<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 March 31, 1997 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:

                        24,381,603 shares of Common Stock
                              as of April 30, 1997
<PAGE>   2

                              IDENTIX INCORPORATED

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----

PART I FINANCIAL INFORMATION
<S>    <C>        <C>                                                                             <C>
       Item 1     Financial Statements
                  Consolidated Balance Sheets - March 31, 1997 and June 30, 1996..................  1

                  Consolidated Statements of Operations - three months ended
                    March 31, 1997 and 1996; and nine months ended
                    March 31, 1997 and 1996.......................................................  2

                  Consolidated Statements of Cash Flows - nine months ended
                    March 31, 1997 and 1996.......................................................  3

                  Notes to Consolidated Financial Statements......................................  5

       Item 2     Management's Discussion and Analysis of Financial
                    Condition and Results of Operations...........................................  7


PART II           OTHER INFORMATION............................................................... 20


       Item 1     Legal Proceedings

       Item 6     Exhibits and Reports on Form 8-K

       Signatures ................................................................................ 21
</TABLE>


<PAGE>   3
                                                                       DRAFT # 2
                                                                5/8/97  11:22 AM

                                                            
                              IDENTIX INCORPORATED
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                   MARCH 31,         JUNE 30,
                                                                                     1997              1996
                                                                                -----------------   ----------
                                                                                (UNAUDITED)

ASSETS
    Current assets:
<S>                                                                            <C>                  <C>        
      Cash and cash equivalents                                                $   1,394,000        $   981,000
      Accounts receivable, less allowance for doubtful accounts
        and sales returns of $623,000 and $488,000                                16,526,000         16,331,000
      Inventories                                                                  6,171,000          4,464,000
      Prepaid expenses and other assets                                              527,000            266,000
                                                                                ------------       ------------
         Total current assets                                                     24,618,000         22,042,000

    Property and equipment, net                                                    2,494,000          2,218,000
    Intangibles and other assets                                                   2,924,000          2,847,000
                                                                                ------------       ------------
                                                                                $ 30,036,000       $ 27,107,000
                                                                                ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Notes payable to banks                                                    $  2,795,000       $  1,846,000
      Accounts payable                                                             4,253,000          3,309,000
      Accrued compensation                                                         1,162,000          1,185,000
      Other accrued liabilities                                                      895,000            426,000
      Current portion of long-term debt                                                    -            106,000
      Deferred revenue                                                               625,000            256,000
                                                                                 -----------        -----------
         Total current liabilities                                                 9,730,000          7,128,000

    Deferred revenue                                                                 217,000            293,000
    Long-term debt                                                                         -            127,000
    Other liabilities                                                                 89,000             87,000
                                                                                 -----------        -----------
         Total liabilities                                                        10,036,000          7,635,000
                                                                                 -----------        -----------

    Commitments and contingencies (Note 5)

    Shareholders' equity:
      Common stock, no par; 50,000,000 shares authorized;
         24,381,603 and 24,320,464 shares issued and outstanding                  50,201,000         50,024,000
      Accumulated deficit                                                        (30,187,000)       (30,534,000)
      Cumulative translation adjustment                                              (14,000)           (18,000)
                                                                                ------------       ------------
         Total shareholders' equity                                               20,000,000         19,472,000
                                                                                ------------       ------------
                                                                                $ 30,036,000       $ 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               NINE MONTHS ENDED
                                                       MARCH 31,                        MARCH 31,
                                            ------------------------------  ----------------------------
                                                 1997             1996          1997            1996
                                                 ----             ----          ----            ----

Revenues:
<S>                                         <C>             <C>             <C>             <C>         
    Net product revenues                    $  5,690,000    $  2,343,000    $ 18,352,000    $  7,663,000
    Services revenues                          6,567,000       6,444,000      17,558,000      16,071,000
                                            ------------    ------------    ------------    ------------
      Total revenues                          12,257,000       8,787,000      35,910,000      23,734,000
                                            ------------    ------------    ------------    ------------

