minimum, on an annual basis) impairment testing.
Intangible assets that have finite useful lives will continue to be amortized
over their respective useful lives of approximately five years. The goodwill
test for impairment consists of a two-step process that begins with an
estimation of the fair value of a reporting unit. The first step is a screen
for potential impairment and the second step measures the amount of
impairment, if any.

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The Companys goodwill balance of $22,792,000 at March 31, 2002 arose from
its April 1999 acquisition of Identicator Technologies, Inc. The goodwill
has been assigned to the Companys Security reporting unit, which is also a
reportable segment. In December 2001, the Company completed the transitional
goodwill impairment testing required by SFAS No. 142 and determined that the
goodwill is not impaired. The fair value of the Security segment was
estimated using the expected present value of future cash flows.

A reconciliation of previously reported net loss and net loss per share to
the amounts adjusted for the exclusion of goodwill amortization is as
follows:

|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |             |       |  
|----------------------------------------------------------------------------------- | ------------------------------------- | --------------------- | ---------- | ------------------ | ----- | ----------------- | ---------- | ---------- | ----- | ---- | ---------- | ----------- | ----- | - | ---------- | ----------- | ----- | -
|                                                                                    |                                       |                       |            | Three months ended |       | Nine months ended
|                                                                                    |                                       |                       |            | March 31,          |       | March 31,        
|                                                                                    |                                       |                       |            |                    |       |                  
|                                                                                    |                                       |                       |            | 2002               |       | 2001              |            | 2002       |       | 2001
|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |     
|                                                                                    | Reported net loss                     |                       | $          | (7,464,000         | )     |                   | $          | (8,369,000 | )     |      | $          | (22,143,000 | )     |   | $          | (20,923,000 | )    
|                                                                                    | Add: Goodwill amortization            |                       |            |                   |       |                   |            | 599,000    |       |      |            |            |       |   |            | 1,797,000   |      
|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |            
|                                                                                    | Adjusted net loss                     |                       | $          | (7,464,000         | )     |                   | $          | (7,770,000 | )     |      | $          | (22,143,000 | )     |   | $          | (19,126,000 | )    
|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |            
|                                                                                    | Basic and diluted net loss per share: |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |             |      
|                                                                                    |                                       | Reported net loss     |            | $                  | (0.17 | )                 |            | $          | (0.25 | )    |            | $           | (0.56 | ) |            | $           | (0.62 | )
|                                                                                    |                                       | Goodwill amortization |            |                    |      |                   |            |            | 0.02  |      |            |             |      |   |            |             | 0.05  |  
|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |            
|                                                                                    |                                       | Adjusted net loss     |            | $                  | (0.17 | )                 |            | $          | (0.23 | )    |            | $           | (0.56 | ) |            | $           | (0.57 | )
|                                                                                    |                                       |                       |            |                    |       |                   |            |            |       |      |            |             |       |   |            |            
|Weighted average common shares used in basic
and diluted loss per share computation |                                       |                       | 44,814,000 |                    |       |                   | 33,954,000 |            |       |      | 39,809,000 |             |       |   | 33,530,000 |            

Acquired intangible assets subject to amortization consists of purchased
technology related to the Companys acquisition of Identicator
Technologies, Inc. as follows:

|                     |  |                |            |               |  |                |             |              |  |  |            |  |  |  |             |  
|-------------------- |  | -------------- | ---------- | ------------- |  | -------------- | ----------- | ------------ |  |  | ---------- |  |  |  | ----------- | -
|                     |  | March 31, 2002 |            | June 30, 2001
|                     |  |                |            |              
|                     |  | Gross Carrying |            | Accumulated   |  | Gross Carrying |             | Accumulated 
|                     |  | Amount         |            | Amortization  |  | Amount         |             | Amortization
|                     |  |                |            |               |  |                |             |             
|Purchased technology |  |                | $4,663,000 |               |  |                | $(2,720,000 | )            |  |  | $4,663,000 |  |  |  | $(2,021,000 | )

|                                                       |  |                    |          |                   |  |      |          |      |  |  |          |  |  |  |          | 
|------------------------------------------------------ |  | ------------------ | -------- | ----------------- |  | ---- | -------- | ---- |  |  | -------- |  |  |  | -------- | 
|                                                       |  | Three months ended |          | Nine months ended
|                                                       |  | March 31,          |          | March 31,        
|                                                       |  |                    |          |                  
|                                                       |  | 2002               |          | 2001              |  | 2002 |          | 2001
|                                                       |  |                    |          |                   |  |      |          |     
|Aggregate amortization expense of purchased
technology |  |                    | $233,000 |                   |  |      | $233,000 |      |  |  | $699,000 |  |  |  | $699,000 | 

Estimated future amortization expense of purchased technology for fiscal 2002
fourth quarter ending June 30, 2002 and fiscal years ending June 30, 2003 and
2004 is listed below. The purchased technology balance will be fully
amortized by April 2004.

|                                                              |  |  |         |  |  |  |  |  |  |  |  |  |  |  |  | 
|------------------------------------------------------------- |  |  | ------- |  |  |  |  |  |  |  |  |  |  |  |  | 
|Estimated future amortization expense of purchased
technology |  |  |         |  |  |  |  |  |  |  |  |  |  |  |  | 
|For fiscal 2002 fourth quarter ending June 30                 |  |  | 233,000 |  |  |  |  |  |  |  |  |  |  |  |  | 
|For fiscal 2003 ending June 30                                |  |  | 933,000 |  |  |  |  |  |  |  |  |  |  |  |  | 
|For fiscal 2004 ending June 30                                |  |  | 777,000 |  |  |  |  |  |  |  |  |  |  |  |  | 

10. Recent Accounting Pronouncements

In October 2001, the FASB issued Statement of Financial Accounting Standards
No. 144 or SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets
to be disposed. SFAS No. 144 will be effective for fiscal years beginning
after December 15, 2001. The Company is currently evaluating the impact of
SFAS No. 144, but does not

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expect that its adoption on July 1, 2002 will have a material effect on its
financial statements.

11. Reportable Segments Data

The Company has determined that its reportable segments are those based on
its method of internal reporting. The Companys reportable segments are
Imaging, Security, Government Services and Fingerprinting Services.
Management has organized the Company on product lines. The Companys
reportable segments are strategic business units that offer different
products and services and include inter-segment revenues, corporate
allocations and administrative expenses.
Revenues are attributed to the reportable segment of the sales or service
organizations, and costs directly and indirectly incurred in generating
revenues are similarly assigned. Segment information is as follows:

|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |             |  
|----------------------------------------- | ------------------------------------- | - | ------------------ | ---------- | ----------------- | - | ---------- | ---------- | ---- | - | ----------- | ----------- | - | - | ----------- | ----------- | -
|                                          |                                       |   | Three months ended |            | Nine months ended
|                                          |                                       |   | March 31,          |            | March 31,        
|                                          |                                       |   |                    |            |                  
|                                          |                                       |   | 2002               |            | 2001              |   | 2002       |            | 2001
|                                          |                                       |   |                    |            |                   |   |            |            |     
|Total revenues:                           |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  | 5,602,000  |                   |   | $          | 5,834,000  |      |   | $           | 14,925,000  |   |   | $           | 18,303,000  |  
|                                          | Security                              |   |                    | 3,237,000  |                   |   |            | 2,279,000  |      |   |             | 6,498,000   |   |   |             | 5,901,000   |  
|                                          | Government Services                   |   |                    | 11,261,000 |                   |   |            | 13,298,000 |      |   |             | 35,870,000  |   |   |             | 40,387,000  |  
|                                          | Elimination of inter-segment revenues |   |                    | (868,000   | )                 |   |            | (1,187,000 | )    |   |             | (1,784,000  | ) |   |             | (3,298,000  | )
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ | 19,232,000         |            |                   | $ | 20,224,000 |            |      | $ | 55,509,000  |             |   | $ | 61,293,000  |            
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|Depreciation and amortization:            |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  | 329,000    |                   |   | $          | 258,000    |      |   | $           | 1,019,000   |   |   | $           | 778,000     |  
|                                          | Security                              |   |                    | 360,000    |                   |   |            | 936,000    |      |   |             | 1,098,000   |   |   |             | 2,793,000   |  
|                                          | Government Services                   |   |                    | 179,000    |                   |   |            | 174,000    |      |   |             | 464,000     |   |   |             | 577,000     |  
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ | 868,000            |            |                   | $ | 1,368,000  |            |      | $ | 2,581,000   |             |   | $ | 4,148,000   |            
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|Interest and other income (expense), net: |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  | 51,000     |                   |   | $          | 51,000     |      |   | $           | 131,000     |   |   | $           | 216,000     |  
|                                          | Security                              |   |                    | 93,000     |                   |   |            | 92,000     |      |   |             | 210,000     |   |   |             | 384,000     |  
|                                          | Government Services                   |   |                    | 12,000     |                   |   |            | 96,000     |      |   |             | 47,000      |   |   |             | 345,000     |  
|                                          | Fingerprinting Services               |   |                    | 105,000    |                   |   |            | 76,000     |      |   |             | 273,000     |   |   |             | 213,000     |  
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ | 261,000            |            |                   | $ | 315,000    |            |      | $ | 661,000     |             |   | $ | 1,158,000   |            
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|Interest expense:                         |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  |           |                   |   | $          |           |      |   | $           |            |   |   | $           |            |  
|                                          | Security                              |   |                    |           |                   |   |            |           |      |   |             |            |   |   |             |            |  
|                                          | Government Services                   |   |                    |           |                   |   |            | 21,000     |      |   |             |            |   |   |             | 85,000      |  
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ |                   |            |                   | $ | 21,000     |            |      | $ |            |             |   | $ | 85,000      |            
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|Net income (loss):                        |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  | (1,279,000 | )                 |   | $          | (1,545,000 | )    |   | $           | (4,409,000  | ) |   | $           | (3,722,000  | )
|                                          | Security                              |   |                    | (4,132,000 | )                 |   |            | (5,816,000 | )    |   |             | (14,239,000 | ) |   |             | (17,143,000 | )
|                                          | Government Services                   |   |                    | (2,233,000 | )                 |   |            | (1,135,000 | )    |   |             | (3,956,000  | ) |   |             | (457,000    | )
|                                          | Fingerprinting Services               |   |                    | 180,000    |                   |   |            | 127,000    |      |   |             | 461,000     |   |   |             | 399,000     |  
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ | (7,464,000         | )          |                   | $ | (8,369,000 | )          |      | $ | (22,143,000 | )           |   | $ | (20,923,000 | )          
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|Capital expenditures:                     |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          | Imaging                               |   | $                  | 100,000    |                   |   | $          | 471,000    |      |   | $           | 282,000     |   |   | $           | 1,038,000   |  
|                                          | Security                              |   |                    | 88,000     |                   |   |            | 388,000    |      |   |             | 377,000     |   |   |             | 703,000     |  
|                                          | Government Services                   |   |                    | 86,000     |                   |   |            | 105,000    |      |   |             | 2,135,000   |   |   |             | 412,000     |  
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            
|                                          |                                       | $ | 274,000            |            |                   | $ | 964,000    |            |      | $ | 2,794,000   |             |   | $ | 2,153,000   |            
|                                          |                                       |   |                    |            |                   |   |            |            |      |   |             |             |   |   |             |            

