##### 









SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark one) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended June 30, 2005                                                     
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission File Number: 1-9641


Identix Incorporated


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                  
|------------------------------------------------------------------ |  | ---------------------------------
|Delaware                                                           |  | 94-2842496                       
|(State or other jurisdiction of
    incorporation or organization) |  | (IRS Employer Identification No.)
|                                                                  
|5600 Rowland Road, Minnetonka, Minnesota                           |  | 55343                            
|(Address of principal executive offices)                           |  | (Zip Code)                       

Registrants telephone number, including area code:


(952) 932-0888


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


Common Stock, $0.01 par value


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


None


þ o


þ


þ o


o þ






DOCUMENTS INCORPORATED BY REFERENCE












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IDENTIX INCORPORATED


Year Ended June 30, 2005


TABLE OF CONTENTS


|         |  |                                                                                                    |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                    |  | Page |   
|         |  |                                                                                                    |  |      |   
|PART I  
|Item 1.  |  | BUSINESS                                                                                           |  |      | 2  | 
|Item 2.  |  | PROPERTIES                                                                                         |  |      | 21 | 
|Item 3.  |  | LEGAL PROCEEDINGS                                                                                  |  |      | 22 | 
|Item 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS                                            |  |      | 22 | 
|PART II 
|Item 5.  |  | MARKET FOR THE COMPANYS COMMON STOCK
    AND RELATED STOCKHOLDER MATTERS                          |  |      | 23 | 
|Item 6.  |  | SELECTED FINANCIAL DATA                                                                            |  |      | 24 | 
|Item 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          |  |      | 25 | 
|Item 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK                                     |  |      | 38 | 
|Item 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                        |  |      | 39 | 
|Item 9.  |  | CHANGES IN AND DISAGREEMENTS WITH
    ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           |  |      | 71 | 
|Item 9A. |  | CONTROLS AND PROCEDURES                                                                            |  |      | 71 | 
|Item 9B. |  | OTHER INFORMATION                                                                                  |  |      | 73 | 
|PART III
|Item 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT                                             |  |      | 73 | 
|Item 11. |  | EXECUTIVE COMPENSATION                                                                             |  |      | 73 | 
|Item 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |  |      | 73 | 
|Item 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                             |  |      | 73 | 
|PART IV 
|Item 15. |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                         |  |      | 74 | 

1



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PART I







|        |         
|------- | --------
|Item 1. | Business

The statements in this Annual Report on Form 10-K that
relate to future plans, events or performance are
forward-looking statements. Actual results could differ
materially due to a variety of factors, including the factors
described under Risk Factors and the other risks
described in this Annual Report on Form 10-K. We undertake
no obligation to publicly update these forward-looking
statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.


Overview






| |                               
| | ------------------------------
| | Business Case  Why Biometrics











| |                                                             
| | ------------------------------------------------------------
| | Current Market Outlook  Target Industries/
    Applications



2



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##### 







U.S. Government:


Law Enforcement:


National Identification and Passport Programs:


3



---



##### 





Healthcare:


Financial:


Consumer:






Product Offerings




| |         
| | --------
| | Overview





4



---



##### 





|   |          
|-- | ---------
|i. | Live Scan



tm tm






| |                    
| | -------------------
| | Livescan Offerings:

TouchPrint Enhanced Definition 3000, TouchPrint Enhanced
Definition 3500, TouchPrint 3000; TouchPrint 3500. tm tm tm




TouchPrint Enhanced Definition 3100, and TouchPrint 3100.


5



---



##### 





TENPRINTER FC-Desktop Modular and TENPRINTER
FC-Transportable.


TouchPrint PRO Full Hand Scanner.


TouchPrint Enhanced Definition 3800 Full Hand Scanner
TouchPrint 3800.


DFR® 2080; DFR 2090.




TouchPrint Card Scan System.