Costs and expenses:
    Cost of product revenues                   2,657,000       1,206,000       9,201,000       4,044,000
    Cost of services revenues                  5,096,000       5,215,000      13,607,000      13,153,000
    Research, development and engineering        635,000         359,000       1,663,000       1,048,000
    Marketing and selling                      2,022,000       1,198,000       5,609,000       3,127,000
    General and administrative                 1,734,000       1,124,000       5,376,000       3,050,000
    Write-off of acquired in-process
      research and development                        --       4,723,000              --       4,723,000
                                            ------------    ------------    ------------    ------------

      Total costs and expenses                12,144,000      13,825,000      35,456,000      29,145,000
                                            ------------    ------------    ------------    ------------

Income (loss) from operations                    113,000      (5,038,000)        454,000      (5,411,000)
Interest income (expense), net                   (56,000)         15,000        (170,000)         75,000
Other income, net                                 94,000         202,000          93,000         185,000
                                            ------------    ------------    ------------    ------------
Income (loss) before income taxes                151,000      (4,821,000)        377,000      (5,151,000)
Provision for income taxes                        (6,000)             --         (30,000)             --
                                            ------------    ------------    ------------    ------------
Net income (loss)                           $    145,000    $ (4,821,000)   $    347,000    $ (5,151,000)
                                            ============    ============    ============    ============

Net income (loss) per common and
  common equivalent share                   $       0.01    $      (0.21)   $       0.01    $      (0.22)
                                            ============    ============    ============    ============

Weighted average common
  and common equivalent shares                25,214,000      23,513,000      25,123,000      23,227,000
                                            ============    ============    ============    ============
</TABLE>












       See accompanying notes to these consolidated financial statements.

                                       2
<PAGE>   5


                              IDENTIX INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                  FOR THE NINE MONTH PERIOD
                                                                        ENDED MARCH 31,
                                                               ------------------------------
                                                                    1997            1996
                                                               --------------  -------------
Cash flows from operating activities:
<S>                                                            <C>             <C>          
   Net income (loss)                                           $    347,000    $ (5,151,000)
Adjustments to reconcile net income (loss) to net
   cash provided (used) for operating activities:
   Depreciation and amortization                                  1,436,000       1,079,000
   Amortization of deferred revenue                                (636,000)       (286,000)
   Write-off of acquired in-process research and development                      4,723,000
   Changes in assets and liabilities:
      Accounts receivable                                          (195,000)     (2,278,000)
      Inventories                                                (1,707,000)     (3,775,000)
      Prepaid expenses and other assets                            (261,000)        302,000
      Accounts payable                                              944,000       2,461,000
      Accrued compensation                                          (23,000)        (32,000)
      Other accrued liabilities                                     469,000        (207,000)
      Deferred revenue                                              929,000         234,000
                                                               ------------    ------------

Net cash provided (used) for operating activities                 1,303,000      (2,930,000)
                                                               ------------    ------------

Cash flows used for investing activities:
   Capital expenditures                                          (1,092,000)     (1,477,000)
   Additions to intangibles and other assets                       (697,000)       (506,000)
   Cash received in acquisitions                                         --         180,000
                                                               ------------    ------------

Net cash used for investing activities                           (1,789,000)     (1,803,000)
                                                               ------------    ------------

Cash flows from financing activities:
   Borrowings under bank lines of credit                         14,149,000      10,446,000
   Payments under bank lines of credit                          (13,200,000)    (10,460,000)
   Borrowings under long-term note                                       --         318,000
   Principal payments on long-term note                            (233,000)        (58,000)
   Proceeds from sale of common stock and warrants, net             177,000       4,905,000
   Other, net                                                         2,000          (3,000)
                                                               ------------    ------------

Net cash provided by financing activities                           895,000       5,148,000
                                                               ------------    ------------

Effects of exchange rate changes on cash
  and cash equivalents                                                4,000          (1,000)
                                                               ------------    ------------

Net increase in cash and cash equivalents                           413,000         414,000

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

Cash and cash equivalents at end of period                     $  1,394,000    $  4,256,000
                                                               ============    ============
</TABLE>


See accompanying notes to these consolidated financial statements.

                                       3
<PAGE>   6
CONSOLIDATED STATEMENTS OF CASH FLOWS -- CONTINUED...