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|                     |                     |   |             |            |          |   |            |            | 
|-------------------- | ------------------- | - | ----------- | ---------- | -------- | - | ---------- | ---------- | 
|                     |                     |   | March 31,   |            | June 30,
|                     |                     |   | 2002        |            | 2001    
|                     |                     |   |             |            |         
|Identifiable assets: |                     |   |             |            |          |   |            |           
|                     | Imaging             |   | $           | 72,534,000 |          |   | $          | 33,838,000 | 
|                     | Security            |   |             | 23,832,000 |          |   |            | 30,579,000 | 
|                     | Government Services |   |             | 14,820,000 |          |   |            | 19,037,000 | 
|                     |                     |   |             |            |          |   |            |           
|                     |                     | $ | 111,186,000 |            |          | $ | 83,454,000 |           
|                     |                     |   |             |            |          |   |            |           

12. Foreign Operations Data

In geographical reporting, revenues are attributed to the geographical
location of the sales and service organizations:

|                |               |   |                    |            |                   |   |            |            |      |   |            |            |  |   |            |            | 
|--------------- | ------------- | - | ------------------ | ---------- | ----------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                |               |   | Three months ended |            | Nine months ended
|                |               |   | March 31,          |            | March 31,        
|                |               |   |                    |            |                  
|                |               |   | 2002               |            | 2001              |   | 2002       |            | 2001
|                |               |   |                    |            |                   |   |            |            |     
|Total revenues: |               |   |                    |            |                   |   |            |            |      |   |            |            |  |   |            |           
|                | North America |   | $                  | 17,670,000 |                   |   | $          | 19,262,000 |      |   | $          | 52,568,000 |  |   | $          | 58,472,000 | 
|                | International |   |                    | 1,562,000  |                   |   |            | 962,000    |      |   |            | 2,941,000  |  |   |            | 2,821,000  | 
|                |               |   |                    |            |                   |   |            |            |      |   |            |            |  |   |            |           
|                |               | $ | 19,232,000         |            |                   | $ | 20,224,000 |            |      | $ | 55,509,000 |            |  | $ | 61,293,000 |           
|                |               |   |                    |            |                   |   |            |            |      |   |            |            |  |   |            |           

|                     |               |   |             |             |          |   |            |            | 
|-------------------- | ------------- | - | ----------- | ----------- | -------- | - | ---------- | ---------- | 
|                     |               |   | March 31,   |             | June 30,
|                     |               |   | 2002        |             | 2001    
|                     |               |   |             |             |         
|Identifiable assets: |               |   |             |             |          |   |            |           
|                     | North America |   | $           | 110,006,000 |          |   | $          | 82,420,000 | 
|                     | International |   |             | 1,180,000   |          |   |            | 1,034,000  | 
|                     |               |   |             |             |          |   |            |           
|                     |               | $ | 111,186,000 |             |          | $ | 83,454,000 |           
|                     |               |   |             |             |          |   |            |           

13. Pending Merger with Visionics Corporation

On February 22, 2002, the Company signed a definitive merger agreement with
Visionics Corporation (Visionics). Upon obtaining necessary approvals, and
upon closing of the proposed merger, Visionics will become a wholly-owned
subsidiary of the Company. The Company will exchange 1.3436 shares of its
Common Stock for each share of Visionics common stock and anticipates that
approximately 38.8 million share of Identix common stock will be issued in
exchange for the outstanding stock of Visionics. The Hart-Scott-Rodino
waiting period for the merger expired on April 8, 2002. The merger remains
subject to additional customary closing conditions, including approval of the
two companies stockholders. A Form S-4 Registration Statement related to
the transaction has been filed with the Securities and Exchange Commission
and information regarding the proposed merger is contained in an amended
registration statement on Form S-4 filed with the SEC on April 25, 2002.
Stockholders of both Identix and Visionics are expected to meet in June 2002,
in each case to vote on the merger and if approved, it is anticipated the
merger will be consummated promptly thereafter.

In connection with the pending merger, the Company has capitalized direct
merger related costs totaling $285,000 at March 31, 2002. This amount is
included in other assets on the Companys consolidated balance sheet. As a
result of

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certain employment agreements to be executed in contemplation of this merger,
the Company is expecting to record a one-time charge during its fourth
quarter ending June 30, 2002 including a cash charge of approximately
$1,400,000 related to the Companys current chief executive officer. Upon completion of the merger, the combined
company will be named Identix Incorporated and will be headquartered in
Minnetonka, Minnesota. After completion of the merger the Company intends to
close its facilities in California and undergo a company wide reduction in
staff of approximately 120 employees, or 20% of its current combined
workforce.

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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Item 2.

The statements in this report on Form 10-Q that relate to future plans,
events, or performance are forward-looking statements. Actual results, events
and performance may differ materially due to a variety of factors including the
factors described under Risk Factors below. The Company undertakes no
obligation to publicly update these forward-looking statements to reflect
events or circumstances that occur after the date hereof or to reflect the
occurrence of unanticipated events.

Our future results of operations and the forward-looking statements
contained in this report on Form 10-Q involve a number of risks and
uncertainties, many of which are outside of our control. Factors that could
cause actual results to differ materially from projected results include, but
are not limited to, risks associated with (1) successful development and timely
introduction of new products and enhancements to existing products through
investment in research and development, (2) market acceptance of our new
products and services, (3) continued demand for our existing products and
services, (4) our ability to raise additional financing in the future to fund
research and development and operations, (5) our reliance on certain Original
Equipment Manufacturers (OEM), system integrators, distributors and resellers
to actively and successfully promote our products or pursue installations that
use our equipment, (6) our reliance on sole or limited source suppliers to
supply components and certain complete products efficiently, timely and at
competitive prices, (7) general market conditions and (8) the impact of future
litigation.

OVERVIEW

Identix Incorporated provides leading-edge fingerprint biometric
authentication security platforms and solutions for commercial and government
marketplaces. The Company offers hardware, software and consulting services to
protect information, control access, and maintain privacy and trust. A world
leader in biometric technology, Identix believes it has more fingerprint
biometric installations worldwide than any other company. Identix products
and services are classified into three groups: (i) Security solutions that
verify the identity of an individual through the unique physical biological
characteristics of a fingerprint including itrust, Identix Security software
solution that integrates authentication, access rights and administration as a
managed network security service to safeguard information sharing and data
transfer on open wired and wireless networks; (ii) Imaging solutions that
electronically capture forensic quality fingerprint images that can be
transmitted to Automated Fingerprint Identification Systems (AFIS); and (iii)
information technology, engineering and consulting services, including the
installation and integration of Identix products primarily to public sector
agencies. The Companys solutions employ industry leading optical fingerprint
capture technologies, proprietary algorithms and customizable application
software suites. Identix technologies and intellectual property enable it to
produce Security and Imaging solutions for commercial, federal, state and local
government customers worldwide. The Company provides public sector services
through Identix Public Sector, Inc. (IPS), a wholly owned subsidiary of the
Company. Identix also formed a joint venture, Sylvan/Identix Fingerprinting
Centers, LLC (SIFC), in September 1997 with Sylvan Learning Systems, Inc.
(Sylvan), for the purpose of providing fingerprinting services for a variety
of civilian applications. In June 2001, Identix launched its first itrust
Security solution offering.

The results of operations for the three and nine months ended March 31,
2002 include the effect of adopting the Financial Accounting Standards Board,
or FASB, Statement of Financial Accounting Standards No. 142, or SFAS No. 142,
Goodwill and Other Intangible Assets as of July 1, 2001. The adoption of
SFAS No. 142 resulted in a reduction of goodwill amortization expense of
$599,000 and $1,797,000, respectively, for the three and nine months ended
March 31, 2002. This reduction represents the amount of amortization of
goodwill that, in accordance with SFAS No. 142, is no longer subject to
amortization. Goodwill is no longer subject to amortization, but is instead
subject to periodic (at minimum, on an annual basis) impairment testing.
Intangible assets that have finite useful lives will continue to be amortized
over their respective useful lives of approximately five years. The goodwill
test for impairment consists of a two-step process that begins with an
estimation of the fair value of a reporting unit. The first step is a screen
for potential impairment and the second step measures the amount of impairment,
if any.

The Companys goodwill balance of $22,792,000 at March 31, 2002 arose from
its April 1999 acquisition of Identicator Technologies, Inc. The goodwill has
been assigned to the Companys Security reporting unit, which is also a
reportable segment. In December 2001, the Company completed the transitional
goodwill impairment testing required by SFAS No. 142 and determined that the
goodwill is not impaired. The fair value of the Security segment was estimated
using the expected

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present value of future cash flows.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires
management to make judgments, assumptions and estimates that affect the amounts
reported in the Consolidated Financial Statements and accompanying notes. Note
1 to the Consolidated Financial Statements in the Annual Report on Form 10-K
for the fiscal year ended June 30, 2001 describes the significant accounting
policies and methods used in the preparation of the Consolidated Financial
Statements. Estimates are used for, but not limited to, the accounting for the
allowance for doubtful accounts and sales returns, inventory allowances,
warranty costs, goodwill impairments, revenue recognition and loss
contingencies. Actual results could differ from these estimates. The
following critical accounting policies are impacted significantly by judgments,
assumptions and estimates used in the preparation of the Consolidated Financial
Statements.