Store & Forward Systems.




|    |                                               
|--- | ----------------------------------------------
|ii. | IBIS (Identification Based Information System)



6



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##### 











|     |                                                                         
|---- | ------------------------------------------------------------------------
|iii. | ABIS (Automated Biometric Identification System)/ Facial
    Recognition

The
ABIS tm System




|    |                                
|--- | -------------------------------
|iv. | Enabling Biometric Technologies





| |                        
| | -----------------------
| | Fingerprint Recognition

®




| |                    
| | -------------------
| | Facial Recognition:



7



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##### 





| |                          
| | -------------------------
| | Surface Texture Analysis:





| |                  
| | -----------------
| | Fingerprint SDKs:

BioEngine SDK.


BioLogon® SDK.


BioCard® SDK.




| |                         
| | ------------------------
| | Facial Recognition SDKs:

FaceIt Verification SDK.


FaceIt Identification SDK.


FaceIt Surveillance SDK.


FaceIt Quality Assessment SDK.




| |                                                     
| | ----------------------------------------------------
| | v.     Biometric and other
    Professional Services



| |                                        
| | ---------------------------------------
| | Identix Identification Services (IIS)





8



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| |                                                           
| | ----------------------------------------------------------
| | Identix Legislative Demographic Services, Inc.
    (LDS)



Strategy




| |         
| | --------
| | Overview





Deliver comprehensive solutions.


Deliver scalable multi-biometric technology and
authentication platforms.


9



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##### 



Penetrate and develop new markets through strategic
partnerships and relationships.


Maintain and enhance leadership in biometric technology.


Maintain a global perspective.


Product Development




Sales, Marketing and Support




Direct Sales.


Channel Sales and Business Development.


10



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##### 







Marketing Strategy


Live Scan products and solutions.




IBIS.


ABIS.


Enabling Biometrics Technologies:




Identix Identification Services (IIS).


11



---



##### 



Product and Customer Support






Backlog




Patents and Trademarks




Competition










12



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##### 





Manufacturing






Employees




Financial Information about Segments




RISK FACTORS


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


Our business will not grow unless the market for biometric
products and services expands both domestically and
internationally.






| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | national or international events which may affect the need for
    or interest in biometric products or services;                               
|
| |  | the cost, performance and reliability of our products and
    services and those of our competitors;                                            
|
| |  | customers perception of the perceived benefit of biometric
    products and services and their satisfaction with our products
    and services;

13



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| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | public perceptions of the intrusiveness of these products and
    services and the manner in which firms are using the information
    collected;
|
| |  | public perceptions regarding the confidentiality of private
    information;                                                                     
|
| |  | proposed or enacted legislation related to privacy of
    information; and                                                                       
|
| |  | marketing efforts and publicity regarding these products and
    services.                                                                       



We face intense competition from other biometric solution
providers as well as identification and security systems
providers.








The biometrics industry is characterized by rapid
technological change and requires introduction of new and
enhanced products at competitive prices.






14



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##### 





We derive a significant amount of our revenue from government
contracts, which are often non-standard, involve competitive
bidding, may be subject to cancellation without penalty and may
produce volatility in earnings and revenue.












Our financial and operating results often vary significantly
from quarter to quarter and may be negatively affected by a
number of factors.






| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | unavailability or delays in authorization of government funding
    or cancellations, delays or contract amendments by government
    agency customers;                                                                                     
|
| |  | reduced demand for products and services caused, for example, by
    product offerings from new competitors;                                                                                                                                
|
| |  | the inability to timely and successfully (i) complete
    development of complex designs, components and products,
    (ii) complete new product introductions that may result in
    improved gross margins, (iii) manufacture in volume or

15



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##### 



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | install certain of our complex products or (iv) obtain
    relevant government agency certifications for newly introduced
    products on a timely basis;
|
| |  | changes in the mix of products and services we or our
    distributors sell;                                                                             
|
| |  | the readiness of customers to accept delivery of new products on
    a timely basis;                                                                     
|
| |  | protests of federal, state or local government contract awards
    by competitors;                                                                       
|
| |  | unforeseen legal expenses, including litigation and/or
    administrative protest costs;                                                                 
|
| |  | expenses related to acquisitions or mergers;                                                                                                             
|
| |  | impairment charges arising out of our assessments of goodwill
    and intangibles;                                                                       
|
| |  | other one-time financial charges;                                                                                                                        
|
| |  | the lack of availability or increase in cost of key components
    and subassemblies;                                                                    
|
| |  | competitive pricing pressures; and                                                                                                                       
|
| |  | unpredictable product installation schedules                                                                                                             



Our results of operations may be harmed by governmental
credit and other policies.