Supplemental disclosures of cash flow information:

Non-cash investing and financing activities:

On March 26, 1996, the Company acquired Fingerscan Pty Ltd ("Fingerscan")
pursuant to a share purchase agreement whereby Fingerscan became a wholly owned
subsidiary of the Company. The acquisition was accounted for as a purchase as
follows: 

<TABLE>
<CAPTION>
<S>                                                   <C>
Cash...........................................        $  156,000
Accounts receivable............................           152,000
Inventory......................................           234,000
Property and equipment, net....................            23,000
Intangibles and other assets...................           581,000
In-process research and development............         4,723,000
                                                       ----------
                                                       $5,869,000
                                                       ==========
Accounts payable and other accruals............        $  393,000
Accrued compensation...........................            17,000
Common stock...................................         5,459,000
                                                       ----------
                                                       $5,869,000
                                                       ==========
</TABLE>

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


                                       4

<PAGE>   7


IDENTIX INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of Identix
     Incorporated (the "Company") and its wholly owned subsidiaries: ANADAC,
     Inc. ("ANADAC") and Fingerscan Pty Limited ("Fingerscan") which was
     acquired on March 26, 1996. The Company accounted for the acquisition of
     Fingerscan as a purchase. In addition, the Company acquired Innovative
     Archival Solutions, Inc. ("IAS") on June 30, 1996. On October 1, 1996, IAS
     was merged into Identix. The Company accounted for the acquisition of IAS
     as a pooling of interests. Accordingly, the consolidated statement of
     operations for the three month and nine month periods ended March 31, 1996
     and the consolidated statement of cash flows for the nine month period
     ended March 31, 1996 have been restated to include the accounts and
     operations of IAS. All significant intercompany balances and transactions
     have been eliminated in consolidation.

     These accompanying 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 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 and nine months ended March 31, 1997 are not necessarily indicative
     of results to be expected for the entire fiscal year, which ends on June
     30, 1997.

2.   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>

                                                         MARCH 31,              JUNE 30,
                                                           1997                   1996
                                                       -----------            -----------

<S>                                                     <C>                    <C>       
     Purchased parts and materials                      $2,772,000             $2,869,000
     Work-in-process                                     2,009,000                429,000
     Finished goods                                      1,390,000              1,166,000
                                                       -----------            -----------
                                                        $6,171,000             $4,464,000
                                                        ==========             ==========
</TABLE>

3.   NET INCOME PER SHARE

     Net income per common and common equivalent share is computed using the
     weighted average number of common shares outstanding during the period
     after considering the effect of common stock options and warrants under the
     treasury method. Common stock options and warrants have been excluded from
     the computation when their effect is anti-dilutive.

4.   RECENT ACCOUNTING PRONOUNCEMENTS

    In February 1997, the Financial Accounting Standards Board Issued Statement
    of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
    128"). This statement is effective for the Company's fiscal year ending June
    30, 1998. The statement redefines earnings per share under generally
    accepted accounting principles. Under the new standard, primary earnings per
    share is replaced by basic earnings per share and fully diluted earnings per
    share is replaced by diluted earnings per share. The adoption of SFAS
    128 would not have a material impact on the Company's earnings per share for
    three and nine month periods ended March 31, 1997.

5.   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 and California law. 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 has
     established a reserve for the Company's estimate of the legal expenses to
     seek dismissal of the lawsuit. The Company and its officers deny the
     allegations and will vigorously defend this action.


                                       5
<PAGE>   8

5.   CONTINGENT LIABILITIES - CONTINUED

     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. On August 22, 1996, the Court granted the Company's motion
     determining that the TouchPrint 600 does not infringe the patent. On
     December 7, 1996, the Court issued another ruling determining that the
     predecessor product of the TouchPrint 600, the TouchPrint 900 product, did
     not infringe the patent. As a result, the Court entered judgment in favor
     of Identix and awarded Identix its costs of suit. On January 7, 1997, DBI
     filed a Notice of Appeal and the matter is now pending before the Federal
     Circuit Court of Appeals.





                                       6
<PAGE>   9


                              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*, I(3)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 Identification
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 "Risk Factors" 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

Revenues for the three month and nine month periods ended March 31, 1997 were
$12,257,000 and $35,910,000, respectively, compared to $8,787,000 and
$23,734,000 for the same periods in the prior fiscal year. For the three month
period ended March 31, 1997, the increase in revenues of 39% was primarily due
to increases in the Company's net product revenues. For the nine month period
ended March 31, 1997, the increase in revenues of 51% was primarily due to
increases in both the Company's net product revenues and services 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),
I(3) Workstation(TM) and DocuColor(TM) as trademarks.