Allowance for doubtful accounts and sales returns

The allowance for doubtful accounts is based on our assessment of the
collectibility of specific customer accounts and the aging of the accounts
receivable. If there is a deterioration of a major customers credit
worthiness or actual defaults are higher than our historical experience, our
estimates of the recoverability of amounts due us could be adversely affected.
A reserve for sales returns is established based on historical trends in
returns and information obtained directly from the customers regarding possible
returns. If the actual future returns do not reflect the historical data, our
revenue could be affected.

Goodwill impairments

We perform a goodwill impairment test on an annual basis and between annual
tests in certain circumstances. The impairment test entails comparing the
carrying value of goodwill to the estimated fair value of the reporting unit
that the goodwill is assigned. There are a number of significant management
assumptions and estimates inherent in estimating the fair value of the
reporting unit including those used to estimate future cash flows and the
appropriate rate that incorporates our cost of capital and the risk profile of
the cash flows. Actual cash flows may be less than those estimated by
management. A change in industry or market conditions could result in the
impairment of goodwill.

Inventory allowances

Inventories are recorded at the lower of standard cost, which approximates
actual cost on a first-in-first-out basis, or market value. We write down
inventories to net realizable value based on forecasted demand and market
conditions as well as the anticipated timing and impact of new product
introductions. Actual demand, market conditions and timing of new product
introductions may be different from those projected by our management. This
could have a material effect on our gross margins and operating results.

Warranty costs

We accrue for warranty costs based on the expected material and labor usage
costs to provide warranty services. If we experience an increase in warranty
claims, which are higher than our historical experience, our gross margin could
be adversely affected.

Revenue recognition

Significant management judgments and estimates are made in connection with the
revenues recognized in any accounting period. The Company must assess whether
the fee associated with a revenue transaction is fixed or determinable and
whether or not collection is probable. Material differences could result in
the amount and timing of revenues for any period if management were to make
different judgments or utilize different estimates.

Certain of the Companys Imaging segment equipment sales such as its TouchPrint
Live Scan Systems generally require installation subsequent to shipment and
transfer of title. The Company recognizes revenue on such sales in accordance
with Staff Accounting Bulletin (SAB) 101, Revenue Recognition, Product
revenue related to equipment sales that require installation is deferred until
installation is complete and customer acceptance has been obtained. Revenue
related to product sales that require no installation such as printers and
other peripheral devices as well as the Companys Security segment products
including DFR-300, DFR-200 and FingerScan V20 are recognized in accordance with
the terms of the sale, generally upon shipment by the Company, provided no
significant obligations remain and collection of the receivable is deemed
reasonably assured. Revenues from sales of products via authorized
representatives, dealers, distributors or other third party sales channels are
recognized at the time the risks and rewards have transferred or, in the case
of TouchPrint Live Scan Systems that generally require installation, upon the
final installation and acceptance from the end user.

The Company also sells several stand-alone software products including BioLogon
and software developer kits. Revenue is

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recognized on software products in accordance with Statement of Position
(SOP) 97-2, Software Revenue Recognition, as amended. The Company
recognizes revenue on software products when persuasive evidence of an
arrangement exists, delivery has occurred, the vendors fee is fixed or
determinable and vendor-specific objective evidence (VSOE) exists to allocate
the total fee to all undelivered elements of the arrangement and collection is
determined to be probable. VSOE is established based upon either sales of the
element (e.g. maintenance, training or consulting) in individual transactions,
or, in certain cases for maintenance, based upon substantive renewal rates. In
cases where the Company does not have VSOE for all delivered elements in the
transaction (e.g., for licenses), the fees from these multiple-element
agreements are allocated using the residual value method. Maintenance revenue is deferred and recognized
rateably over the life of the service period of the related agreement.

The
majority of the Companys services are performed for the U.S. Government under
various firm fixed-price (FFP), time-and-material (T&M) and cost
reimbursement contracts. Revenues on FFP contracts are generally recognized on
the percentage-of-completion method based on costs incurred in relation to
total estimated costs. Revenues on T&M contracts are recognized to the extent
of billable rates multiplied by hours worked plus materials expense incurred.
Revenues for cost plus fixed fee (CPFF) contracts are recognized as costs are
incurred, including a proportionate amount of the fee earned. Unbilled
accounts receivable represent revenue accrued which becomes billable per the
terms of contract. Provisions for estimated contract losses are recorded in
the period such losses are determined.

Services revenues directly from contracts with the U.S. Government, principally
with the Department of Defense (DOD), and from subcontracts with other U.S.
Government contractors, were approximately 86% and 84% of total services
revenue for the three and nine months ended March 31, 2002 and approximately
90% of total services revenue for the same periods in the prior fiscal year.
Contract costs for services revenues to the U.S. Government, including indirect
expenses, are subject to audit and subsequent adjustment by negotiation between
the Company and U.S. Government representatives. Revenues are recorded in
amounts expected to be realized upon final settlement. IPS is currently being
audited by the Defense Contract Audit Agency for the period from July 1, 1997
to June 30, 2000. While the Company believes that the results of such audit
will have no material effect on the Companys financial position or results of
the operations, there can be no assurance that no adjustment will be made and
that, if made, such adjustments will not have a material effect the Companys
financial position or results of operations.

Loss contingencies

We are subject to the possibility of various loss contingencies arising in the
ordinary course of business. We consider the likelihood of the loss or
impairment of an asset or the incurrence of a liability as well as our ability
to reasonably estimate the amount of loss in determining loss contingencies.
An estimated loss contingency is accrued when it is probable that a liability
has been incurred or an asset has been impaired and the amount of loss can be
reasonably estimated. We regularly evaluate current information available to
us to determine whether such accruals should be adjusted.

RESULTS OF OPERATIONS

Revenues

Revenues for the three months and nine months ended March 31, 2002 were
$19,232,000 and $55,509,000 compared to $20,224,000 and $61,293,000,
respectively, for the same periods in the prior fiscal year. The decrease in
revenues of 5% for the three months ended March 31, 2002 was primarily due to a
decrease in government services sales while the decrease in revenues of 9% for
the nine months March 31 2002 was due to a decrease in both product and
government services sales. For the three months and nine months ended March
31, 2002 and 2001, the Company had one customer, the DOD, which accounted for
44% and 41%, respectively, and 46% and 45%, respectively, of total revenue.

Product revenues were $8,839,000 and $21,423,000 for the three and nine
months ended March 31, 2002, compared to $8,113,000 and $24,204,000 for the
same period in the prior fiscal year. The increase in product revenue of 9%
for the three months ended March 31, 2002 was primarily due to an increase in
Security product sales, including particular strength in our Physical Access
product line. The decrease in product revenues of 11% for the nine months
ended March 31, 2002 was due to a decrease in sales of Imaging solutions
products and services, primarily due to the saturation and decline of the law
enforcement marketplace.

International sales accounted for $1,562,000 and $2,941,000 or 18% and 14%
of the Companys product revenues for the three and nine months ended March 31,
2002 compared to $962,000 and $2,821,000 or 12% for the same periods in the
prior fiscal year. The increase in international sales for the three and nine
months ended March 31, 2002 was due to increased sales

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of Security products in Europe. The Companys international sales are
predominately denominated in U.S. dollars, and the Company actively monitors
its foreign currency exchange exposure and, if significant, will take action to
reduce foreign exchange risk. To date, the Company has not entered into any
hedging transactions.

Services revenues were $10,393,000 and $34,086,000 for the three and nine
months ended March 31, 2002 compared to $12,111,000 and $37,089,000 for the
same period in the prior fiscal year. Services revenues decreased 14% and 8%
for the three and nine months ended March 31, 2002. The decrease in revenue
for the three and nine months ended March 31, 2002 was primarily related to a
reduction in new contract starts as well as reductions in government funding on
certain contracts due to reprioritization of defense spending toward war time
actions. The majority of the Companys services revenues are generated
directly from contracts with the U.S. government, principally the DOD. For the
three and nine months ended March 31, 2002, revenues directly from the DOD and
from other U. S. government agencies accounted for 86% and 84%, respectively,
of the Companys total services revenues compared to 90% for the same periods
in the prior fiscal year.

The Companys services business generates a significant amount of its
revenues from firm fixed-price (FFP) contracts and from time-and-materials
(T&M) contracts. During the three and nine months ended March 31, 2002 the
Company derived 94% and 90%, respectively, of services revenues from FFP and
T&M and contracts. During the three and nine months ended March 31, 2002 the
Company derived 96% and 95%, respectively, of services revenues from FFP and
T&M and contracts. FFP contracts provide for a fixed price for stipulated
services or products, regardless of the costs incurred, which may result in
losses from cost overruns. T&M contracts typically provide for payment of
negotiated hourly rates for labor incurred plus reimbursement of other
allowable direct and indirect costs. The Company assumes greater performance
risk on T&M and FFP contracts and the failure to accurately estimate ultimate
costs or to control costs during performance of the work can result in reduced
profit margins or losses. There can be no assurance that the Companys
services business will not incur cost overruns for any FFP and T&M contracts it
is awarded. The Companys services business also generates revenues from cost
plus fixed fee (CPFF) contracts, which accounted for approximately 6% and
10%, respectively, of its services revenues for the three and nine months ended
March 31, 2002 and approximately 4% and 5%, respectively, for the same period
in the prior fiscal year. CPFF contracts provide for the reimbursement of
allowable costs, including indirect costs plus a fee or profit. Revenues
generated from contracts with government agencies are subject to audit and
subsequent adjustment by negotiation between the Company and representatives of
such government agencies. IPS is currently being audited by the Defense
Contract Audit Agency for the period from July 1, 1997 to June 30, 2000. While
the Company believes that the results of such audits will have no material
effect on the Companys financial position or results of operations, there can
be no assurance that no adjustments will be made and that, if made, such
adjustments will not have a material effect on the Companys financial
position, results of operations, or cash flows.

Gross margin on product revenues was 31% and 34% for the three and nine
months ended March 31, 2002 and 31% and 38% for the three and nine months ended
March 31, 2001. The decrease in product gross margin for the nine months ended
March 31, 2002 compared to the prior fiscal year reflects continued market
price pressures in the Companys Imaging segment and lower unit volumes which
has resulted in underabsorbed overhead costs. The Company expects gross margins
to fluctuate in future periods due to changes in the product mix, the costs of
components and the competition in the industry.

Gross margin on services revenues was 2% and 6% for the three and nine
months ended March 31, 2002 as compared to 15% and 14% for the same period in
the prior fiscal year. The decrease in gross margin for the three and nine
months ended March 31, 2002 compared to the prior year was primarily due to
lower utilization of the direct labor workforce, increased utilization of
subcontractors and contract overruns during the three and nine months ended
March 31, 2002.