A security breach or failure in systems that we sell could
result in the disclosure of private personal information that
could harm our business by adversely affecting the markets
perception of our products and services.




The terrorist attacks of September 11, 2001, and the
continuing threat of global terrorism, have increased financial
expectations that may not materialize.




16



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##### 





We may need to raise additional equity or debt financing in
the future.




Our lengthy and variable sales cycle will make it difficult
to predict operating results.






The substantial lead-time required for ordering parts and
materials may lead to inventory problems.




We rely in part upon original equipment manufacturers
(OEM) and distribution partners to distribute our
products, and we may be adversely affected if those parties do
not actively promote our products or pursue installations that
use our equipment.






Loss of sole or limited source suppliers may result in delays
or additional expenses.






Our plan to pursue sales in international markets may be
limited by risks related to conditions in such markets.




17



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

Individual stockholders owning a significant portion of our
stock may have the ability to delay or prevent a change in
control or adversely affect the stock price through sales in the
open market.




We may be subject to loss in market share and market
acceptance as a result of performance failures, manufacturing
errors, delays or shortages.




We may be subject to repair, replacement, reimbursement and
liability claims as a result of products that fail to work or to
meet applicable performance criteria.




18



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##### 





Failure by us to maintain the proprietary nature of our
technology, intellectual property and manufacturing processes
could have a material adverse effect on our business, operating
results, financial condition, stock price, and on our ability to
compete effectively.












Acquisitions and dispositions of companies, assets or
technologies may result in disruptions to our business.








| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | exposure to unknown liabilities of acquired companies or assets;                                                               
|
| |  | higher than anticipated acquisition costs and expenses;                                                                        
|
| |  | effects of costs and expenses of acquiring and integrating new
    businesses on our operating results and financial condition;

19



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| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | effects of consolidated revenue loss associated with
    dispositions of material subsidiaries or assets;                                                                            
|
| |  | effects of costs and expenses of integrating and introducing new
    technologies;                                                                                                   
|
| |  | the difficulty and expense of assimilating the operations and
    personnel of the companies;                                                                                        
|
| |  | disruption of our ongoing business;                                                                                                                                                  
|
| |  | diversion of management time and attention;                                                                                                                                          
|
| |  | failure to maximize our financial and strategic position by the
    successful incorporation of acquired technology;                                                                 
|
| |  | failure to realize the potential of acquired technologies,
    complete product development, or properly obtain or secure
    appropriate protection of intellectual property rights;
|
| |  | the maintenance of uniform standards, controls, procedures and
    policies;                                                                                                         
|
| |  | loss of key employees and customers as a result of changes in
    management;                                                                                                        
|
| |  | incurring amortization expenses;                                                                                                                                                     
|
| |  | incurring impairment charges arising out of our assessments of
    goodwill and intangibles; and                                                                                     
|
| |  | possible dilution to our stockholders.                                                                                                                                               



The manner of accounting for our merger with Visionics
Corporation, which was completed in June 2002, may affect our
reported results of operations.




If we are unable to successfully address the material
weakness in our internal controls as described in Item 9A
in this Report on Form 10-K, our ability to report our
financial results on a timely and accurate basis may be
adversely affected. As a result, current and potential
stockholders could lose confidence in our financial reporting
which could have a material adverse effect on our business,
operating results and stock price.






20



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##### 



Compliance with changing regulation of corporate governance
and public disclosure may result in additional expenses.




If we fail to adequately manage the size of our business, it
could have a severe negative effect on our financial results or
stock price.




If we fail to attract and retain qualified senior executive
and key technical personnel, our business will not be able to
expand.








