<PAGE>   1
                       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 September 30, 1996 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)

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

510 N. Pastoria Avenue, Sunnyvale, California                 94086
     (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (408) 731-2000

         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:

                        24,323,937 shares of Common Stock
                             as of October 31, 1996
<PAGE>   2
                              IDENTIX INCORPORATED

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                              <C>
PART I            FINANCIAL INFORMATION

       Item 1     Financial Statements

                  Consolidated Balance Sheets - September 30, 1996 and June 30, 1996 ..............1

                  Consolidated Statements of Operations - three months ended
                    September 30, 1996 and 1995....................................................2

                  Consolidated Statements of Cash Flows - three months ended
                    September 30, 1996 and 1995....................................................3

                  Notes to Consolidated Financial Statements.......................................4

       Item 2     Management's Discussion and Analysis of Financial
                    Condition and Results of Operations............................................6


PART II           OTHER INFORMATION...............................................................18


       Item 1     Legal Proceedings

       Item 6     Exhibits and Reports on Form 8-K

       Signatures.................................................................................19
</TABLE>
<PAGE>   3
                              IDENTIX INCORPORATED
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,          JUNE 30,
                                                                           1996                 1996
                                                                     -----------------       -----------
                                                                        (UNAUDITED)
<S>                                                                    <C>                 <C>
ASSETS
    Current assets:
      Cash and cash equivalents ................................       $    205,000        $    981,000
      Accounts receivable, less allowance for doubtful accounts
        and sales returns of $621,000 and $488,000 .............         19,389,000          16,331,000
      Inventories ..............................................          3,672,000           4,464,000
      Prepaid expenses and other assets ........................            554,000             266,000
                                                                       ------------        ------------
         Total current assets ..................................         23,820,000          22,042,000

    Property and equipment, net ................................          2,581,000           2,218,000
    Intangibles and other assets ...............................          2,902,000           2,847,000
                                                                       ------------        ------------
                                                                       $ 29,303,000        $ 27,107,000
                                                                       ============        ============

LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Notes payable to banks ...................................       $  4,298,000        $  1,846,000
      Accounts payable .........................................          2,740,000           3,309,000
      Accrued compensation .....................................          1,102,000           1,185,000
      Other accrued liabilities ................................            680,000             426,000
      Current portion of long-term debt ........................            106,000             106,000
      Deferred maintenance revenue .............................            272,000             256,000
                                                                       ------------        ------------
         Total current liabilities .............................          9,198,000           7,128,000

    Deferred maintenance revenue ...............................            253,000             293,000
    Long-term debt .............................................            100,000             127,000
    Other liabilities ..........................................             89,000              87,000
                                                                       ------------        ------------
         Total liabilities .....................................          9,640,000           7,635,000
                                                                       ------------        ------------

    Commitments and contingencies (Note 4)

    Shareholders' equity:
      Common stock, no par; 30,000,000 shares authorized;
         24,323,937 and 24,320,464 shares issued and outstanding         50,031,000          50,024,000
      Accumulated deficit ......................................        (30,374,000)        (30,534,000)
      Cumulative translation adjustment ........................              6,000             (18,000)
                                                                       ------------        ------------
         Total shareholders' equity ............................         19,663,000          19,472,000
                                                                       ------------        ------------
                                                                       $ 29,303,000        $ 27,107,000
                                                                       ============        ============
</TABLE>


       See accompanying notes to these consolidated financial statements.

                                        1
<PAGE>   4
                              IDENTIX INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                          SEPTEMBER 30,
                                                    1996                1995
                                                ------------        ------------
<S>                                             <C>                 <C>
Revenues:
    Net product revenues                        $  6,376,000        $  3,165,000
    Services revenues                              5,700,000           4,427,000
                                                ------------        ------------
      Total revenues                              12,076,000           7,592,000
                                                ------------        ------------


Costs and expenses:
    Cost of product revenues                       3,372,000           1,689,000
    Cost of services revenues                      4,650,000           3,682,000
    Research, development and engineering            452,000             336,000
    Marketing and selling                          1,625,000             883,000
    General and administrative                     1,737,000             905,000
                                                ------------        ------------
      Total costs and expenses                    11,836,000           7,495,000
                                                ------------        ------------

Income from operations                               240,000              97,000
Interest income (expense), net                       (51,000)             40,000
Other income (expense), net                           (9,000)            (10,000)
                                                ------------        ------------

Income before income taxes                           180,000             127,000
Provision for income taxes                           (20,000)               --
                                                ------------        ------------

Net income                                      $    160,000        $    127,000
                                                ============        ============


Net income per common and
  common equivalent share                       $       0.01        $       0.01
                                                ============        ============

Weighted average common
  and common equivalent shares                    25,122,000          24,171,000
                                                ============        ============
</TABLE>


       See accompanying notes to these consolidated financial statements.

                                        2
<PAGE>   5
                              IDENTIX INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                              -------------------------------
                                                                  1996               1995
                                                              -----------        -----------
<S>                                                           <C>                <C>
Cash flows from operating activities:
   Net income                                                 $   160,000        $   127,000
Adjustments to reconcile net income to net cash used
   for operating activities:
   Depreciation and amortization                                  456,000            307,000
   Amortization of deferred maintenance revenue                  (147,000)           (69,000)
   Changes in assets and liabilities:
      Accounts receivable                                      (3,058,000)        (1,307,000)
      Inventories                                                 792,000           (329,000)
      Prepaid expenses and other assets                          (288,000)            98,000
      Accounts payable                                           (569,000)           252,000
      Accrued compensation                                        (83,000)           (16,000)
      Other accrued liabilities                                   254,000            (53,000)
      Deferred maintenance revenue                                123,000             72,000
                                                              -----------        -----------

Net cash used for operating activities                         (2,360,000)          (918,000)
                                                              -----------        -----------

Cash flows used for investing activities:
   Capital expenditures                                          (629,000)          (334,000)
   Additions to intangibles and other assets                     (245,000)           (96,000)
   Cash received from acquisition                                    --               24,000
                                                              -----------        -----------

Net cash used for investing activities                           (874,000)          (406,000)
                                                              -----------        -----------

Cash flows from financing activities:
   Borrowings under bank lines of credit                        6,178,000          4,031,000
   Payments under bank lines of credit                         (3,726,000)        (3,994,000)
   Borrowings under long-term note                                   --              206,000
   Principal payments on long-term note                           (27,000)           (12,000)
   Proceeds from sale of common stock and warrants, net             7,000          4,076,000
   Other, net                                                       2,000               --
                                                              -----------        -----------

Net cash provided by financing activities                       2,434,000          4,307,000
                                                              -----------        -----------

Effects of exchange rate changes on cash
  and cash equivalents                                             24,000               --
                                                              -----------        -----------

Net increase (decrease) in cash and cash equivalents             (776,000)         2,983,000

Cash and cash equivalents at beginning of period                  981,000          3,842,000
                                                              -----------        -----------

Cash and cash equivalents at end of period                    $   205,000        $ 6,825,000
                                                              ===========        ===========
</TABLE>




       See accompanying notes to these consolidated financial statements.