Research, Development and Engineering

Research, development and engineering expenses were $2,358,000 or 27% and
$7,224,000 or 34% of product revenues for the three and nine months ended March
31, 2002 compared to $2,758,000 or 34% and $7,309,000 or 30% of product
revenues for the same period in the prior fiscal year. The decrease in
research, development and engineering expenses for the three and nine months
ended March 31, 2002 is primarily due to reduced development spending on
hardware product lines. The Company is focusing its engineering efforts on
fewer projects and the reliance upon external engineering sources is being
reduced.

Marketing and Selling

Marketing and selling expenses were $3,851,000 and $10,799,000 or 20% and
19%, respectively, of total revenues for the both the three and nine months
ended March 31, 2002 compared to $4,291,000 or 21% and $11,764,000 or 19% of
total revenues for the same period in the prior fiscal year. The decrease in
marketing and selling expenses was primarily due to reduced staffing as part of
the Companys restructuring efforts initiated in June 2001 and continued
control of marketing

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expenditures.

General and Administrative

General and administrative expenses were $4,340,000 and $11,990,000 or 23%
and 22% of total revenues for the three and nine months ended March 31, 2002
compared to $3,949,000 or 20% and $10,199,000 or 17% of total revenues for the
same period in the prior fiscal year. The increase in general and
administrative expenses was primarily due to increased executive staffing and
related administrative expenses. In addition, the Companys real estate leases
in several facilities expired during this quarter of the prior year. As a
result the Company moved into several different facilities with significantly
higher costs. All leases are long term.

Restructuring and Special Other Charges

Fiscal 2002

In June 2001, the Company initiated a restructuring of its worldwide
operations to reduce costs and increase operational efficiencies. In
connection with the restructuring, in July 2001, the Company initiated a
workforce reduction of approximately 42 employees, or 10% of its worldwide
workforce primarily in marketing, selling and other administrative functions.
The workforce reduction resulted in a $1,712,000 charge during the quarter
ended September 30, 2001 relating primarily to severance and fringe benefits.
Related cash payments of $1,476,000 were made during the nine months ended
March 31, 2002. The remaining liability at March 31, 2002 of $236,000 is
included in accrued compensation in the condensed consolidated balance sheets.
The Company expects that this amount will be paid by June 30, 2002.

Fiscal 2001

In light of continued deteriorating general economic conditions, during
the third quarter ended March 31, 2001, the Company initiated a review of its
asset carrying values, forecasted sales and the timing of introductions and end
of lives of its products. The Company recorded charges during the third quarter
ended March 31, 2001 totaling $2,356,000 consisting of $1,172,000 for the
write-off of certain IPS intangible assets related to software and other
capitalized costs that the Company no longer plans to market/use; $675,000 for
the write-down of inventory related primarily to
the introduction and end-of-life of certain Imaging and Security products
including the introduction of TouchPrint 2000 and the end-of-life of TouchPrint
600 and BioLogon version 2.0 and a $509,000 provision to
write-off certain accounts receivables for customers whose financial condition
deteriorated subsequent to the revenue being recognized.

Charges recorded during the third quarter ended March 31, 2001 in
connection with its review activities, substantially all of which were non-cash
in nature, are summarized as follows:

|                                          |       |   |           |           | 
|----------------------------------------- | ----- | - | --------- | --------- | 
|Write-off of intangibles and other assets |       | $ | 1,172,000 |          
|Inventory write-offs and reserves         |       |   | 675,000   |          
|Allowance for doubtful accounts           |       |   | 509,000   |          
|                                          |       |   |           |          
|                                          | Total |   | $         | 2,356,000 | 
|                                          |       |   |           |          

These charges were included in the Companys consolidated statement of
operations as follows:

|                                        |       |   |           |           | 
|--------------------------------------- | ----- | - | --------- | --------- | 
|Cost of product revenues                |       | $ | 675,000   |          
|General and administrative              |       |   | 509,000   |          
|Restructuring and other special charges |       |   | 1,172,000 |          
|                                        |       |   |           |          
|                                        | Total |   | $         | 2,356,000 | 
|                                        |       |   |           |          

Preferred Stock and Warrant Expense

In connection with the private sale of shares of Series A Convertible
Preferred Stock and warrant in July 2000 to Motorola, the Company recognized a
one-time preferred stock and warrant expense of $1,259,000 relating to the
embedded beneficial

18



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conversion feature within the Series A Convertible Preferred Stock.

Interest and Other Income (Expense), net

For the three and nine months ended March 31, 2002, interest and other
income (expense), net was $261,000 and $661,000 compared to $315,000 and
$1,158,000 for the same period in the prior fiscal year. The decrease in
interest and other income (expense), net was primarily due to a decrease in
interest income generated from cash balances primarily resulting from lower
interest rates and lower average cash balances invested during comparable
periods. Interest and other income for the three months ending March 31, 2002
and 2001 was primarily composed of interest income of $170,000 and $245,000,
respectively, and license fees from SIFC of $104,000 and $76,000, respectively.
For the nine months ending March 31, 2002 and 2001, interest and other income
was primarily composed of interest income of $441,000 and $815,000,
respectively, and license fees from SIFC of $273,000 and $213,000,
respectively.

Interest Expense

Interest expense was nil for the three and nine months ended March 31,
2002 compared to $21,000 and $85,000 for the same period in the prior fiscal
year. The decrease was due to minimal borrowings under the IPS Lines of Credit
during the three and nine months ended March 31, 2002. There have been no
borrowings under the Identix line of credit for the three and nine months ended
March 31, 2002 and 2001. The weighted average interest rate paid on borrowings
under the IPS Line of Credit during the three months ended March 31, 2001 was
8.5%.

Provision for Income Taxes

The Company recorded income tax provisions of $7,000 and $6,000,
respectively, for the three and nine months ended March 31, 2002 and a
provision of $27,000 and $83,000 for the three and nine months ended March 31,
2001, which consisted of certain state franchise taxes.

Equity Interest in Income of Joint Venture

The equity interest income of joint venture represents the Companys 50%
share of the results of SIFC. For the three and nine months ended March 31,
2002, the Companys equity interest in joint venture income was $75,000 and
$188,000, respectively, compared to $51,000 and $187,000, respectively, for
the same period in the prior fiscal year. The increase in the equity interest
was due to increased net income of SIFC.

Liquidity and Capital Resources

The Company financed its operations during the nine months ended March 31,
2002 from its working capital at June 30, 2001. As of March 31, 2002, the
Companys principal sources of liquidity consisted of $60,826,000 of working
capital including $54,003,000 in cash and cash equivalents. In addition, the
Company has one bank line of credit, the Identix Line of Credit.

The Identix Line of Credit, (Identix Line of Credit) entered into in
September 2001 was amended on March 28, 2002. The Identix Line of Credit
provides for up to the lesser of $15,000,000 or 80% of the Companys eligible
accounts receivable including IPS, its wholly owned subsidiary. Loans under
the Identix Line of Credit are secured by substantially all of the assets of
the Company and bear interest at the banks prime rate of interest plus 50
basis points (5.25% at March 31, 2002). The Identix Line of Credit expires on
March 28, 2003. At March 31, 2002, there was no amount outstanding and
$7,445,000 was available to borrow. The Identix Line of Credit agreement
contains financial and operating covenants, including restrictions on the
Companys ability to pay dividends on its common stock.

The IPS Line of Credit (IPS Line of Credit) is a $6,000,000 bank line
of credit collateralized by IPS accounts receivable and certain other assets.
Under the IPS Line of Credit, IPS could borrow against qualified accounts
receivable. Amounts drawn bear interest at the banks prime rate of interest
(5.25% at March 31, 2002). The IPS Line of Credit agreement contained
financial and operating covenants. At March 31, 2002 the Company was in
technical default of one of these IPS Line of Credit covenants, which required
that the Companys maximum quarterly net loss not exceed $4 million on a
consolidated basis. There were minimal amounts outstanding under this bank
line of credit during the nine months ended March 31, 2002. With the
consolidation of the Companys bank lines of credit on March 28, 2002, as noted
above, the Company terminated the IPS line of credit on April 1, 2002.

The Company used cash for operating activities of $16,066,000 during the
nine months ended March 31, 2002 as

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compared to $9,554,000 for the same period in the prior fiscal year. The
primary use of cash for the nine months ended March 31, 2002 was due to (i) the
net loss of $22,143,000 which includes depreciation and amortization of
$2,581,000, (ii) a decrease in accounts payable of $2,179,000 partially offset
by decreases in accounts receivable of $5,061,000 and prepaid expenses and
other assets of $622,000. The primary use of cash during the nine months ended
March 31, 2001 was due to (i) the net loss of $20,923,000 which includes a
one-time charge for preferred stock and warrant expense of $1,259,000,
depreciation and amortization of $4,148,000 and (ii) an increase in inventories
of $2,002,000, reduced restricted cash of $2,159,000 and increased prepaid
expenses and other assets of $1,743,000, partially offset by a decrease in
accounts payable of $2,419,000 and a decrease in accounts receivable of
$1,861,000.

The Company used cash of $3,463,000 for investing activities during the
nine months ended March 31, 2002 consisting of purchases of property and
equipment of $2,810,000 and additions to intangible assets of $669,000. During
the nine months ended March 31, 2001, the Company used cash of $3,746,000 for
investing activities for the purchase of property and equipment of $2,153,000
and additions to intangible assets of $1,593,000.

The Company generated cash from financing activities of $52,755,000 from
the sales of common stock, net of issuance costs and from the exercise of stock
options during the nine months ended March 31, 2002 as compared to cash
generated from financing activities of $7,528,000 for the same period in the
prior fiscal year. Financing activities for the nine months ended March 31,
2001, consisted of proceeds from the sale of the Companys Series A Convertible
Preferred Stock of $3,702,000, net of issuance costs and the sale of common
stock of $4,256,000, partially offset by net repayments of $430,000 against the
IPS line of credit.

While the Company believes that cash flows from operations, together with
existing working capital and available lines of credit, may be adequate to fund
the Companys current cash requirements, the Company may need to raise
additional debt or equity financing in the future. The Company may not be able
to obtain additional debt or equity financing. If successful in raising
additional financing, the Company may not be able to do so on terms that are
not excessively dilutive to existing stockholders or less costly than existing
sources of financing. Failure to secure additional financing in a timely manner
and on favorable terms in the future could have a material adverse impact on
the Companys financial performance and stock price and require the Company to
implement certain cost reduction initiatives and curtail certain of its
operations.