Available Information









|        |                          
|------- | -------------------------
|Item 2. | Description of Properties





21



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings










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



22



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|                   |                                  
|------------------ | ---------------------------------
|Supplemental Item. | Executive Officers of the Company



|                  |  |     |    |  |          |                                                
|----------------- |  | --- | -- |  | -------- | -----------------------------------------------
|Name              |  | Age |    |  | Position
|                  |  |     |    |  |         
|Joseph J. Atick   |  |     | 41 |  |          | President, Chief Executive Officer and Director
|Paul Griffin      |  |     | 43 |  |          | Chief Technology Officer                       
|Elissa J. Lindsoe |  |     | 38 |  |          | Chief Financial Officer                        
|James H. Moar     |  |     | 56 |  |          | Chief Operating Officer                        
|Mark S. Molina    |  |     | 46 |  |          | Chief Legal Officer and Secretary              

Joseph J. Atick


Paul Griffin


Elissa J. Lindsoe


James H. Moar


Mark S. Molina





PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for the Companys Common Stock and Related
    Stockholder Matters





|                                |  |      |      |  |     |   |      | 
|------------------------------- |  | ---- | ---- |  | --- | - | ---- | 
|                                |  | High |      |  | Low |  
|                                |  |      |      |  |     |  
|Fiscal year ended June 30, 2005 |  |      |      |  |     |   |      | 
|Fourth Quarter                  |  | $    | 5.86 |  |     | $ | 4.89 | 
|Third Quarter                   |  |      | 7.26 |  |     |   | 4.82 | 
|Second Quarter                  |  |      | 8.04 |  |     |   | 6.49 | 
|First Quarter                   |  |      | 7.19 |  |     |   | 4.45 | 

23



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|                                |  |      |      |  |     |   |      | 
|------------------------------- |  | ---- | ---- |  | --- | - | ---- | 
|                                |  | High |      |  | Low |  
|                                |  |      |      |  |     |  
|Fiscal year ended June 30, 2004 |  |      |      |  |     |   |      | 
|Fourth Quarter                  |  | $    | 8.36 |  |     | $ | 5.67 | 
|Third Quarter                   |  |      | 5.77 |  |     |   | 4.35 | 
|Second Quarter                  |  |      | 6.13 |  |     |   | 4.26 | 
|First Quarter                   |  |      | 7.18 |  |     |   | 5.27 | 