                                        3
<PAGE>   6
                              IDENTIX INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

         These accompanying consolidated financial statements 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 period have been included. These consolidated financial
         statements should be read in conjunction with the audited consolidated
         financial statements and notes thereto for the fiscal year ended June
         30, 1996 included in the Company's Form 10-K. The results of operations
         for the three months ended September 30, 1996 are not necessarily
         indicative of results to be expected for the entire fiscal year, which
         ends on June 30, 1997.

         The consolidated financial statements include the accounts of Identix
         Incorporated (the "Company") and its wholly owned subsidiaries: ANADAC,
         Inc. ("ANADAC"), Fingerscan Pty Limited ("Fingerscan") which was
         acquired on March 26, 1996, and Innovative Archival Solutions, Inc.
         ("IAS") which was acquired on June 30, 1996. Identix accounted for the
         acquisition of Fingerscan as a purchase. Identix accounted for the
         acquisition of IAS as a pooling of interests. Accordingly, the
         consolidated balance sheet at September 30, 1995 and the consolidated
         statement of operations and consolidated statement of cash flows for
         the three month period from July 1, 1995 to September 30, 1995 have
         been restated to include the accounts and operations of IAS. All
         significant intercompany balances and transactions have been eliminated
         in consolidation.

2.       EFFECT OF THE IAS ACQUISITION ON THE CONSOLIDATED STATEMENT OF 
         OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995

         A summary of the effects of the acquisition of IAS, which was
         accounted for as a pooling of interests, on the consolidated 
         statement of operations for the Company for the three months ended 
         September 30, 1995 is as follows:

<TABLE>
<CAPTION>
                                           SEPTEMBER 30, 1995
                                           ------------------
                                                        AS PREVIOUSLY
                                        COMBINED          REPORTED
                                        --------        --------------
<S>                                   <C>               <C>
Total revenues                        $ 7,592,000       $ 7,513,000
Net income                            $   127,000       $   124,000
Net income per common and
  common equivalent share             $      0.01       $      0.01
Weighted average common and
  common equivalent shares             24,171,000        24,016,000
</TABLE>




3.       INVENTORIES

         Inventories are stated at the lower of cost (determined on the
         first-in, first-out cost method) or market. Inventories consisted of
         the following:
<TABLE>
<CAPTION>
                                   SEPTEMBER 30,      JUNE 30,
                                       1996             1996
                                   ------------     ------------
<S>                                 <C>              <C>
Purchased parts and materials       $1,923,000       $2,869,000
Work-in-process                        977,000          429,000
Finished goods                         772,000        1,166,000
                                    ----------       ----------
                                    $3,672,000       $4,464,000
                                    ==========       ==========
</TABLE>

                                       4
<PAGE>   7
4.       CONTINGENT LIABILITIES 

         The Company has been named as a defendant in a class action lawsuit
         which was filed in October 1996 in the United States District Court for
         the Northern District of California. Certain executive officers of the
         Company are also named as defendants. The plaintiff purports to
         represent a class of all persons who purchased the Company's common
         stock between January 31, 1996 and August 26, 1996 (the "Class
         Period"). The complaint alleges claims under the federal securities
         laws. The plaintiff alleges that the Company and certain of its 
         executive officers made false and misleading statements regarding 
         the Company that caused the market price of its common stock
         to be "artificially inflated" during the Class Period. The complaint
         does not specify the amount of damages sought. The Company and its 
         officers deny the allegations and will vigorously defend against 
         this action.

         The Company is a defendant in a patent infringement lawsuit related to
         the Company's TouchPrint 600 and 900 products filed against the Company
         by a competitor. TouchPrint is a "live-scan" system used by law
         enforcement agencies to scan and capture high quality fingerprint
         images. The lawsuit has no implication for any other Identix products.
         The Court has granted the Company's motion that the TouchPrint 600 does
         not infringe the patent. The remaining issue in the case is whether the
         Company's TouchPrint 900 product, which is the predecessor of the
         TouchPrint 600 and is no longer in production, infringes the patent.
         The Company is defending this matter vigorously and believes that it is
         unlikely that the outcome of this lawsuit will have a material adverse
         effect on the Company's financial position and results of operations.



                                        5
<PAGE>   8
                              IDENTIX INCORPORATED
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Identix Incorporated ("Identix" or "the Company") designs, develops,
manufactures and markets two categories of products for security, anti-fraud,
law enforcement and other applications: (i) biometric identity verification
("Bio-ID") products that identify an individual through the unique biological
characteristics of a fingerprint and (ii) biometric imaging products that
capture forensic quality fingerprint images directly from an individual's
fingers for law enforcement and other applications. The Company's principal
Bio-ID products are TouchNet II*, TouchSafe II*, TouchLock II*, TouchClock II*
and TouchBlock*. The Company's principal biometric imaging products are
TouchPrint 600*, TouchView II*, I3 Workstation* and DocuColor*. The Company
provides information technology, engineering and management consulting services
to private and public sector clients through a wholly owned subsidiary, ANADAC,
Inc. ("ANADAC"). ANADAC's services support the development, installation,
integration, and operation of hardware and software technology solutions,
including Identix products, for a variety of client operating environments.

On March 26, 1996, the Company acquired Fingerscan Pty Limited ("Fingerscan"), a
privately-held Australian-based company that designs and markets Bio-ID
products. Fingerscan had been a long-standing Identix OEM partner integrating
Identix fingerprint identification technology into Fingerscan's fingerprint
identity and verification products and systems. The acquisition was accounted
for as a purchase. Accordingly, the Company's financial statements include the
results of Fingerscan from the date of acquisition.