                                       7
<PAGE>   10


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .


The Company's net product revenues were $5,690,000 and $18,352,000 for the three
and nine month periods ended March 31, 1997, respectively, compared to
$2,343,000 and $7,663,000 for the same periods in the prior fiscal year. For the
three and nine month periods ended March 31, 1997, the increase in net product
revenues of 143% and 139%, respectively, was primarily due to (i) the inclusion
of Fingerscan revenues, for the entire three and nine month periods, which
revenues were generated primarily from the sale of the Company's Bio-ID products
(ii) increased shipments of the Company's TouchPrint products, and (iii) an
increase in revenues generated by the Company's Identification Services
Division. International sales accounted for $1,909,000 or 34% and $5,819,000 or
32% of the Company's net product revenues for the three and nine month periods,
respectively, compared to $400,000 or 17% and $852,000 or 11% for the same
periods in the prior fiscal year. The increase was primarily due to the increase
of Bio-ID product sales. 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 may take action to reduce foreign
exchange risk, if the Company deems it appropriate.

The Company's services revenues were $6,567,000 and $17,558,000 for the three
and nine month periods ended March 31, 1997, respectively, compared to
$6,444,000 and $16,071,000 for the same periods in the prior fiscal year. The
increase in services revenues of 2% and 9% for the three and nine month periods
ended March 31, 1997, respectively, was due primarily to increased U.S.
Government contracts (with both the Department of Defense and other U.S.
Government agencies). The majority of the Company's services revenues are
generated directly from contracts with the U.S. Government, principally the
Department of Defense ("DOD"). Revenues directly from the DOD and from other 
U.S. Government agencies for the three and nine month periods ended March 31, 
1997 accounted for 75% and 72%, respectively, of the Company's total services
revenues compared to 60% and 64% of the Company's total services revenues for
the same periods 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
39% and 45% of its services revenues for the three and nine month periods ended
March 31, 1997, respectively, compared to 40% and 44% for each of the same
periods 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 and nine
month periods ended March 31, 1997, the Company derived approximately 49% and
41%, respectively, of its services revenues from T&M and FFP contracts compared
to 47% and 44% for the same periods in the prior fiscal year. 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 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. 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.


                                       8


<PAGE>   11


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

Gross Margin

Gross margin on net product revenues was 53% and 50% for the three and nine
month periods ended March 31, 1997, respectively, as compared to 49% and 47% for
the same periods in the prior fiscal year. The increase in gross margin was
primarily due to (i) the favorable product mix of Bio-ID and bio-imaging product
sales, (ii) cost reductions in certain components and (iii) increased
manufacturing efficiencies because of the increase in unit volume and the
absorption of manufacturing overhead resulting from higher production levels.

Gross margin on services revenues was 22% and 23% for the three and nine month
periods ended March 31, 1997, respectively, as compared to 19% and 18% for the
same periods in the prior fiscal year. The increase in gross margin was
primarily due to increased gross margins on revenues generated by ANADAC's
information technology group.

Research, Development and Engineering

Research, development and engineering expenses were $635,000 and $1,663,000 or
11% and 9% of net product revenues for the three and nine month periods ended
March 31, 1997, respectively, compared to $359,000 and $1,048,000 or 15% and 14%
of net product revenues for the same periods in the prior fiscal year. In
addition, for the three and nine month periods ended March 31, 1997, research,
development and engineering expenditures funded by customers were $69,000 and
$255,000, respectively, compared to $69,000 and $143,000 for the same periods in
the prior fiscal year. The increase in research, development and engineering
expenses is primarily due to the inclusion of research, development and
engineering expenses incurred by Fingerscan to develop and maintain certain
Bio-ID products and, in general, the addition of engineering staff and related
expenses to further develop and enhance the Company's 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 future periods.