|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                  |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |         |       |   |   |         |       |  
|----------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------- | ------- | ----- | ----------- | - | ------- | ----- | - | - | -------- | ----- | - | ---- | ------- | ----- | - | - | ------- | ----- | -
|                                                                  |                                                                   | Fiscal Year Ended June 30,            |        
|                                                                  |                                                                   |                                       |        
|                                                                  |                                                                   |                                       |         | 2004  |             |   |        
|Selected Financial Data                                           |                                                                   | 2005                                  |         |       | Restated(1) |   |         | 2003  |   |   | 2002     |       |   | 2001 |        
|                                                                  |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |        
|                                                                  |                                                                   | (In thousands, except per share data) |         |       |             |   |        
|Statement of Operations Data:                                     |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |         |       |   |   |         |      
|Revenues                                                          |                                                                   | $                                     | 73,832  |       |             | $ | 55,199  |       |   | $ | 52,684   |       |   | $    | 33,465  |       |   | $ | 38,156  | (7)  
|Loss from continuing operations                                   |                                                                   |                                       | (13,966 | )     |             |   | (21,667 | )     |   |   | (183,940 | )     |   |      | (49,380 | )     |   |   | (26,046 | )    
|Income (loss) from discontinued operations                        |                                                                   |                                       |        |       |             |   | 3,125   | (3)   |   |   | (3,434   | )     |   |      | (6,058  | )     |   |   | (1,554  | )    
|Loss before cumulative effect of a change in accounting principle |                                                                   |                                       | (13,966 | )(2)  |             |   | (18,542 | )(4)  |   |   | (187,374 | )(5)  |   |      | (55,438 | )(6)  |   |   | (27,600 | )(8) 
|Cumulative effect of a change in accounting principle             |                                                                   |                                       |        |       |             |   |        |       |   |   |         |       |   |      |        |       |   |   | (1,998  | )(7) 
|                                                                  |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |        
|Net loss                                                          |                                                                   | $                                     | (13,966 | )     |             | $ | (18,542 | )     |   | $ | (187,374 | )     |   | $    | (55,438 | )     |   | $ | (29,598 | )    
|                                                                  |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |        
|Basic and diluted net loss per share:                             |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |         |       |   |   |         |      
|Loss from continuing operations                                   |                                                                   | $                                     | (0.16   | )     |             | $ | (0.25   | )     |   | $ | (2.16    | )     |   | $    | (1.19   | )     |   | $ | (0.77   | )    
|Income (loss) from discontinued operations                        |                                                                   | $                                     |        |       |             | $ | 0.04    |       |   | $ | (0.04    | )     |   | $    | (0.14   | )     |   | $ | (0.05   | )    
|                                                                  | Loss before cumulative effect of a change in accounting principle |                                       | $       | (0.16 | )           |   | $       | (0.21 | ) |   | $        | (2.20 | ) |      | $       | (1.33 | ) |   | $       | (0.82 | )
|                                                                  | Cumulative effect of a change in accounting principle             |                                       | $       |      |             |   | $       |      |   |   | $        |      |   |      | $       |      |   |   | $       | (0.06 | )
|                                                                  | Basic and diluted net loss per share                              |                                       | $       | (0.16 | )           |   | $       | (0.21 | ) |   | $        | (2.20 | ) |      | $       | (1.33 | ) |   | $       | (0.88 | )
|Balance Sheet Data:                                               |                                                                   |                                       |         |       |             |   |         |       |   |   |          |       |   |      |         |       |   |   |         |      
|Cash and cash equivalents                                         |                                                                   | $                                     | 22,445  |       |             | $ | 35,944  |       |   | $ | 34,712   |       |   | $    | 53,346  |       |   | $ | 20,777  |      
|Working capital                                                   |                                                                   |                                       | 36,628  |       |             |   | 45,822  |       |   |   | 53,397   |       |   |      | 63,239  |       |   |   | 32,440  |      
|Total assets                                                      |                                                                   |                                       | 215,055 |       |             |   | 228,827 |       |   |   | 245,270  |       |   |      | 431,255 |       |   |   | 83,486  |      
|Stockholders equity                                              |                                                                   |                                       | 192,086 |       |             |   | 203,489 |       |   |   | 211,264  |       |   |      | 393,323 |       |   |   | 64,082  |      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As described in Note 2 to the consolidated financial
    statements, the fiscal year 2004 consolidated financial
    statements have been restated to correct the accounting for
    income taxes arising from the sale of the discontinued IPS
    operations. The restatement resulted in an increase of
    $2,000,000 in the income tax benefit related to continuing
    operations with an offsetting $2,000,000 adjustment to the
    income tax provision related to discontinued operations.

24



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|    |                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | This adjustment had no impact on net loss, net cash used by
    operating activities or total stockholders equity as
    previously reported for fiscal year 2004.                                                                                                                                                                                         
|   
|(2) | Includes a net gain resulting from restructuring and other
    charges of $507,000. This includes a net gain of $620,000
    related to the Company buying out a certain lease obligation in
    Los Gatos, California combined with charges of $113,000 stemming
    from a reduction in force that occurred in the fourth quarter of
    fiscal year 2005.
|   
|(3) | Includes a gain on the sale of IPS of $3,934,000 that was
    partially offset by the loss from discontinued operations of
    $809,000.                                                                                                                                                                                                                    
|   
|(4) | Includes restructuring and other charges of $2,115,000 as
    discussed in the management discussion and analysis in the
    section entitled restructuring and other charges.                                                                                                                                                                            
|   
|(5) | Includes a write-off of $154,799,000 that is related to the
    impairment of goodwill as well as $6,327,000 of restructuring
    and other charges.                                                                                                                                                                                                        
|   
|(6) | Includes $17,965,000 of restructuring and other charges and a
    charge of $6,400,000 for the write-off of acquired in-process
    research and development.                                                                                                                                                                                               
|   
|(7) | Identix changed its method of accounting for revenue recognition
    effective July 1, 2000 to comply with the Securities and
    Exchange Commission Staff Accounting Bulletin No. 101,
    Revenue Recognition in Financial Statements
    (SAB 101).                                                                                                 
|   
|(8) | Includes preferred stock and warrant expense of $1,259,000.                                                                                                                                                                                                                                                                                                 






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Forward-looking Statements


The statements in this Annual Report on Form 10-K 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
in Item 1 and the other risks identified in this Annual
Report on Form 10-K. We undertakes no obligation to
publicly update these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.