On June 30, 1996, the Company acquired Innovative Archival Solutions, Inc.
("IAS"), a privately-held company which provides fingerprinting services using
the Company's biometric imaging products. The acquisition was accounted for as a
pooling of interests. Accordingly, the Company's fiscal 1996 consolidated
financial statements include the accounts and operations of IAS. For the periods
prior to fiscal 1996, the effects of the combination with IAS were not
significant, and the Company has not restated those years to include the
accounts and operations of IAS. On October 1, 1996, IAS was merged into Identix.
The business of IAS is now being conducted as the Company's Fingerprint Services
Division.

The statements in this report 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 "Factors That May Affect Future Results, Events, or
Performance" below. Readers are cautioned not to place undo reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS

Revenues for the three month period ended September 30, 1996 were $12,076,000
compared to $7,592,000 for the same period in the prior fiscal year. The
increase in revenues of 59% for the three month period ended September 30, 1996
was due to increases in both the Company's products business revenues and
services business revenues.



-----------------------------
(*) The Company's has adopted TouchNet II(TM), TouchSafe II(TM), TouchLock 
II(TM), TouchClock II(TM), TouchBlock(TM), TouchPrint 600(TM), TouchView 
II(TM), I3 Workstation(TM) and DocuColor(TM) as trademarks.

                                        6
<PAGE>   9
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

The Company's net product revenues were $6,376,000 for the three month
period ended September 30, 1996 compared to $3,165,000 for the same period in
the prior fiscal year. The increase in net product revenues of 101% was due to
(i) increased shipments of the Company's TouchPrint products, (ii) the
inclusion of Fingerscan revenues which were generated from the sale of Bio-ID
products, and (iii) an increase in revenues generated by the Company's
Fingerprint Services Division. International sales accounted for $1,265,000 or
20% of the Company's net product revenues for the three month period ended
September 30, 1996 compared to $218,000 or 7% for the same period in the prior
fiscal year. The Company expects international sales to continue to represent a
significant portion of net product revenues, although the percentage may
fluctuate from period to period. The Company's international sales are
denominated in U.S. dollars except for sales by Fingerscan which are
denominated in Australian dollars. To date, transactions conducted in
currencies other than U.S. dollars have not presented significant exchange
exposure. Accordingly, the Company has not entered into any hedging
transactions. The Company monitors its foreign currency exchange exposure and
will take appropriate action to reduce foreign exchange risk, if significant.
One non-U.S. Government customer accounted for 16% of the Company's total
revenues for the three month period ended September 30, 1996 and a different
non-U.S. Government customer accounted for 15% of the Company's total revenues
for the three month period ended September 30, 1995.

The Company's services revenues were $5,700,000 for the three month period ended
September 30, 1996 compared to $4,427,000 for the same period in the prior
fiscal year. The increase in services revenues of 29% for the three month period
ended September 30, 1996 was due to increased contract revenues from both U.S.
Government and commercial clients. The majority of the Company's services
revenues are generated from contracts with the U.S. Government, principally the
Department of Defense ("DOD"). Revenues from the DOD and from other U. S.
Government agencies for the three month period ended September 30, 1996
accounted for 76% of the Company's total services revenues compared to 77% of
the Company's total services revenues for the same period in the prior fiscal
year.

The Company's services business generates a significant amount of its revenues
from cost plus fixed fee ("CPFF") contracts, which accounted for approximately
45% of its services revenues for both the three month period ended September 30,
1996 and the comparable period in the prior fiscal year. CPFF contracts provide
for the reimbursement of allowable costs, including indirect costs plus a fee or
profit. The Company's services business also generates revenue from
time-and-materials ("T&M") contracts and from firm fixed-price ("FFP")
contracts. During the three month periods ended September 30, 1996 and September
30, 1995, the Company derived approximately 34% and 43% of its services revenues
from T&M and FFP contracts, respectively. T&M contracts typically provide for
payment of negotiated hourly rates for labor incurred plus reimbursement of
other allowable direct and indirect costs. 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. In addition, 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.

Gross margin on net product revenues was 47% for the three month period ended
September 30, 1996 as compared to 47% for the same period in the prior fiscal
year.

Gross margin on services revenues was 18% for the three month period ended
September 30, 1996 as compared to 17% for same period in the prior fiscal year.


                                        7
<PAGE>   10
IDENTIX INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .
        
Research, development and engineering expenses were $452,000 or 7% of
net product revenues for the three month period ended September 30, 1996,
compared to $336,000 or 11% for the same period in the prior fiscal year. In
addition, for the three month periods ended September 30, 1996 and September
30, 1995, research, development and engineering expenditures funded by
customers were $125,000 and $29,000, respectively. The increase in research,
development and engineering expenses in absolute dollars was primarily due to
the inclusion of research, development and engineering expenses incurred by
Fingerscan to develop and maintain certain Bio-ID products. The Company
believes that investment in research and development is critical to maintaining
a strong technological position in the industry and therefore expects research,
development and engineering expenses to continue to increase in absolute
dollars in the future fiscal 1997 quarters.

Marketing and selling expenses were $1,625,000 or 13% of total revenues
for the three month period ended September 30, 1996, compared to $883,000 or
12% of total revenues for the same period in the prior fiscal year. The
increase in marketing and selling expenses was primarily due to the inclusion
of Fingerscan's marketing and selling expenses and increased staffing and
expenses (i) to promote the Company's products and services, (ii) to expand its
customer service organization and (iii) to expand international sales and
distribution.

General and administrative expenses were $1,737,000 or 14% of total
revenues for the three month period ended September 30, 1996, compared to
$905,000 or 12% of total revenues for the same period in the prior fiscal year.
The increase in general and administrative expenses was primarily due to (i)
litigation reserves and expenses of $328,000 related to a patent infringement
lawsuit filed by a competitor and a class action lawsuit filed against the
Company (see Note 4 of Notes to Consolidated Financial Statements), (ii) the
additional administrative expenses related to the operations of Fingerscan and
(iii) an increase in staffing and other related administrative expenses.

Net interest expense was $51,000 for the three month period ended September 30,
1996 compared to net interest income of $40,000 for the same period in the prior
fiscal year. The difference was due to increased borrowing under the Company's
lines of credit and lower cash balances for temporary investment during the
three month period ended September 30, 1996 compared to the same period in the
prior fiscal year.

Other expense was $9,000 for the three month period ended September 30, 1996
compared to $10,000 for the same period in the prior fiscal year.

During the three month period ended September 30, 1996, the weighted average
interest rate paid by the Company on its line of credit (the "Identix Line of
Credit") was 8.75%. The weighted average interest rate paid by ANADAC on its
bank line of credit (the "ANADAC Line of Credit") during the three month period
ended September 30, 1996 was 8.25%.