Marketing and Selling

Marketing and selling expenses were $2,022,000 and $5,609,000 or 16% of total
revenues for each of the three and nine month periods ended March 31, 1997,
respectively, compared to $1,198,000 and $3,127,000 or 14% and 13% of total
revenues for the same periods in the prior fiscal year. The increase in
marketing and selling expenses is due to the inclusion of Fingerscan's marketing
and selling expenses and increased staffing and expenses to (i) promote the
Company's products and services, (ii) expand its customer service organization
and (iii) expand international sales and distribution.

General and Administrative

General and administrative expenses were $1,734,000 and $5,376,000 or 14% and
15% of total revenues for the three and nine month periods ended March 31, 1997,
respectively, compared to $1,124,000 and $3,050,000 or 13% of total revenues for
each of the same periods in the prior fiscal year. The increase in general and
administrative expenses was primarily due to (i) litigation reserves and
expenses of $71,000 and $707,000 for the three and nine month periods ended
March 31, 1997, respectively, related to a patent infringement lawsuit filed by
a competitor and a class action suit filed against the Company compared to
$70,000 and $100,000 in the same periods in the prior fiscal year (see Note 5 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.

Write-off of Acquired In-Process Research and Development

On March 26, 1996, the Company acquired Fingerscan, a privately-held
Australian-based company that designs and markets biometric identity and
verification products. The excess of the purchase price over the fair market
value of the assets purchased and liabilities assumed was $5,280,000, of which
$4,723,000 was allocated to in-process research and development which was
written-off in the quarter ended March 31, 1996.

                                        9
<PAGE>   12


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

Net Interest Expense

Net interest expense was $56,000 and $170,000 for the three and nine month
periods ended March 31, 1997, respectively, compared to net interest income of
$15,000 and $75,000 for the same periods in the prior fiscal year. The
difference was due to increased borrowings under the Company's lines of credit
and lower cash balances for temporary investments during the three and nine
month periods ended March 31, 1997 compared to the same periods in the prior
fiscal year.

During the three and nine month periods ended March 31, 1997, the weighted
average interest rate paid by the Company on its line of credit (the "Identix
Line of Credit") was 8.26% and 8.37%, respectively. The weighted average
interest rate paid by ANADAC on its bank line of credit (the "ANADAC Line of
Credit") during the three and nine month periods ended March 31, 1997 was 8.29%
and 8.27% , respectively.

Other Income

For the three and nine month periods ended March 31, 1997, other income was
$94,000 and $93,000, respectively, compared to other income of $202,000 and
$185,000 for the same period in the prior fiscal year. The decrease in other
income is primarily due to the completion of a licensing arrangement in March
1996 related to one of the Company's trademarks.

Provision for Income Taxes

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 nine months ended March 31, 1997
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 March 31,
1997, the Company's principal sources of liquidity consisted of $14.9 million of
working capital including $1,394,000 in cash and cash equivalents, the Identix
Line of Credit and the ANADAC Line of Credit.

The Identix Line of Credit is a $5,000,000 bank line of credit secured by all of
the personal property of Identix. Under the bank line of credit, the Company may
borrow up to 80% of eligible accounts receivable. Amounts drawn bear interest at
the bank's prime rate of interest (8.50% at March 31, 1997). The Identix Line of
Credit expires on October 3, 1997. At March 31, 1997, $900,000 was outstanding
and $3,233,000 was available under the Identix Line of Credit. The 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 $6,000,000 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 (8.50% at March 31, 1997).
The line of credit expires on October 31, 1997. At March 31, 1997, $1,895,000
was outstanding and $1,548,000 was available under the ANADAC Line of Credit.
The ANADAC Line of Credit agreement contains financial and operating covenants.


                                       10
<PAGE>   13


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

Net cash provided by operating activities during the nine months ended March 31,
1997 was $1,303,000 due primarily to increases in deferred revenue of $929,000
and accounts payable of $944,000 and adjustments for non-cash depreciation and
amortization of $800,000. The increase in accounts payable was primarily due to
financing the increase in inventories and the timing of vendor payments and the
increase in deferred revenue is primarily due to (i) an increase in the number
of live-scan systems under maintenance contracts and (ii) an increase in advance
payments for fingerprint services under contract. These sources of cash for
operating activities were offset, in part, by increases in inventory of
$1,707,000. The increase in inventories was due primarily to the stocking of
certain inventory for the Company's Bio-ID and bio-imaging product lines.