The Company did not have any material capital expenditure commitments as
of March 31, 2002.

The Company currently occupies its headquarters, Imaging and Security
facility under a lease, which expires December 31, 2007, and is required to pay
taxes, insurance, and maintenance as well as monthly rental payments. In
addition, the Company leases space for research, development and engineering,
which expires October 31, 2005. Further, the Company leases office space for
its sales force under operating leases, which expire at various dates through
2006. The Company leases office space for its IPS business under operating
leases expiring at various dates through 2011. The leases contain escalation
provisions requiring rental increases for increases in operating expense and
real estate taxes.

Future minimum lease payments for operating leases are as follows:

|                                          |       |   |            |            | 
|----------------------------------------- | ----- | - | ---------- | ---------- | 
|Fiscal 2002 fourth quarter ending June 30 |       | $ | 1,173,000  |           
|Fiscal year ending June 30:               |       |   |            |           
|2003                                      |       |   | 4,957,000  |           
|2004                                      |       |   | 5,294,000  |           
|2005                                      |       |   | 5,666,000  |           
|2006                                      |       |   | 5,451,000  |           
|Thereafter                                |       |   | 18,718,000 |           
|                                          |       |   |            |           
|                                          | Total |   | $          | 41,259,000 | 
|                                          |       |   |            |           

Recent Accounting Pronouncements

In October 2001, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 144 or SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No.
144 addresses financial accounting and reporting for the impairment of
long-lived assets and for long-lived assets to be disposed. SFAS No. 144 will
be effective for fiscal years beginning after December 15, 2001. The Company is
currently evaluating the impact of SFAS No. 144, but does not expect that its
adoption on July 1, 2002 will have a material effect on its financial
statements.

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Item 3.

RISK FACTORS

This report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Companys business, operating results, financial
performance, and share price may be materially adversely affected by a number
of factors, including but not limited to the following risk factors, any one of
which could cause actual results to vary materially from anticipated results or
from those expressed in any forward-looking statements made by the Company in
this report on Form 10-Q or in other reports, press releases or other
statements issued from time to time. Additional factors that may cause such a
difference are set forth in the annual report on Form 10-K.

OUR BUSINESS WILL NOT GROW UNLESS THE MARKET FOR BIOMETRIC SOLUTIONS EXPANDS
BOTH DOMESTICALLY AND INTERNATIONALLY.

Our product revenues and a portion of our service revenues are derived
from the sale of biometric products and services. Biometric solutions have not
gained widespread commercial acceptance. We cannot accurately predict the
future growth rate, if any, or the ultimate size of the biometric technology
market. The expansion of the market for our products and services depends on a
number of factors including without limitation:



| |  |  | the cost, performance and reliability of our products and services and the products and services of competitors;                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | customers perception of the perceived benefit of biometric solutions;                                                                   
|
| |  |  | public perceptions of the intrusiveness of these solutions and the
manner in which firms are using the fingerprint information collected;
|
| |  |  | public perceptions regarding the confidentiality of private information;                                                                 
|
| |  |  | customers satisfaction with our products and services; and                                                                              
|
| |  |  | marketing efforts and publicity regarding these products and services.                                                                   

Certain groups have publicly objected to the use of biometric products for
some applications on civil liberties grounds and legislation has been proposed
to regulate the use of biometric security products. From time to time,
biometrics technologies have been the focus of organizations and individuals
seeking to curtail or eliminate such technologies on the grounds that they may
be used to diminish personal privacy rights. In the event that such
initiatives result in restrictive legislation, the market for biometric
solutions may be adversely affected. Even if biometric solutions gain wide
market acceptance, our products and services may not adequately address the
market requirements and may not gain wide market acceptance.

WE FACE INTENSE COMPETITION FROM OTHER BIOMETRIC SOLUTION PROVIDERS AS WELL AS
IDENTIFICATION AND SECURITY SYSTEMS PROVIDERS.

A significant number of established and startup companies have developed
or are developing and marketing software and hardware for fingerprint biometric
security applications that currently compete or will compete directly with
those products designed, developed and sold under our Security line of
products. Some of these companies have developed or are developing and
marketing semiconductor or optically based direct contact fingerprint image
capture devices. Other companies have developed or are developing and marketing
other methods of biometric identification such as retinal blood vessel or iris
pattern, hand geometry, voice and facial structure. If one or more of these
technologies or approaches were widely adopted, it would significantly reduce
the potential market for our products. Our Security products also compete with
non-biometric technologies such as certificate authorities, and traditional
key, card, surveillance systems and passwords. Many competitors offering
products that are competitive with our Security products and services have
significantly more cash and resources than we do. The biometric security market
is a rapidly evolving and intensely competitive market, and we believe that
additional competitors may yet enter the market and become significant
long-term competitors.

The products designed, developed and sold under our Imaging line of
products also face intense competition from a number of competitors who are
actively engaged in developing and marketing live scan products, including
Heinemann Biometric Systems GmbH, Sagem Morpho, Inc., Printrak, a wholly-owned
subsidiary of Motorola, Inc., and CrossMatch Technologies, Inc.

We expect competition to increase and intensify in the near term in the
biometrics markets. Companies competing with us

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may introduce products that are competitively priced, that have increased
performance or functionality or that incorporate technological advances not yet
developed or implemented by us. Some present and potential competitors have
financial, marketing, research, and manufacturing resources substantially
greater than ours.

In order to compete effectively in this environment, we must continually
develop and market new and enhanced products at competitive prices and must
have the resources available to invest in significant research and development
activities. The failure to do so could have a material adverse effect on our
business operations, financial results and stock price.

INTEGRATION OF OUR BUSINESS AND VISIONICS CORPORATIONS BUSINESS FOLLOWING THE
PROPOSED MERGER MAY BE DIFFICULT TO ACHIEVE, WHICH MAY ADVERSELY AFFECT
OPERATIONS.

Our proposed merger with Visionics Corporation (Visionics) involves
risks related to the integration and management of technology, operations and
personnel of two companies. The integration of the businesses of the two
companies will be a complex, time-consuming and expensive process and may
disrupt their business if not completed in a timely and efficient manner.
Following the merger, we must operate with Visionics as a combined organization
utilizing common information and communications systems, operating procedures,
financial controls and human resources practices.

We may encounter substantial difficulties, costs and delays involved in
integrating the companies operations, including:



| |  |  | potential conflicts between business cultures;                                                            
| | - |  | ----------------------------------------------------------------------------------------------------------
|
| |  |  | adverse changes in business focus perceived by third-party
constituencies;                                
|
| |  |  | potential conflicts in distribution, marketing or other important
relationships;                          
|
| |  |  | inability to implement uniform standards, controls, procedures and policies;                              
|
| |  |  | integration of the research and development and product development efforts; and                          
|
| |  |  | loss of key employees and/or the diversion of managements attention from other ongoing business concerns.

In addition, Visionics is co-headquartered in New Jersey and Minnesota,
with offices in five locations, and we are headquartered in Northern
California, with offices in nine locations. The geographic distances between
the companies and their respective offices and operations and the consolidation
of operations increase the risk that the integration will not be completed
successfully or in a timely and cost-effective manner. We may not be successful
in overcoming these risks or any other problems encountered in connection with
the integration of the companies.

THE COSTS TO COMPLETE THE PROPOSED MERGER ARE SUBSTANTIAL. THESE COSTS AND THE
MANNER OF ACCOUNTING FOR THE MERGER MAY AFFECT IDENTIX REPORTED RESULTS OF
OPERATIONS.

It is anticipated that approximately $16 to $20 million of costs will be
incurred by Visionics and us in connection with the proposed merger. Such
amount includes costs associated with combining the businesses of the two
companies, including integration and restructuring costs, costs associated with
the consolidation of operations and the fees of financial advisors, attorneys
and accountants. A significant portion of these costs will be charged to
expense in the period incurred, reducing our earnings or increasing our loss
for such period. The remaining costs, consisting primarily of fees and
expenses paid to financial advisors, attorneys and accountants, will be a
component of the purchase price and capitalized as an element of goodwill.
Goodwill is required to be tested for impairment at least annually and we will
be required to record a charge to earnings in the period any impairment of
goodwill is determined. There is a risk that the management of the combined
company will not be able to effectively control the costs associated with the
integration of the two companies or that such costs may be higher than
anticipated. The failure to manage such integration costs effectively could
have a material adverse effect on the business operations, financial results
and stock price of the combined company.

THE MARKET PRICE OF OUR COMMON STOCK COULD DECLINE.

The market price of our common stock could decline if:



| |  |  | our integration with Visionics is unsuccessful;
| | - |  | -----------------------------------------------

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| |  |  | the combined company is unable to successfully market our products
and services to Visionics customers or Visionics products and
services to our customers;                                                                                         
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the combined company does not achieve the perceived benefits of the
merger as rapidly as, or to the extent, anticipated by financial or
industry analysts, or such analysts do not perceive the same benefits
to the merger as do we and Visionics; or
|
| |  |  | the effect of the merger on our financial results is not consistent
with the expectations of financial or industry analysts.                                                                                                                          

THE TERRORIST ATTACKS OF SEPTEMBER 11, 2001 HAVE INCREASED FINANCIAL
EXPECTATIONS THAT MAY NOT MATERIALIZE.

The September 11, 2001 terrorist attacks may have created an increase in
awareness for biometric security solutions generally. However, it is uncertain
whether the actual level of demand for our biometric products and services will
result from such increased awareness. Increased demand may not result in an
actual increase in our product or services revenues. In addition, it is
uncertain which security solutions, if any, will be adopted as a result of the
terrorism and whether our products will be a part of those solutions. Should
our products be considered or adopted as solutions to the terrorism, the level
and timeliness of available funding are unclear. These factors may adversely
impact us and create unpredictability in revenues and operating results.

WE MAY NEED TO RAISE ADDITIONAL EQUITY OR DEBT FINANCING IN THE FUTURE.

While we believe that cash flows from operations, together with existing
working capital and available lines of credit, may be adequate to fund our
current cash requirements, we may need to raise additional debt or equity
financing in the future. We may not be able to obtain additional debt or equity
financing. If successful in raising additional financing, we may not be able to
do so on terms that are not excessively dilutive to existing stockholders or
less costly than existing sources of financing. Failure to secure additional
financing in a timely manner and on favorable terms in the future could have a
material adverse impact on our financial performance and stock price and
require us to implement certain cost reduction initiatives and curtail certain
of our operations.