The provision for income taxes consists primarily of federal alternative minimum
tax and state taxes. The rate is substantially below the federal statutory rate
due to the utilization of federal net operating loss carryforwards for which no
benefit has previously been taken.

LIQUIDITY AND CAPITAL RESOURCES

The Company financed its operations during the three months ended September 30,
1996 primarily from its existing working capital at June 30, 1996 and borrowings
under the Identix Line of Credit and the ANADAC Line of Credit. As of September
30, 1996, the Company's principal sources of liquidity consisted of $14.6
million of working capital including $205,000 in cash and cash equivalents, the
Identix Line of Credit and the ANADAC Line of Credit.


                                        8
<PAGE>   11
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

At September 30, 1996, the Identix Line of Credit which expired on October 4,
1996, allowed for borrowing up to $3.0 million and bore interest at the bank's
prime rate of interest (8.25% at September 30, 1996) plus 0.5% per annum. Under
this line of credit, the Company could borrow up to 80% of eligible accounts
receivable. At September 30, 1996, $1,700,000 was outstanding and $401,000 was
available under the Identix Line of Credit. On October 4, 1996, the Company
entered into a new line of credit agreement (the "New Identix Line of Credit")
with the same bank which expires October 3, 1997. The New Identix Line of Credit
allows for borrowings up to $5.0 million against qualified accounts receivable
and bears interest at the bank's prime rate of interest. The New Identix Line of
Credit agreement contains financial and operating covenants, including
restrictions on the Company's ability to pay dividends on the Company's common
stock.

The ANADAC Line of Credit is a $4,000,000 bank line of credit secured by
ANADAC's accounts receivable and certain other assets. Under the ANADAC Line of
Credit, ANADAC may borrow against qualified accounts receivable. Amounts drawn
bear interest at the bank's prime rate of interest. The line of credit expired
on October 31, 1996. At September 30, 1996, $2,453,000 was outstanding and
$1,534,000 was available under the ANADAC Line of Credit. The ANADAC Line of
Credit agreement contains financial and operating covenants. ANADAC has
negotiated a new line of credit with the same bank with substantially the same
terms described above. This line of credit expires on October 31, 1997.

Net cash used for operating activities during the three months ended September
30, 1996 was $2,360,000, due primarily to finance increases in accounts
receivable of $3,058,000 and decreases in accounts payable of $569,000. These
uses of cash for operating activities were offset, in part, by a decrease in
inventories of $792,000. The increase in accounts receivable was due primarily
to (i) the Company extending payment terms on a contract with a prime contractor
similar to those that the prime contractor has with its customer, and (ii)
delays in payment on accounts receivable from certain government agencies. The
decrease in inventories was due primarily to sales of certain inventory during
the three month period ended September 30, 1996 that was purchased and/or
produced prior to June 30, 1996 for sales that were expected to occur prior to
June 30, 1996.

Net cash used in investing activities during the three months ended September
30, 1996 was $874,000 comprised of purchases of property and equipment and
additions to intangibles and other assets of $629,000 and $245,000,
respectively.

Net cash provided by financing activities during the three months ended
September 30, 1996 was $2,434,000 related primarily to net borrowings against
the Company's lines of credit.

Identix did not have any material capital expenditure commitments as of
September 30, 1996.

The Company believes that cash flow from operations, together with existing
working capital and two bank lines of credit maintained by the Company, will be
adequate for the Company's cash requirements for fiscal 1997. However, the
Company may need to obtain additional financing prior to June 30, 1997. There
can be no assurance that the Company would be able to obtain such financing or
that the terms of such financing would be favorable to the Company.

FACTORS THAT MAY AFFECT FUTURE RESULTS, EVENTS OR PERFORMANCE

The Company's future operations, financial performance, business and share price
may be affected by a number of factors, including the following, any 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 for the three months ended September 30, 1996, or in other
reports, press releases or other statements issued from time to time.


                                        9
<PAGE>   12
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

FLUCTUATIONS IN QUARTERLY RESULTS; HISTORY OF LOSSES

The Company's quarterly operating results have in the past been, and will
continue to be, subject to significant variations resulting from a number of
factors, many of which are outside of the Company's control and any one of which
could substantially affect the Company's results of operations for any
particular fiscal period. The Company's revenues in any period have been, and in
the near term are expected to be, derived from large orders from a limited
number of customers, which in most cases are government agencies or resellers
who sell the Company's products to government agencies. Accordingly, revenues in
a particular quarter will be dependent upon the timing and size of major orders
and the timing of recognition of revenues from those orders. Government agencies
are subject to political and budgetary constraints and orders from them may be
canceled or substantially delayed or the receipt of revenues or payments
substantially delayed due to political and budgetary processes or other
scheduling delays relating to the contract or bidding process. In addition, the
Company's contracts with local government agencies may be contingent upon
availability of matching funds from state or federal entities. Other factors
which can result in fluctuations in quarterly results of operations include
budgetary and purchasing cycles of government agencies; changes in the mix of
products and services sold; the pricing of existing and future products by the
Company's competitors; the introduction of new or enhanced products by the
Company or its competitors and the market acceptance thereof; expenses related
to, and results of, litigation; percentage of and costs associated with FFP
contracts and T&M contracts; the availability and cost of key components; and
fluctuations in general economic conditions. The Company also may choose to
reduce prices or to increase spending in response to competition or to pursue
new market opportunities, all of which may adversely affect the Company's
business, financial condition and results of operations. Further, the lead time
for ordering parts and materials and building the Company's products can be many
months and the Company orders parts and materials and builds products based on
its forecasted demand for the products. If demand for the Company's products
lags significantly behind the Company's forecasts, the Company runs the risk of
building too large an inventory, which may adversely affect cash flow and may
result in write-offs or write-downs of inventory because of product
obsolescence. Due to the foregoing factors, the Company's operating results may
be below the expectations of public market analysts and investors in some future
quarters, which would likely result in a decline in the trading price of the
Common Stock. The Company believes that period-to-period comparisons of its
results of operations should not be relied upon as indications of future
performance.

At September 30, 1996, the Company had an accumulated deficit of
approximately $30.4 million. The Company experienced net losses in each year
since inception, including a net loss of approximately $3.4 million for the
fiscal year ended June 30, 1996 which included a $4.7 million write-off of
in-process research and development acquired when the Company purchased
Fingerscan on March 26, 1996. There can be no assurance that the Company will
be able to achieve profitability in any future periods.