Overview






Restatement of fiscal year 2004 financial statements




25



---



##### 





| |                 
| | ----------------
| | Fiscal year 2005



Fiscal year 2004




Fiscal year 2003




Critical Accounting Estimates




Allowance for doubtful
accounts:




Goodwill impairments:




26



---



##### 





Inventory allowances:




Warranty obligations:




Revenue recognition:






Product Revenues






27



---



##### 











Service Revenues








Loss contingencies and
restructurings:






28



---



##### 





Results of Operations


Fiscal Years Ended June 30, 2005 and 2004


Revenues.
















Product Gross Margin.


29



---



##### 





Service Gross Margin.


Research and Development.


Marketing and Selling.


General and Administrative.


Amortization of Acquired Intangible Assets.


Impairment of Goodwill.


Restructuring and other, net.


|                                                                                    |  |                |      |   |      |   |       | 
|----------------------------------------------------------------------------------- |  | -------------- | ---- | - | ---- | - | ----- | 
|                                                                                    |  | Twelve Months  |     
|                                                                                    |  | Ended June 30, |     
|                                                                                    |  |                |     
|                                                                                    |  | 2005           |      |   | 2004 |  
|                                                                                    |  |                |      |   |      |  
|                                                                                    |  | (In thousands) |     
|Lease exit costs related to restructuring actions initiated in
    fiscal year 2002 |  |                | (620 | ) |      |   | 610   | 
|Severance costs                                                                     |  |                | 113  |   |      |   | 250   | 
|Employment agreement obligation                                                     |  |                |     |   |      |   | 506   | 
|SIFC acquisition related                                                            |  |                |     |   |      |   | 749   | 
|                                                                                    |  |                |      |   |      |  
|                                                                                    |  | $              | (507 | ) |      | $ | 2,115 | 
|                                                                                    |  |                |      |   |      |  

30



---



##### 



Fiscal year 2005






Fiscal year 2004






Interest and Other Income (Expense), net.


Provision/benefit for Income Taxes (Restated).


Equity Interest in Loss of Joint Venture.


Discontinued Operations (Restated).


31



---



##### 





|                                      |  |                   |        |  
|------------------------------------- |  | ----------------- | ------ | -
|                                      |  | Fiscal Year Ended |       
|                                      |  | June 30, 2004     |       
|                                      |  |                   |       
|                                      |  | (In thousands)    |       
|Revenue                               |  | $                 | 20,078 |  
|Cost of sales                         |  |                   | 17,550 |  
|Operating Expenses                    |  |                   | 3,337  |  
|                                      |  |                   |       
|Loss from discontinued IPS operations |  | $                 | (809   | )
|                                      |  |                   |       








|                                                      |  |                   |        |  
|----------------------------------------------------- |  | ----------------- | ------ | -
|                                                      |  | Fiscal Year Ended |       
|                                                      |  | June 30, 2004     |       
|                                                      |  | Restated          |       
|                                                      |  |                   |       
|                                                      |  | (In thousands)    |       
|Gain on sale of IPS                                   |  | $                 | 5,934  |  
|Provision for income taxes                            |  |                   | (2,000 | )
|                                                      |  |                   |       
|Gain on sale of IPS net of provision for income taxes |  | $                 | 3,934  |  
|                                                      |  |                   |       

Fiscal Years Ended June 30, 2004 and 2003


Revenues.












Product Gross Margin.


32



---



##### 





Service Gross Margin.


Research and Development.


Marketing and Selling.


General and Administrative.


Amortization of Acquired Intangible Assets.


Impairment of Goodwill.