FUTURE GROWTH DEPENDS IN PART ON THE SUCCESS OF ITRUST, A RELATIVELY NEW
BUSINESS ACTIVITY WITH LITTLE OPERATING HISTORY.

Our future growth may depend on the success of itrust, which was formed in
July 2000 and has a limited operating history. itrusts success will depend on
many factors, including, but not limited to:



| |  |  | our ability to form additional collaborative partnerships that will
contribute technical and commercial value to itrust;                                               
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the demand for our Security products and itrust products and
services;                                                                                                 
|
| |  |  | our ability to successfully and rapidly manufacture, disseminate and
deploy biometric enabled products and services;                                                   
|
| |  |  | the ability and willingness of our collaborative partners to
successfully and rapidly promote, manufacture, disseminate and deploy
biometric enabled products services;
|
| |  |  | the levels of competition in the space for Internet and wireless web security services;                                                                                
|
| |  |  | the perceived need for secure communications and commerce in such markets;                                                                                             
|
| |  |  | our ability to successfully introduce new products and services; and                                                                                                   
|
| |  |  | our ability to expand its operations and attract, integrate, retain
and motivate qualified sales, marketing, and research and development
personnel.                   

A significant number of established and startup companies have developed
or are developing and marketing security

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and/or authentication solutions that currently compete or will compete
directly with itrusts solutions. Some of these companies have significantly
more cash and resources than we do, and may currently offer a broader or more
robust range of solutions than those currently available through the itrust
offering. The wired and wireless security and authentication marketplace is a
rapidly evolving and intensely competitive market and we believe that
additional competitors may yet enter the market and become significant
long-term competitors.

We have experienced net losses in the last two fiscal years and expect
additional losses in the future. itrust is not expected to contribute
significant revenues or positive cash flows in the foreseeable future. At the
same time, however, we will incur significant costs in the design, development,
manufacture, sale and deployment of itrust products and services and in the
execution of itrusts business plan. In part because of the significant
investment we will make in itrust, we expect to incur substantial additional
losses and negative cash flows from it in the foreseeable future.

WE FACE SUBSTANTIAL COMPETITION FROM PROFESSIONAL SERVICE PROVIDERS OF ALL
SIZES IN THE GOVERNMENT MARKETPLACE.

IPS is increasingly being required to bid on firm fixed price and similar
contracts that result in greater performance risk to IPS. If IPS is not able to
maintain a competitive cost structure, support specialized market niches,
retain highly qualified personnel or align with technology leaders, we may lose
our ability to compete successfully in the services business.

THE BIOMETRICS INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND
EVOLVING INDUSTRY STANDARDS, WHICH COULD RENDER EXISTING PRODUCTS OBSOLETE.

Our future success will depend upon our ability to develop and introduce a
variety of new products and services and enhancements to these new product and
services in order to address the changing and sophisticated needs of the
marketplace. Frequently, technical development programs in the biometric
industry require assessments to be made of the future directions of technology
and technology markets generally, which are inherently risky and difficult to
predict. Delays in introducing new products, services and enhancements, the
failure to choose correctly among technical alternatives or the failure to
offer innovative products and services at competitive prices may cause
customers to forego purchases of our products and services and purchase
those of our competitors.

Continued participation by us in the market for live scan systems that are
linked to forensic quality databases under the jurisdiction of governmental
agencies may require the investment of our resources in upgrading our products
and technology for us to compete and to meet regulatory and statutory
standards. We may not have adequate resources available to us or may not
adequately keep pace with appropriate requirements in order to effectively
compete in the marketplace.

OUR FINANCIAL AND OPERATING RESULTS OFTEN VARY SIGNIFICANTLY FROM QUARTER TO
QUARTER AND MAY BE NEGATIVELY AFFECTED BY A NUMBER OF FACTORS.

Our financial and operating results may fluctuate from quarter to quarter
because of the following reasons:



| |  |  | reduced demand for products and services caused by competitors;                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------
|
| |  |  | price reductions, new competitors, or the introduction of enhanced
products or services from new or existing competitors;
|
| |  |  | changes in the mix of products and services we or our distributors sell;                                                 
|
| |  |  | cancellations, delays or contract amendments by government agency customers;                                             
|
| |  |  | the lack of availability of government funds;                                                                            
|
| |  |  | unforeseen legal expenses, including litigation costs;                                                                   
|
| |  |  | expenses related to acquisitions;                                                                                        
|
| |  |  | other one-time financial charges;                                                                                        
|
| |  |  | the lack of availability or increase in cost of key components and subassemblies; and                                    

24



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| |  |  | the inability to successfully manufacture in volume certain of our
products that may contain complex designs and components.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------

Particularly important is the need to invest in planned technical
development programs to maintain and enhance our competitiveness, and to
develop and launch new products and services. Improving the manageability and
likelihood of success of such programs requires the development of budgets,
plans and schedules for the execution of these programs and the adherence to
such budgets, plans and schedules. The majority of such program costs are
payroll and related staff expenses, and secondarily materials, subcontractors
and promotional expenses. These costs are very difficult to adjust in response
to short-term fluctuations in our revenues, compounding the difficulty of
achieving profitability in the event of a revenue downturn.

OUR LENGTHY AND VARIABLE SALES CYCLE WILL MAKE IT DIFFICULT TO PREDICT
OPERATING RESULTS.

Certain of our Imaging products often have a lengthy sales cycle while the
customer evaluates and receives approvals for purchase. If, after expending
significant funds and effort, we fail to receive an order, a negative impact on
our financial results and stock price could result.

It is difficult to predict accurately the sales cycle of any large order
for any of our products. If we do not ship one or more large orders as forecast
for a fiscal quarter, our total revenues and operating results for that quarter
could be materially and adversely affected.

THE SUBSTANTIAL LEAD-TIME REQUIRED FOR ORDERING PARTS AND MATERIALS MAY LEAD TO
EXCESS OR INSUFFICIENT INVENTORY.

The lead-time for ordering parts and materials and building our Security
or Imaging products can be many months. As a result, we must order parts and
materials and build our products based on forecasted demand. If demand for our
products lags significantly behind our forecasts, we may produce more products
than we can sell, which can result in cash flow problems and write-offs or
write-downs of obsolete inventory.

WE DERIVE A MAJORITY OF OUR SERVICES REVENUE FROM GOVERNMENT CONTRACTS, WHICH
ARE OFTEN NON-STANDARD, INVOLVE COMPETITIVE BIDDING, MAY BE SUBJECT TO
CANCELLATION WITHOUT PENALTY AND MAY PRODUCE VOLATILITY IN EARNINGS AND
REVENUE.

Our performance in any one reporting period is not necessarily indicative
of sale trends or future operating or earnings performance because of our
reliance on a small number of large customers, the majority of which are
government agencies. Government contracts frequently include provisions that
are not standard in private commercial transactions. For example, government
contracts may include bonding requirements and provisions permitting the
purchasing agency to cancel the contract without penalty in certain
circumstances. As public agencies, our prospective customers are also subject
to public agency contract requirements that vary from jurisdiction to
jurisdiction. Some of these requirements may be onerous or impossible to
satisfy.

In addition, public agency contracts are frequently awarded only after
formal competitive bidding processes, which have been and may continue to be
protracted, and typically impose provisions that permit cancellation in the
event that funds are unavailable to the public agency. There is a risk that we
may not be awarded any of the competitive bidding processes, which have been
and may continue to be protracted, and typically impose provisions that permit
cancellation in the event that funds are unavailable to the public agency.
Furthermore, unsuccessful bidders for public agency contracts are provided the
opportunity to formally protest certain contact awards through various agency,
administrative and judicial channels. The protest process may delay a
successful bidders contract performance for a number of weeks, months or more,
or cancel the contract award entirely. Although we have not previously
experienced a substantial number of contract delays or cancellations due to
protest initiated by losing bidders, there is a risk that we may not be awarded
contracts for which we bid or, if awarded, that substantial delays or
cancellation of purchases may follow as a result of such protests. In
addition, local government agency contracts may be contingent upon availability
of matching funds from federal or state entities. Also, law enforcement and
other government agencies are subject to political, budgetary, purchasing and
delivery constraints which may continue to result in quarterly and annual
revenues and operating results that may be irregular and difficult to predict.
Such revenue volatility makes management of inventory levels, cash flow and
profitability inherently difficult. In addition, in the event we are
successful in winning such procurements, there may be unevenness in shipping
schedules, as well as potential delays and schedule changes in the timing of
deliveries and recognition of revenue, or cancellation of such procurements.

For the three and nine months ended March 31, 2002, we derived
approximately 86% and 84%, respectively, of our

25



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services revenue directly from contracts relating to the Department of
Defense and other U.S. Government agencies. The loss of a material government
contract due to budget cuts or otherwise could have a severe negative impact on
our financial results and stock price.

For the year ended June 30, 2001, and the three months ended March 31,
2002 we derived approximately 94% of our services revenue from
time-and-materials contracts and firm-fixed-price contracts. For the nine
months ended March 31, 2002 we derived approximately 90% of our services
revenue from time-and-materials contracts and firm-fixed-price contracts. We
assume certain performance risk on these contracts. If we fail to estimate
accurately ultimate costs or to control costs during performance of the work,
our profit margins may be reduced and we may suffer losses. In addition,
revenues generated from government contracts are subject to audit and
subsequent adjustment by negotiation with representatives of the government
agencies. The Defense Contract Audit Agency is currently auditing IPS for the
periods from July 1, 1997 to June 30, 2000. While we believe that the results
of such audit will have no material effect on our profits, if made, such
adjustments may have a material adverse effect on our business, financial
condition and results of operations.

OUR RESULTS OF OPERATIONS MAY BE HARMED BY GOVERNMENTAL CREDIT, FUNDING AND
OTHER POLICIES.

We extend substantial credit to federal, state and local governments in
connection with sales of our products and services. Sales to sizeable
customers requiring large and sophisticated networks of fingerprint recognition
and live scan systems and peripheral equipment often include technical
requirements which may not be fully known at the time requirements are
specified by the customer. In addition, contracts may specify performance
criteria that must be satisfied before the customer accepts the products and
services. Collection of accounts receivable may be dependent on completion of
customer requirements, which may be unpredictable, subject to change by the
customer, and not fully understood at the time of acceptance of the order, and
may involve investment of additional resources. These investments of additional
resources are accrued when amounts can be estimated but may be uncompensated
and negatively affect profit margins and our liquidity.