CURRENTLY PENDING LITIGATION

The Company is currently a defendant in a securities class action lawsuit and
in a patent infringement lawsuit (see Note 4 of Notes to Consolidated Financial
Statements). The Company is defending these matters vigorously. However, there
can be no assurance that the Company will be successful in defending such
actions. Adverse results from such litigation would have a material adverse
effect on the Company's business, financial condition and results of operations.
Even if the Company is successful in its defense of both of these actions, the
costs of such defense have been, and may continue to be, substantial and the
lawsuits have diverted the attention of the Company's management and technical
personnel.

                                       10
<PAGE>   13
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

DEPENDENCE UPON NEW AND UNCERTAIN MARKETS; UNCERTAINTY OF MARKET ACCEPTANCE

Substantially all of the Company's product revenues to date have been, and for
the foreseeable future are anticipated to be, derived from Bio-ID products and
biometric imaging products. These products represent new technologies which have
not gained widespread commercial acceptance. In particular, Bio-ID products
represent a new approach to identity verification which has only been used in
very limited applications to date. The expansion of the market for the Company's
products depends on a number of factors, including the cost and reliability of
the Company's products and products of competitors, customers' perception of the
perceived benefits of these products, public perceptions of the intrusiveness of
these products and the manner in which agencies are using the fingerprint
information collected, public confidence as to confidentiality of private
information, customers' satisfaction with the Company's products, and publicity
regarding these products. Public objections have been raised to the use of
biometric imaging products for some applications on civil liberties grounds. The
Company's future success is dependent upon the development and expansion of
markets for Bio-ID products and biometric imaging products both domestically and
internationally. In addition, even if markets develop for Bio-ID products and
additional markets develop for biometric imaging products, there can be no
assurance that the Company's products will gain wide market acceptance. A number
of factors may limit the market acceptance of the Company's products, including
the performance and price of the Company's products compared to competitive
products or technologies, the practicalities of developing the infrastructure
necessary to support certain Bio-ID applications such as ATMs and point-of-sale
applications, the nature of technological innovations and new product
development activities by the Company and its competitors, and the extent of
marketing efforts by the Company's collaborators or partners. If the markets for
the Company's products fail to develop or develop more slowly than anticipated
or if the Company's products fail to gain wide market acceptance, the Company's
business, financial condition and results of operations would be materially and
adversely affected.

COMPETITION AND TECHNOLOGICAL CHANGE

The markets for Bio-ID products and biometric imaging systems are extremely
competitive and are characterized by rapid technological change, both as a
result of technical developments exploited by competitors, the changing
technical needs of the customers and frequent introductions of new features. In
addition, the Company is experiencing intense price competition in the law
enforcement market and, to a lesser extent, price competition in the markets
where the Company sells its Bio-ID products. The Company expects competition to
increase as other companies introduce additional and more competitive products.
In order to compete effectively in this environment, the Company must
continually be able to develop and market new and enhanced products and market
those products at competitive prices. There can be no assurance that the Company
will be able to make the technological advances necessary to compete
successfully in its products business. Some of the Company's present and
potential competitors have financial, marketing and research resources
substantially greater than those of the Company. Existing and new competitors
may enter or expand their efforts in the Company's product markets, or develop
new products to compete against the Company's products. No assurance can be
given that the Company's competitors will not develop new technologies or
enhancements to existing products or introduce new products that will offer
superior price or performance features or that new products or technologies will
not render obsolete the products of the Company. For example, other companies
are currently developing other methods of biometric identification such as hand
geometry, voice recognition, signature recognition or retina scanning, which
could significantly reduce the potential market for the Company's products if
successfully developed and commercialized. Some of these products have been
brought to market. The Company believes that to remain competitive in the 
future it will need to invest increasing financial resources in research and 
development. The Company's Bio-ID products also face competition from 
non-biometric technologies such as traditional key, card and surveillance
systems, PINs, passwords and similar traditional verification methods.

In its services business, the Company faces substantial competition from
professional services providers of all sizes in the government professional
services market. ANADAC is increasingly being required to bid on FFP and similar
contracts that result in greater performance risk to ANADAC. If ANADAC is not
able to maintain a competitive cost structure, support specialized market
niches, retain its highly qualified personnel or align with technology leaders,
its ability to compete successfully will be materially and adversely affected.

                                       11
<PAGE>   14
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

DEPENDENCE ON NEW PRODUCT INTRODUCTIONS

The Company's future success will depend upon its ability to address the needs
of the market by enhancing its current products and by developing and
introducing new products on a timely basis that keep pace with technological
developments and emerging industry standards (including FBI accreditation
standards), respond to evolving customer requirements and achieve market
acceptance. The development of new, technologically-advanced products and
product enhancements is a complex and uncertain process requiring high levels of
innovation, as well as the accurate anticipation of technological and market
trends. Any failure by the Company to anticipate or adequately respond to
technological developments or end user requirements, or any significant delays
in product development or introduction, could result in a loss of
competitiveness or a decline in revenue. There can be no assurance that the
Company will be successful in developing and marketing product enhancements or
new products on a timely basis if at all, that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction and sale of these products, or that any of its new products and
product enhancements will adequately meet the requirements of the marketplace
and achieve market acceptance. If the Company is unable, for technological or
any other reason, to develop, introduce and sell its products in a timely
manner, the Company's business, financial condition and results of operations
would be materially and adversely affected. In addition, because a number of the
Company's biometric imaging products and Bio-ID products are incorporated into
systems marketed by other companies, or are co-marketed together with other
products or services sold by other companies, the failure to introduce products
in a timely manner may cause such companies to seek alternative suppliers or
marketing partners. From time to time, the Company or its present or future
competitors may announce new products, capabilities or technologies that have
the potential to replace the Company's existing products. There can be no
assurance that announcements of currently planned or other new products will not
cause customers to delay or alter their purchasing decisions in anticipation of
such products, which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, new
product introductions may contribute to fluctuations in quarterly operating
results or result in the early obsolescence of the Company's products, because
customers may forego ordering the Company's existing products. If the Company's
new products have reliability or quality problems, the Company may experience
reduced orders, higher manufacturing costs, delays in collecting accounts
receivable and additional service and warranty expense.