33



---



##### 



Restructuring and other net.


|                                                               |                                    |                |       |     |      |   |       |       | 
|-------------------------------------------------------------- | ---------------------------------- | -------------- | ----- | --- | ---- | - | ----- | ----- | 
|                                                               |                                    | Twelve Months  |      
|                                                               |                                    | Ended          |      
|                                                               |                                    | June 30,       |      
|                                                               |                                    |                |      
|                                                               |                                    | 2004           |       |     | 2003 |  
|                                                               |                                    |                |       |     |      |  
|                                                               |                                    | (In thousands) |      
|Charges related to restructuring in actions initiated in 2002: |                                    |                |       |     |      |   |       |      
|                                                               | Severence and benefits             |                | $     |    |      |   | $     | 2,283 | 
|                                                               | Disposal of property and equipment |                |       |    |      |   |       | 370   | 
|                                                               | Lease exit costs                   |                |       | 610 |      |   |       | 1,061 | 
|                                                               | Internal merger costs and other    |                |       |    |      |   |       | 2,613 | 
|Severence costs                                                |                                    |                | 250   |     |      |   |      |      
|Employee agreement obligation                                  |                                    |                | 506   |     |      |   |      |      
|SIFC acquisition related                                       |                                    |                | 749   |     |      |   |      |      
|                                                               |                                    |                |       |     |      |  
|                                                               |                                    | $              | 2,115 |     |      | $ | 6,327 |      
|                                                               |                                    |                |       |     |      |  

Fiscal year 2004






Fiscal year 2003


Severence and
benefits




Disposal of property and
equipment




Lease exit costs




Internal merger costs
and other




Interest and Other Income (Expense), net.


34



---



##### 





Provision for Income Taxes (Restated).


Equity Interest in Loss of Joint Venture.


Discontinued Operations (Restated).




|                                      |  |                   |        |   |      |   |        |  
|------------------------------------- |  | ----------------- | ------ | - | ---- | - | ------ | -
|                                      |  | Fiscal Year Ended |       
|                                      |  | June 30,          |       
|                                      |  |                   |       
|                                      |  | 2004*             |        |   | 2003 |  
|                                      |  |                   |        |   |      |  
|                                      |  | (In thousands)    |       
|Revenue                               |  | $                 | 20,078 |   |      | $ | 39,830 |  
|Cost of sales                         |  |                   | 17,550 |   |      |   | 35,023 |  
|Operating Expenses                    |  |                   | 3,337  |   |      |   | 8,241  |  
|                                      |  |                   |        |   |      |  
|Loss from discontinued IPS operations |  | $                 | (809   | ) |      | $ | (3,434 | )
|                                      |  |                   |        |   |      |  






|                                                      |  |                   |        |  
|----------------------------------------------------- |  | ----------------- | ------ | -
|                                                      |  | Fiscal Year Ended |       
|                                                      |  | June 30, 2004     |       
|                                                      |  | Restated          |       
|                                                      |  |                   |       
|                                                      |  | (In thousands)    |       
|Gain on sale of IPS                                   |  | $                 | 5,934  |  
|Provision for income taxes                            |  |                   | (2,000 | )
|                                                      |  |                   |       
|Gain on sale of IPS net of provision for income taxes |  | $                 | 3,934  |  
|                                                      |  |                   |       

Liquidity and Capital Resources






35



---



##### 















|                                        |       |          |       |       |                      |  |     |       |  |  |       |       | 
|--------------------------------------- | ----- | -------- | ----- | ----- | -------------------- |  | --- | ----- |  |  | ----- | ----- | 
|                                        |       | Occupied |       |       | Unoccupied or Sublet |  |     | Total | 
|                                        |       |          |       |       |                      |  |     |       | 
|Periods or fiscal years ending June 30: |       |          |       |       |                      |  |     |       |  |  |       |      
|2006                                    |       |          | 1,813 |       |                      |  | 361 |       |  |  | 2,174 |      
|2007                                    |       |          | 1,600 |       |                      |  |    |       |  |  | 1,600 |      
|2008                                    |       |          | 1,309 |       |                      |  |    |       |  |  | 1,309 |      
|2009                                    |       |          | 358   |       |                      |  |    |       |  |  | 358   |      
|                                        |       |          |       |       |                      |  |     |       | 
|                                        | Total |          | $     | 5,080 |                      |  | $   | 361   |  |  | $     | 5,441 | 
|                                        |       |          |       |       |                      |  |     |       | 





36



---



##### 









Off Balance-Sheet Arrangements






| |                              
| | -----------------------------
| | New Accounting Pronouncements









37



---



##### 










|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk

Interest Rate Risk.