Furthermore, in many instances, customer procurements are dependent on the
availability or continued availability of state or federal government grants
and general tax funding. Such funding may be subject to termination at any
time at the sole discretion of the government body providing or receiving such
funds.

Additionally, without regard to termination of funding, government
agencies both domestically and internationally may successfully assert the
right to terminate business or funding relationships with us at their sole
discretion without adequate or any compensation or recourse for us.

WE RELY IN PART UPON ORIGINAL
EQUIPMENT MANUFACTURES (OEMS) AND DISTRIBUTION
PARTNERS TO DISTRIBUTE OUR PRODUCTS, AND WE MAY BE ADVERSELY AFFECTED IF THOSE
PARTIES DO NOT ACTIVELY PROMOTE OUR PRODUCTS OR PURSUE INSTALLATIONS THAT USE
OUR EQUIPMENT.

A significant portion of our product revenues comes from sales to partners
including OEMS, systems integrators, distributors and resellers. Some, but not
all, of these relationships are formalized in written agreements. Even where
these relationships are formalized in written agreements, the agreements are
often terminable with little or no notice and subject to periodic amendment. We
cannot control the amount and timing of resources that our partners devote to
activities on our behalf.

We intend to continue to seek strategic relationships to distribute,
license and sell certain of our products. We, however, may not be able to
negotiate acceptable relationships in the future and cannot predict whether
current or future relationships will be successful.

WE RELY HEAVILY ON PRODUCTS AND SERVICES PROVIDED BY INTERNATIONAL TECHNOLOGY
CONCEPTS, INC. (IT CONCEPTS).

Both our Imaging and Security divisions purchase certain complete
biometric security and imaging products, components of products and research,
development and engineering services related to the development of products
from IT Concepts. IT Concepts is also contributing to the development of
certain of itrusts solutions. In turn, IT Concepts subcontracts portions of
its development work to an affiliate in Russia and brings in a portion of its
engineering and personnel resources from Russia under applicable immigration
laws. In recent years competition for a limited number of available visas for
foreign high-technology workers and/or consultants has intensified as more U.S.
companies have chosen to look abroad for supplemental research, development and
engineering resources.

If we were to lose IT Concepts as a supplier of products and engineering
services, or if IT Concepts were prohibited or

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restricted from bringing in a portion of its engineering requirements or
resources, because of lack of availability of applicable immigration visas or
otherwise, we would be required to find alternative suppliers of products and
services or hire additional engineering personnel to provide the services. This
could require us to incur significant additional research and development costs
and delay shipment of products to customers and the development of new
technology and products. There is a risk that we would not be able to find such
personnel or suppliers at a reasonable cost, or at all. Any delay in product
development or shipment could have a material adverse effect on our business,
operations, financial results and stock price. Identix is a party to a series
of agreements with IT Concepts governing IT Concepts supply of research,
development and engineering services to Identix. Identix relies in part on
these agreements to protect its ownership, and the confidentiality of Identix
proprietary technology, trade secrets and other intellectual property rights
developed under the agreements. There is a risk that these agreements may be
inadequate to protect Identix, or that such agreements may be breached, and
that the remedies available to Identix may not be adequate.

LOSS OF SOLE OR LIMITED SOURCE SUPPLIERS MAY RESULT IN DELAYS OR ADDITIONAL
EXPENSES.

We obtain certain components and complete products from a single source or
a limited group of suppliers. We do not have long-term agreements with any of
our suppliers. We will experience significant delays in manufacturing and
shipping of products to customers if we lose these sources or if supplies from
these sources are delayed.

As a result, we may be required to incur additional development,
manufacturing and other costs to establish alternative sources of supply. It
may take several months to locate alternative suppliers, if required, or to
re-tool our products to accommodate components from different suppliers. We
cannot predict if we will be able to obtain replacement components within the
time frames we require at an affordable cost, or at all. Any delays resulting
from suppliers failing to deliver components or products on a timely basis in
sufficient quantities and of sufficient quality or any significant increase in
the price of components from existing or alternative suppliers could have a
severe negative impact on our financial results and stock price.

THE SUCCESS OF OUR STRATEGIC PLAN TO PURSUE SALES IN INTERNATIONAL MARKETS MAY
BE LIMITED BY RISKS RELATED TO CONDITIONS IN SUCH MARKETS.

For the year ended June 30, 2001, and the three and nine months ended
March 31, 2002, we derived approximately 11%, 18% and 14%, respectively, of our
product revenues from international sales. We currently have a local presence
in the United Kingdom.

There is a risk that we may not be able to successfully market, sell and
deliver our products in foreign countries, or successfully rely on supplemental
offshore research and development resources.

Risks inherent in marketing, selling and delivering products in foreign
and international markets, include those associated with:



| |  |  | regional economic conditions;                                                                                                                                                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | delays in or prohibitions on exporting products resulting from export
restrictions for certain products and technologies, including crime
control products and encryption technology;         
|
| |  |  | loss of, or delays in importing products, services and intellectual
property developed abroad, resulting from unstable or fluctuating
social, political or governmental conditions;             
|
| |  |  | fluctuations in foreign currencies and the U.S. dollar;                                                                                                                                         
|
| |  |  | loss of revenue, property (including intellectual property) and
equipment from expropriation, nationalization, war, insurrection,
terrorism, criminal acts and other political and social risks;
|
| |  |  | the overlap of different tax structures;                                                                                                                                                        
|
| |  |  | seasonal reductions in business activity;                                                                                                                                                       
|
| |  |  | risks of increases in taxes and other government fees; and                                                                                                                                      

27



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| |  |  | involuntary renegotiations of contracts with foreign governments.
| | - |  | -----------------------------------------------------------------

In addition, foreign laws treat the protection of proprietary rights
differently from laws in the United States and may not protect our proprietary
rights to the same extent as U.S. laws. The failure of foreign laws or judicial
systems to adequately protect our proprietary rights or intellectual property,
including intellectual property developed on our behalf by foreign contractors
or subcontractors may have a material adverse effect on our business,
operations, financial results and stock price.

ONE STOCKHOLDER OWNS A SIGNIFICANT PORTION OF OUR STOCK AND MAY DELAY OR
PREVENT A CHANGE IN CONTROL OR ADVERSELY AFFECT THE STOCK PRICE THROUGH SALES
IN THE OPEN MARKET.

As of March 31, 2002, State of Wisconsin Investment Board owned
approximately 16% of the Companys outstanding common stock. The concentration
of large percentages of ownership in any single stockholder may delay or
prevent change in control of the Company. Additionally, the sale of a
significant number of our shares in the open market by a single stockholder or
otherwise could adversely affect our stock price.

WE MAY BE SUBJECT TO LOSS IN MARKET SHARE AND MARKET ACCEPTANCE AS A RESULT OF
MANUFACTURING ERRORS, DELAYS OR SHORTAGES.

Performance failure in our products or certain of our services may cause
loss of market share, delay in or loss of market acceptance, additional
warranty expense or product recall, or other contractual liabilities. The
complexity of certain of our fingerprint readers makes the manufacturing and
assembly process of such products, especially in volume, complex. This may in
turn lead to delays or shortages in the availability of certain products, or,
in some cases, the unavailability of certain products. The negative effects of
any delay or failure could be exacerbated if the delay or failure occurs in
products or services (such as itrust services) that provide personal security,
secure sensitive computer data, authorize significant financial transactions or
perform other functions where a security breach could have significant
consequences.

If a product or service launch is delayed or is the subject of an
availability shortage because of problems with our ability to manufacture or
assemble the product or service successfully on a timely basis, or if a product
or service otherwise fails to meet performance criteria, we may lose revenue
opportunities entirely and/or experience delays in revenue recognition
associated with a product or service in addition to incurring higher operating
expenses during the period required to correct the defects. There is a risk
that for unforeseen reasons we may be required to repair or replace a
substantial number of products in use or to reimburse customers for products
that fail to work or meet strict performance criteria. We carry product
liability insurance, but existing coverage may not be adequate to cover
potential claims.

WE MAY BE SUBJECT TO REPAIR, REPLACEMENT, REIMBURSEMENT AND LIABILITY CLAIMS AS
A RESULT OF PRODUCTS THAT FAIL TO WORK OR TO MEET APPLICABLE PERFORMANCE
CRITERIA.

There is a risk that for unforeseen reasons we may be required to repair
or replace a substantial number of products in use or to reimburse customers
for products that fail to work or meet strict performance criteria. We attempt
to limit remedies for product or service failure to the repair or replacement
of malfunctioning or noncompliant products or services, and also attempt to
exclude or minimize exposure to product and related liabilities by including in
our standard agreements warranty disclaimers and disclaimers for consequential
and related damages as well as limitations on our aggregate liability. From
time to time, in certain complex sale or licensing transactions, we may
negotiate liability provisions that vary from such standard forms. There is a
risk that our contractual provisions may not adequately minimize our product
and related liabilities or that such provisions may be unenforceable. We carry
product liability insurance, but existing coverage may not be adequate to cover
potential claims.

FAILURE BY US TO MAINTAIN THE PROPRIETARY NATURE OF OUR TECHNOLOGY,
INTELLECTUAL PROPERTY AND MANUFACTURING PROCESSES COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, OPERATING RESULTS, FINANCIAL CONDITION AND STOCK PRICE
AND ON OUR ABILITY TO COMPETE EFFECTIVELY.

We principally rely upon patent, trademark, copyright, trade secret and
contract law to establish and protect our proprietary rights. There is a risk
that claims allowed on any patents or trademarks we hold may not be broad
enough to protect our technology. In addition, our patents or trademarks may be
challenged, invalidated or circumvented and we cannot be certain that the
rights granted thereunder will provide competitive advantages to us. Moreover,
any current or future issued or licensed patents, or trademarks, or currently
existing or future developed trade secrets or know-how may not afford
sufficient protection against competitors with similar technologies or
processes, and the possibility exists that certain of our already issued
patents

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or trademarks may infringe upon third party patents or trademarks or be
designed around by others. In addition, there is a risk that others may
independently develop proprietary technologies and processes, which are the
same as, substantially equivalent or superior to ours, or become available in
the market at a lower price.