UNCERTAINTY RELATED TO CONTRACTS FOR SERVICES WITH GOVERNMENT AGENCIES

During the fiscal year ended June 30, 1996 and the three month period
ended September 30, 1996, the Company's services business derived approximately
75% and 76%, respectively, of its revenue from contracts relating to the DOD
and other U.S. Government agencies. Because of downsizing in certain government
programs, the Company has been expanding its services business to other
targeted government agencies and commercial organizations, but there can be no
assurance that the results of these efforts will be substantial enough to
offset any decline in revenue from government programs that have been
downsizing. There can be no assurance that the Company's services business will
not be adversely affected by further downsizing in the government agencies to
which the Company currently provides services.

During the fiscal year ended June 30, 1996 and the three month period
ended September 30, 1996, the Company derived approximately 41% and 34%,
respectively, of services revenues from T&M and FFP contracts. T&M
contracts typically provide for payment of negotiated hourly rates for labor
incurred plus reimbursement of other allowable direct and indirect costs. 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. The Company assumes greater performance risk on FFP and T&M contracts
and the failure to estimate accurately 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
such overruns for any FFP and T&M contracts it is awarded. In addition,
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. If such revenues are audited,
there can be no assurance that no adjustments would be made and that such
adjustments would not have a material adverse effect on the Company's business,
financial condition and results of operations.

                                       12
<PAGE>   15
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

OTHER PUBLIC AGENCY CONTRACT CONSIDERATIONS

A majority of the Company's revenues are derived from the sale of products and
services to governmental agencies or OEMs who sell products to government
agencies. Government agencies frequently require provisions in contracts that
are not standard in private commercial transactions, such as bonding
requirements and provisions permitting the purchasing agency to cancel the
contract without penalty if funding for the contract is no longer available or
is not obtained. As public agencies, the Company's prospective customers are
also subject to public agency contract requirements which vary from jurisdiction
to jurisdiction. Future sales to public agencies will depend on the Company's
ability to meet public agency contract requirements, certain of which may be
onerous or even impossible for the Company 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
contain provisions that permit cancellation in the event that funds are
unavailable to the public agency. There can be no assurance that the Company
will be awarded any of the contracts for which its products are bid or, if
awarded, that substantial delays or cancellations of purchases will not result
from protests initiated by losing bidders.

DEPENDENCE ON COLLABORATIVE PARTNERS FOR PRODUCT DISTRIBUTION

The Company's strategy for the distribution of certain of its products requires
entering into various arrangements with corporate collaborators. These
agreements often are of short duration, terminable with little or no notice, and
subject to periodic amendment. Although the Company believes that its
collaborative partners and the systems integrators with which it works have an
economic motivation to promote or use the Company's products, the amount and
timing of resources to be devoted to these activities are not within the control
of the Company. There can be no assurance that such parties will actively
promote the Company's products or pursue installations which use the Company's
equipment, that any distribution or other arrangements with the Company will not
be terminated or renegotiated or that the Company will derive any revenues from
such arrangements. The Company intends to continue to seek collaborative
arrangements to commercialize certain of its products. There can be no assurance
that the Company will be able to negotiate acceptable collaborative arrangements
in the future or that current or future collaborative arrangements will be
successful.

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

Approximately 20% and 13% of the Company's net product revenues were for foreign
installations for the three month period ended September 30, 1996 and the fiscal
year ended June 30, 1996, respectively. A key component of the Company's
strategy is to continue expansion into international markets. There can be no
assurance that the Company will be able to market, sell and deliver its products
in these foreign countries. In addition to the uncertainty as to the Company's
ability to expand its international presence, there are certain risks inherent
in foreign operations, including longer accounts receivable payment cycles in
certain countries, general economic conditions in each country, seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world, delays in or prohibitions on exporting products 
resulting from export restrictions for certain technologies (such as encryption
technology), fluctuations in foreign currencies, fluctuations in the U.S. 
Dollar which can increase the sales price of the Company's products in local 
currencies, loss of revenue, property and equipment from expropriation, 
nationalization, war, insurrection, terrorism and other political risks, the 
overlap of different tax structures, risks of increases in taxes and other 
government fees and involuntary renegotiation of contracts with foreign 
governments. The Company is also at risk from changes in foreign and domestic 
laws, regulations and policies governing foreign operations. There can be no 
assurance that laws or administrative practice relating to taxation, foreign 
exchange or other matters of countries within which the Company operates or 
will operate will not change. Any such change could have a material adverse 
effect on the Company's business, financial condition and results of 
operations. In addition, the laws of foreign countries treat the protection of
proprietary rights differently from, and may not protect the Company's 
proprietary rights to the same extent as, laws in the United States.

                                       13
<PAGE>   16
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

DEPENDENCE ON LARGE ORDERS BY CUSTOMERS

The Company's revenues have principally consisted, and will continue to consist
principally, of large orders from a limited number of customers. While the
individual customers may vary from period to period, the Company is nevertheless
dependent upon these large orders for a substantial portion of its total
revenues. There can be no assurance that the Company will be able to obtain
large orders on a consistent basis. The Company's inability to obtain sufficient
large orders would have a material adverse effect on the Company's business,
financial condition and results of operations. Moreover, the timing and shipment
of such orders may cause the operating results of the Company in any given
quarter to differ from projections of securities analysts, which could adversely
affect the trading price of the Company's common stock. Losses arising from
customer disputes regarding shipping schedules, product condition or
performance, or the Company's inability to collect accounts receivable from any
major customer could also have a material adverse effect on the Company's
business, financial condition and results of operations.

Orders for the Company's biometric imaging products are often subject to delays
associated with the lengthy approval processes that typically accompany large
capital expenditures by government agencies. The Company's total revenues depend
in significant part upon the decision of a government agency to adopt and
integrate the Company's systems, which often involves a significant capital
commitment as well as significant future support costs. Similar delays may also
be experienced from government agencies procuring the Company's services. The
Company often has a lengthy sales cycle while the customer evaluates and
receives approvals for the purchase of the Company's products or services. Any
significant failure by the Company to receive an order after expending
significant funds and effort could have a material adverse effect on its
business, financial condition and results of operations. It may be difficult to
accurately predict the sales cycle of any large order. In the event one or more
large orders fail to be shipped as forecasted for a fiscal quarter, the
Company's total revenues and operating results for such quarter could be
materially and adversely affected. In addition, even if the Company receives
such an order, the order may be contingent upon availability of matching funds
from state or federal entities or may be canceled or receipt of revenues may be
substantially delayed due to political and budgetary processes.