Net cash used in investing activities during the nine months ended March 31,
1997 was $1,789,000 due primarily to purchases of property and equipment of
$1,092,000 and additions to intangibles and other assets of $697,000 primarily
related to capitalized software development costs.

Net cash provided by financing activities during the nine months ended March 31,
1997 was $895,000 due primarily to increased net borrowings against the
Company's lines of credit.

Identix did not have any material capital expenditure commitments as of 
March 31, 1997.

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 through December 1997. However, the
Company may require additional equity or debt financing beyond the amounts
currently forecasted by the Company to meet its working capital or capital
equipment needs. There can be no assurance that the Company would be able to
obtain such financing or that the terms of financing would be favorable to the
Company.


                                       11
<PAGE>   14


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

RISK FACTORS

The Company's future operation, 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 and nine month periods ended March 31, 1997,
or in other reports, press releases or other statements issued from time to
time.

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 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
Company's 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 March 31, 1997, the Company had an accumulated deficit of approximately $30.2
million. The Company experienced net losses in each year since inception,
including a net loss of approximately $3.4 million for fiscal 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.

                                       12
<PAGE>   15


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
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 fingerprinting 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
have developed and are currently developing or have brought to market 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. 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 and
similar traditional verification methods.

                                       13
<PAGE>   16


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

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 trained technical personnel or align with technology leaders,
its ability to compete successfully will be materially and adversely affected.

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 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

Because of downsizing in certain government programs, the Company has been
expanding its marketing efforts 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 provides services.


                                       14
<PAGE>   17


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

During both the fiscal year ended June 30, 1996 and the nine month period ended
March 31, 1997, the Company derived approximately 41% of services revenues from
T&M contracts 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 cost 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.

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.


                                       15
<PAGE>   18


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION

Approximately 32% and 13% of the Company's net product revenues were for foreign
installations in the nine month period ended March 31, 1997 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.

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 fails 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.


                                       16
<PAGE>   19


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

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 and 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, 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. 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.


                                       17

<PAGE>   20


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

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
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 products. However, as the Company
begins to market its  capabilities for potentially larger volume commercial
applications such as information security and time-and-attendance, 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
other acquisitions by the Company, if any, 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


                                       18
<PAGE>   21


IDENTIX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED . . .

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.

SHARE HOLDINGS OF ASCOM HOLDING

As of March 31, 1997, Ascom USA Inc. ("Ascom"), beneficially owned approximately
21% 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 deposited all of its 5,177,824 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.


                                       19
<PAGE>   22


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 and
                  California law. The plaintiff alleges that the Company and
                  certain of its executive officers make 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 has established a reserve for the
                  Company's estimate of the legal expenses to seek dismissal of
                  the lawsuit. The Company and its officers deny the allegations
                  and will vigorously defend 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. On August 22, 1996, the Court granted
                  the Company's motion determining that the TouchPrint 600 does
                  not infringe the patent. On December 7, 1996, the Court issued
                  another ruling determining that the predecessor product of the
                  TouchPrint 600, the TouchPrint 900 product, did not infringe
                  the patent. As a result, the Court entered judgment in favor
                  of Identix and awarded Identix its costs of suit. On January
                  7, 1997, DBI filed a Notice of Appeal and the matter is now
                  pending before the Federal Circuit Court of Appeals.


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

                           (a) Exhibits
<TABLE>
<CAPTION>
                               Exhibit
                               Number                Description
                               ------                -----------

<S>                            <C>                   <C>         
                               11.1                  Statement of Computation of Earnings Per Share

                               27.1                  Financial Data Schedule
</TABLE>

                           (b) No reports on Form 8-K were filed by the Company
                               during the three month period ended March 31,
                               1997.


                                       20
<PAGE>   23



                              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
                                  May 14, 1997




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



                                       21
<PAGE>   24

<TABLE>
<CAPTION>
                                 EXHIBIT INDEX

             EXHIBIT
               NO.                      DESCRIPTION
            ---------                   -----------

               <S>                 <C>                                        
               11.1                Statement of Computation of Earnings per
                                   Share

               27                  Financial Data Schedule
</TABLE>