There is a risk that we have infringed or in the future will infringe
patents or trademarks owned by others, that we will need to acquire licenses
under patents or trademarks belonging to others for technology potentially
useful or necessary to us, and that licenses will not be available to us on
acceptable terms, if at all.

We may have to litigate to enforce our patents or trademarks or to
determine the scope and validity of other parties proprietary rights.
Litigation could be very costly and divert managements attention. An adverse
outcome in any litigation may have a severe negative impact on our financial
results and stock price. To determine the priority of inventions, we may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office or oppositions in foreign patent and trademark offices,
which could result in substantial cost to the Company and limitations on the
scope or validity of our patents or trademarks.

We also rely on trade secrets and proprietary know-how, which we seek to
protect by confidentiality agreements with our employees, consultants, service
providers and third parties. There is a risk that these agreements may be
breached, and that the remedies available to us may not be adequate. In
addition, our trade secrets and proprietary know-how may otherwise become known
to or be independently discovered by others.

IF WE FAIL TO ADEQUATELY MANAGE THE SIZE OF OUR BUSINESS, IT COULD HAVE A
SEVERE NEGATIVE IMPACT ON OUR FINANCIAL RESULTS OR STOCK PRICE.

Our management believes that in order to be successful we must
appropriately manage the size of our business. This may mean reducing costs and
overhead in certain economic periods, and selectively growing in periods of
economic expansion. In addition, we will be required to implement operational,
financial and management information procedures and controls that are efficient
and appropriate for the size and scope of our operations. The management skills
and systems currently in place may not be adequate and we may not be able to
manage any significant reductions or growth effectively.

ACQUISITIONS OF COMPANIES OR TECHNOLOGIES MAY RESULT IN DISRUPTIONS TO OUR
BUSINESS.

As part of our business strategy, we may acquire assets and businesses
principally relating to or complementary to our current operations. We acquired
Identicator Technology, Inc. (Identicator Technology) in fiscal 1999, one
company in fiscal 1998 and two companies in fiscal 1996. These and any other
acquisitions and/or mergers by Identix are and will be accompanied by the risks
commonly encountered in acquisitions of companies. These risks include, among
other things:



| |  |  | exposure to unknown liabilities of acquired companies;                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | higher than anticipated acquisition costs and expenses;                                                                    
|
| |  |  | effects of costs and expenses of acquiring and integrating new
businesses on our operating results and financial condition;
|
| |  |  | the difficulty and expense of assimilating the operations and personnel of the companies;                                  
|
| |  |  | disruption of our ongoing business;                                                                                        
|
| |  |  | diversion of management time and attention;                                                                                
|
| |  |  | failure to maximize our financial and strategic position by the successful incorporation of acquired technology;           
|
| |  |  | the maintenance of uniform standards, controls, procedures and policies;                                                   
|
| |  |  | loss of key employees and customers as a result of changes in management;                                                  
|
| |  |  | the incurrence of amortization expenses; and                                                                               
|
| |  |  | possible dilution to our stockholders.                                                                                     

29



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In addition, geographic distances may make integration of businesses more
difficult. We may not be successful in overcoming these risks or any other
problems encountered in connection with any acquisitions.

IF WE FAIL TO ATTRACT AND RETAIN QUALIFIED SENIOR EXECUTIVE AND KEY TECHNICAL
PERSONNEL, OUR BUSINESS WILL NOT BE ABLE TO EXPAND.

We are dependent on the continued availability of the services of our
employees, many of whom are individually key to our future success, and the
availability of new employees to implement our business plans. The market for
skilled employees is highly competitive, especially for employees in technical
fields. Although our compensation programs are intended to attract and retain
the employees required for us to be successful, there can be no assurance that
we will be able to retain the services of all of the key employees or a
sufficient number to execute our plans, nor can there be any assurances that we
will be able to continue to attract new employees as required.

Our personnel may voluntarily terminate their relationship with us at any
time, and competition for qualified personnel, especially engineers, is
intense. The process of locating additional personnel with the combination of
skills and attributes required to carry out our strategy could be lengthy,
costly and disruptive.

If we lose the services of key personnel, or fail to replace the services
of key personnel who depart, we could experience a severe negative impact on
our financial results and stock price. In addition, there is intense
competition for highly qualified engineering and marketing personnel in the
Silicon Valley where we principally operate. The loss of the services of any
key engineering, marketing or other personnel or our failure to attract,
integrate, motivate and retain additional key employees could have a material
adverse effect on our business, operating and financial results and stock
price.

OUR BUSINESS OPERATIONS MAY BE ADVERSELY AFFECTED IN THE EVENT OF AN
EARTHQUAKE.

Our corporate headquarters and most of our research and development
operations are located in Silicon Valley in Northern California, a region known
for dramatic seismic activity. An earthquake or other significant natural
disaster could have a material adverse impact on our business, financial
condition, operating results and stock price.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk.The Companys exposure to market risk for changes in
interest rates relates primarily to the Companys cash equivalents and lines of
credit.The Company does not use derivative financial instruments. The
Companys cash equivalents are invested in money market accounts with major
financial institutions. Due to the short duration and conservative nature of
the Companys cash equivalents, their carrying value approximates fair market
value. The Company has performed an analysis to assess the potential effect of
reasonably possible near-term changes in interest rates. The effect of such
rate changes is not expected to be material to the Companys results of
operations, cash flows or financial condition.

The Company primarily enters into debt obligations to support general
corporate purposes including working capital requirements and capital
expenditures. The Company is subject to fluctuating interest rates that may
impact, adversely or otherwise, its results of operation or cash flows for its
variable rate lines of credit and cash equivalents.

Foreign Currency Exchange Rate Risk.Certain of the Companys foreign
revenues, cost of revenues and marketing expenses are transacted in local
currencies. As a result, the Companys results of operations and certain
receivables and payables are subject to foreign exchange rate fluctuations. The
Company does not currently hedge against foreign currency rate fluctuations.
Gains and losses from such fluctuations are not material to the Companys
consolidated results of operations or balance sheet.

30



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PART II               OTHER INFORMATION




Item 1. Legal Proceedings

The Company is not party to any material legal proceedings.




Item 2. Changes in Securities

None.




Item 3. Defaults upon Senior Securities

None.




Item 4. Submission of Matters to a Vote of Security Holders

None.




Item 5. Other

None.




Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits

|        |  |                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                     
|Number  |  | Description                                                                                                                                                         
|        |  |                                                                                                                                                                     
|2.1(1)  |  | Agreement and Plan of Merger dated as of February 22, 2002,
by and among the Company, Viper Acquisition Corp. and Visionics
Corporation                             
|       
|       
|       
|       
|3.1     |  | Amended and Restated Bylaws of the Company                                                                                                                          
|       
|       
|       
|       
|10.4    |  | Second Amendment to 1992 Employee Stock Option Plan                                                                                                                 
|       
|       
|       
|       
|10.6    |  | Equity Incentive Plan, as amended on January 29, 2002                                                                                                               
|       
|       
|       
|       
|10.7    |  | Nonemployee Directors Stock Option Plan, as amended on January 29, 2002                                                                                             
|       
|       
|       
|       
|10.9    |  | New Employee Stock Incentive Plan, as amended on January 29, 2002                                                                                                   
|       
|       
|       
|       
|10.38   |  | Amendment No. 2 to Compensation Continuation
Agreement dated as of January 29, 2002 by and between the
Company and James P. Scullion                                
|       
|       
|       
|       
|10.45   |  | Amendment to Loan Documents dated March 28, 2002
between Silicon Valley Bank and the Company, Identix Public
Sector, Inc. and Legislative Demographic Services, Inc.
|       
|       
|       
|       
|10.50   |  | Deed of Lease between BRIT LIMITED PARTNERSHIP AND ANADAC, INC. dated
September 28, 2000.                                                                           
|       
|       
|       
|       
|10.51   |  | 2002 Equity Incentive Plan                                                                                                                                          



---

|(1) |  | Incorporated by reference to the February 22, 2002
Form 8-K.
|--- |  | ------------------------------------------------------------



| | (b) |  | The Company filed a report on Form 8-K on February 22, 2002
regarding the Companys entry into the Agreement and Plan of Merger
dated as of February 22, 2002 by and among the Company, Viper
Acquisition Corp. and Visionics Corporation, and the entry by
certain affiliates of Identix Incorporated and Visionics
Corporation into certain voting agreements in connection therewith.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Identix Incorporated, a corporation
organized and existing under the laws of the State of Delaware, has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Los Gatos, State of California, on
May 15, 2002.

| |                                                                     |                   
| | ------------------------------------------------------------------- | ------------------
| | IDENTIX INCORPORATED                                               
|
| | BY:                                                                 | /s/ Erik E. Prusch
| |                                                                    
| | Erik E. Prusch
Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

|        |  |                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                     
|Number  |  | Description                                                                                                                                                         
|        |  |                                                                                                                                                                     
|2.1(1)  |  | Agreement and Plan of Merger dated as of February 22, 2002,
by and among the Company, Viper Acquisition Corp. and Visionics
Corporation                             
|       
|       
|       
|       
|3.1     |  | Amended and Restated Bylaws of the Company                                                                                                                          
|       
|       
|       
|       
|10.4    |  | Second Amendment to 1992 Employee Stock Option Plan                                                                                                                 
|
|10.6    |  | Equity Incentive Plan, as amended on January 29, 2002                                                                                                               
|       
|       
|       
|       
|10.7    |  | Nonemployee Directors Stock Option Plan, as amended on January 29, 2002                                                                                             
|       
|       
|       
|       
|10.9    |  | New Employee Stock Incentive Plan, as amended on January 29, 2002                                                                                                   
|       
|       
|       
|       
|10.38   |  | Amendment No. 2 to Compensation Continuation
Agreement dated as of January 29, 2002 by and between the
Company and James P. Scullion                                
|       
|       
|       
|       
|10.45   |  | Amendment to Loan Documents dated March 28, 2002
between Silicon Valley Bank and the Company, Identix Public
Sector, Inc. and Legislative Demographic Services, Inc.
|       
|       
|       
|       
|10.50   |  | Deed of Lease between BRIT LIMITED PARTNERSHIP AND ANADAC, INC. dated
September 28, 2000.                                                                           
|       
|       
|       
|       
|10.51   |  | 2002 Equity Incentive Plan                                                                                                                                          



---

|(1) |  | Incorporated by reference to the February 22, 2002
Form 8-K.
|--- |  | ------------------------------------------------------------