RISK OF PRODUCT DEFECTS AND FAILURE TO MEET PERFORMANCE CRITERIA

Complex products such as those offered by the Company may contain undetected or
unresolved defects or may fail initially to meet customers' performance criteria
when first introduced or as new versions are released. There can be no assurance
that, despite testing by the Company, defects or performance flaws will not be
found in new products or new versions of products following commercial release
or that performance failures will not result, causing loss of market share,
delay in or loss of market acceptance, additional warranty expense or product
recall. In addition, the failure of products to meet performance criteria could
result in delays in recognition of revenue and higher operating expenses during
the period required to correct such defects. There is a risk, that for
unforeseen reasons, the Company may be required to repair or replace a
substantial number of products in use or to reimburse persons for products that
fail to work or meet strict performance criteria. Any such occurrence could have
a material adverse effect on the Company's business, financial condition and
results of operations. The Company does carry product liability insurance, but
there can be no assurance that existing coverage is adequate for current
operations or will be adequate for future operations. The Company's business
could be adversely affected by the assertion of product liability claims.

PROTECTION OF PROPRIETARY TECHNOLOGY

The Company's ability to compete effectively will depend in part on its ability
to maintain the proprietary nature of its technology, products and manufacturing
processes. The Company principally relies upon patent, copyright, trade secret
and contract law to establish and protect its proprietary rights. The success of
the Company's products business will depend in part on its proprietary
technology and the Company's protection of such technology. The Company holds
United States and foreign patents covering certain of its products and
technologies and has other patent applications pending. No assurance can be
given that the claims allowed on any patents held by the Company will be
sufficiently broad to protect the Company's technology. In addition, no
assurance can be given that any patents issued to the Company will not be
challenged,

                                       14
<PAGE>   17
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .


invalidated or circumvented or that the rights granted thereunder will
provide competitive advantages to the Company. The loss of patent protection on
the Company's technology or the circumvention of its patent protection by
competitors could have a material adverse effect on the Company's ability to
compete successfully in its products business. There can be no assurance that
any existing or future patent applications by the Company will result in issued
patents with the scope of the claims sought by the Company, or at all, that any
current or future issued or licensed patents, trade secrets or know-how will
afford sufficient protection against competitors with similar technologies or
processes, or that any patents issued will not be infringed upon or designed
around by others. In addition, there can be no assurance that others will not
independently develop proprietary technologies and processes which are the same
as or substantially equivalent or superior to those of the Company. Further,
there can be no assurance that the Company has not or will not infringe prior
or future patents owned by others, that the Company will not need to acquire
licenses under patents belonging to others for technology potentially useful or
necessary to the Company, or that such licenses will be available to the
Company, if at all, on terms acceptable to the Company. Litigation, which could
result in substantial cost to the Company and diversion of management
attention, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of other parties' proprietary rights.
For example, the Company is engaged in litigation with Digital Biometrics
Incorporated ("DBI") regarding an alleged infringement by the Company of a DBI
patent (see Note 4 of Notes to Consolidated Financial Statements). If the
outcome of any such litigation is adverse to the Company, its business could be
adversely affected. To determine the priority of inventions, the Company may
have to participate in interference proceedings declared by the United States
Patent and Trademark Office or oppositions in foreign patent offices, which
could result in substantial cost to the Company and limitations on the scope or
validity of the Company's patents. The Company also relies on trade secrets and
proprietary know-how which it seeks to protect by confidentiality agreements
with its employees and consultants and with third parties. There can be no
assurance that these agreements will not be breached, that the Company will
have adequate remedies for any breach, or that its trade secrets and
proprietary know-how will not otherwise become known or be independently
discovered by others.

RISKS ASSOCIATED WITH MANAGING EXPANSION OF OPERATIONS

The Company has experienced significant growth in recent years and believes that
in order to be successful it must continue to grow rapidly. In order to grow
rapidly, the Company will be required to expand, train and manage its employee
base, particularly skilled technical, marketing and management personnel. Rapid
growth will also require an increase in the level of responsibility for both
existing and new management and will require the Company to implement and
improve operational, financial and management information procedures and
controls. The Company competes with some of the major technology, consulting and
software companies in seeking to attract qualified personnel. There can be no
assurance that the management skills and systems currently in place will be
adequate or that the Company will be able to manage any significant growth it
experiences effectively and to hire or assimilate new personnel necessary to
pursue its growth strategy. Any failure to adequately manage growth could
materially and adversely affect the Company's business, financial condition and
results of operations.

DEPENDENCE UPON SOLE AND LIMITED SOURCES OF SUPPLY; RISKS ASSOCIATED WITH
IMPLEMENTATION OF LARGER SCALE MANUFACTURING CAPABILITIES

Certain of the components included in the Company's products are obtained from a
single source or a limited group of suppliers, the most important of which are
the charge coupled devices and ASICs for the Bio-ID products and the charge
coupled devices for the biometric imaging products. The Company has no long term
agreements with any of its suppliers. Although the Company seeks to reduce
dependence on these sole and limited sources of suppliers, the partial or
complete loss of certain of these sources or the delay in receiving supplies
from these sources could result in delays in manufacturing and shipping of
products to customers and require the incurrence of development and other costs
to establish alternative sources of supply. While the Company attempts to
maintain a few months worth of inventory on sole sourced components, it may take
the Company several months to locate alternative suppliers if required, and/or
to re-tool its products to accommodate components from different suppliers. If
the Company is required to seek alternative suppliers, there can be no assurance
that the Company will be able to obtain such components within the time frames
required by the Company at an affordable cost, or at all. Any delays resulting
from suppliers failing to deliver components on a timely basis in sufficient

                                       15
<PAGE>   18
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

quantities and of sufficient quality or any significant increase in the price of
components from existing or alternative suppliers could have a material adverse
effect on the Company's business, financial condition and results of operations.

Historically, the volume of the Company's production requirements for the law
enforcement and public sectors has not placed significant capacity constraints
on the Company's manufacturing and assembling capabilities. However, as the
Company begins to market its products for potentially larger volume commercial
applications such as time-and-attendance and computer database security, the
Company may be required to fulfill larger orders in a short period of time and
to implement measures to decrease product costs. There can be no assurance that
the Company will be able to scale-up its manufacturing and assembling capacities
to fulfill such orders and to decrease manufacturing costs. Any failure by the
Company to implement higher volume manufacturing or reduce product costs for
commercial applications could have a material adverse effect on the Company's
business, financial condition and results of operations.

RISKS ASSOCIATED WITH ACQUISITIONS

As part of its business strategy, the Company intends to acquire assets and
businesses principally relating to or complementary to its current operations.
The Company acquired Fingerscan in March 1996 and IAS in June 1996. These and
any other acquisitions by the Company will be accompanied by the risks commonly
encountered in acquisitions of companies. Such risks include, among other
things, potential exposure to unknown liabilities of acquired companies or to
acquisition costs and expenses exceeding amounts anticipated for such purposes;
fluctuations in the Company's quarterly and annual operating results due to the
costs and expenses of acquiring and integrating new businesses; the difficulty
and expense of assimilating the operations and personnel of the companies; the
potential disruption of the Company's ongoing business and diversion of
management time and attention; the inability of management to maximize the
Company's financial and strategic position by the successful incorporation of
acquired technology; the maintenance of uniform standards, controls, procedures
and policies; the impairment of relationships with and possible loss of key
employees and customers as a result of changes in management; the incurrence of
amortization expenses if an acquisition is accounted for as a purchase; and
dilution to the shareholders of the Company if the consideration for the
acquisition consists of stock. In addition, the difficulty of integrating
certain companies may be increased by geographic distances. There can be no
assurance that the Company will be successful in overcoming these risks or any
other problems encountered in connection with such acquisitions.

DEPENDENCE UPON KEY PERSONNEL; NEED TO HIRE ADDITIONAL QUALIFIED PERSONNEL

The Company's success will depend upon its ability to retain its current senior
management team and key technical, marketing and sales personnel and its ability
to identify, attract and retain additional highly qualified personnel. The
Company's employees may voluntarily terminate their employment with the Company
at any time, and competition for qualified employees, especially engineers, is
intense. The process of locating additional personnel with the combination of
skills and attributes required to carry out the Company's strategy is often
lengthy. The loss of the services of key personnel, or the inability to attract
additional qualified personnel, could have a material adverse effect on the
Company's business, financial condition and results of operations.

VOLATILITY OF STOCK PRICE

The stock market has from time to time experienced significant price and volume
fluctuations that may be unrelated to the operating performance of particular
companies. In addition, the market price of the Company's common stock, like
the stock prices of many technology companies, has been, and may continue to be,
highly volatile. Variations in quarterly operating results, the timing and
volume of procurements for the Company's products and services, announcements of
technological innovations or new products or services by the Company or by the
Company's competitors, announcements regarding product pricing by the Company or
its competitors, failure of the Company to meet earnings or revenue projections
of market analysts, the commencement of litigation, the developments in or
outcome of any litigation, developments in patent or other proprietary rights,
and economic and other external factors, among other factors, may have a
material adverse effect on the market price of the Company's common stock.

                                       16
<PAGE>   19
IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

SHARE HOLDINGS OF ASCOM HOLDING

As of September 30, 1996, Ascom USA Inc. ("Ascom"), beneficially owned
approximately 22% of the outstanding common stock. This concentration of
ownership may have the effect of delaying or preventing a change in control of
the Company. The Company is a party to a Voting Trust Agreement ("Voting Trust
Agreement") with Ascom whereby Ascom has deposited all of its 5,418,224 shares
of the Company's common stock ("Voting Stock") into a voting trust ("Voting
Trust"). The Trustee has voting control of the Voting Stock. The Voting Trust 
Agreement expires in 2004. Ascom has preemptive rights with respect to 
issuances of the Company's securities and registration rights with respect to 
the securities it holds. The Company's ability to obtain additional financing on
favorable terms in the future may be adversely affected by the existence of
these preemptive rights and registration rights.



                                       17
<PAGE>   20
IDENTIX INCORPORATED

PART II           OTHER INFORMATION

      Item 1.     Legal Proceedings

               The Company has been named as a defendant in a class action
               lawsuit which was filed in October 1996 in the United States
               District Court for the Northern District of California. Certain
               executive officers of the Company are also named as defendants.
               The plaintiff purports to represent a class of all persons who
               purchased the Company's common stock between January 31, 1996
               and August 26, 1996 (the "Class Period"). The complaint alleges
               claims under the federal securities laws. The plaintiff alleges
               that the Company and certain of its executive officers made
               false and misleading statements regarding the Company that
               caused the market price of its common stock to be "artificially
               inflated" during the Class Period. The complaint does not
               specify the amount of damages sought. The Company and its
               officers deny the  allegations and will vigorously defend
               against this action. 
        
               On May 31, 1995, Digital Biometrics, Inc. ("DBI"), a
               competitor, filed a lawsuit in the United States District Court
               in the Northern District of California against the Company
               alleging that certain of the Company's TouchPrint products
               violate a DBI patent and seeking injunctive relief and
               unspecified damages. The lawsuit has no implication for other
               Identix products. The Court has granted the Company's motion
               that the TouchPrint 600 does not infringe the patent. The
               remaining issue in the case is whether the Company's TouchPrint
               900 product, which is the predecessor of the TouchPrint 600 and
               is no longer in production, infringes the patent. The Company is
               defending this matter vigorously and believes that it is
               unlikely that the outcome of this lawsuit will have a material
               adverse effect on the Company's financial position or results of
               operations.


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

                  (a)     Exhibits

                          Exhibit
                          Number       Description

                           10.22    The Fourth Amendment to Lease Agreement
                                    Dated June 15, 1988 for the Company's
                                    corporate offices and manufacturing facility

                           10.23    Security and Loan Agreement between the
                                    Company and Imperial Bank dated October 4,
                                    1996

                           11.1     Statement of Computation of Earnings Per
                                    Share

                           27.1     Financial Data Schedule

                  (b)      On August 27, 1996, the Company filed a report on
                           Form 8-K related to a press release issued on August
                           26, 1996. The press release stated that the Company
                           has made changes in the application of its revenue
                           recognition policy for certain Law Enforcement
                           contracts and has restated its revenues and earnings
                           for its fiscal quarters ended December 31, 1995,
                           March 31, 1996 and June 30, 1996.


                                       18
<PAGE>   21
                              IDENTIX INCORPORATED

                                   SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                     IDENTIX INCORPORATED
                                     November 14, 1996




                                     BY:  /s/James P. Scullion
                                        ----------------------------
                                          James P. Scullion
                                          Executive Vice President,
                                          Chief Financial Officer and Secretary


                                       19


<PAGE>   22
                                 EXHIBIT INDEX
        
        Exhibit
         Number                    Description

         10.22          The Fourth Amendment to Lease Agreement
                        Dated June 15, 1988 for the Company's
                        corporate offices and manufacturing facility

         10.23          Security and Loan Agreement between the
                        Company and Imperial Bank dated October 4,
                        1996

         11.1           Statement of Computation of Earnings Per
                        Share

         27.1           Financial Data Schedule