Foreign Currency Exchange Rate Risk.


38



---



##### 








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


AND FINANCIAL STATEMENT SCHEDULE


|                      |                                                                                                                                 |      |  |    | 
|--------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                      |                                                                                                                                 | Page | 
|                      |                                                                                                                                 |      | 
|Financial Statements: |                                                                                                                                 |      |  |   
|                      | Report of Independent Registered Public
    Accounting Firm                                                                     |      |  | 40 | 
|                      | Consolidated Balance Sheets as of
    June 30, 2005 and 2004                                                                    |      |  | 42 | 
|                      | Consolidated Statements of Operations for
    the years ended June 30, 2005, 2004 and 2003                                      |      |  | 43 | 
|                      | Consolidated Statements of
    Stockholders Equity and Comprehensive Loss for the years
    ended June 30, 2005, 2004 and 2003 |      |  | 44 | 
|                      | Consolidated Statements of Cash Flows for
    the years ended June 30, 2005, 2004 and 2003                                      |      |  | 45 | 
|                      | Notes to Consolidated Financial
    Statements                                                                                  |      |  | 46 | 
|                      | Financial Statement Schedule:                                                                                                   |      |  |    | 
|                      | Report of Independent registered Public
    Accounting on financial statement schedule                                          |      |  | 79 | 
|                      | Schedule II  Valuation and
    Qualifying Accounts and Reserves for the years ended
    June 30, 2005, 2004 and 2003           |      |  | 80 | 

39



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








| |                                  
| | ---------------------------------
| | Consolidated financial statements







| |                                          
| | -----------------------------------------
| | Internal control over financial reporting

Internal
Control  Integrated Framework






40



---



##### 









Internal Control  Integrated Framework Internal Control  Integrated Framework


PricewaterhouseCoopers
LLP






41



---



##### 



IDENTIX INCORPORATED


CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share amounts)


|                                               |                                                                                                                                            |                            |                                            |          |          |         |         |          |         |         | 
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------------ | -------- | -------- | ------- | ------- | -------- | ------- | ------- | 
|                                               |                                                                                                                                            | June 30,                   |                                            |          | June 30, |        
|                                               |                                                                                                                                            | 2005                       |                                            |          | 2004     |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|ASSETS                                        
|Current assets:                                |                                                                                                                                            |                            |                                            |          |          |         |         |         
|                                               | Cash and cash equivalents                                                                                                                  |                            | $                                          | 22,445   |          |         | $       | 35,944   |        
|                                               | Marketable securities                                                                                                                      |                            |                                            | 9,753    |          |         |         | 9,472    |        
|                                               | Restricted cash                                                                                                                            |                            |                                            | 2,649    |          |         |         |         |        
|                                               | Accounts receivable, net                                                                                                                   |                            |                                            | 15,376   |          |         |         | 11,412   |        
|                                               | Inventories                                                                                                                                |                            |                                            | 6,340    |          |         |         | 7,171    |        
|                                               | Prepaid expenses and other assets                                                                                                          |                            |                                            | 928      |          |         |         | 1,052    |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            | Total current assets       |                                            |          | 57,491   |         |         |          | 65,051  |        
|Restricted cash                                |                                                                                                                                            |                            | 933                                        |          |          |         | 1,761   |         
|Property and equipment, net                    |                                                                                                                                            |                            | 1,738                                      |          |          |         | 2,153   |         
|Goodwill                                       |                                                                                                                                            |                            | 141,213                                    |          |          |         | 141,213 |         
|Acquired intangible assets, net                |                                                                                                                                            |                            | 13,363                                     |          |          |         | 18,497  |         
|Other assets                                   |                                                                                                                                            |                            | 317                                        |          |          |         | 152     |         
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            | Total assets               |                                            | $        | 215,055  |         |         | $        | 228,827 |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                              
|LIABILITIES AND STOCKHOLDERS EQUITY          
|Current liabilities:                           |                                                                                                                                            |                            |                                            |          |          |         |         |         
|                                               | Accounts payable                                                                                                                           |                            | $                                          | 6,597    |          |         | $       | 4,881    |        
|                                               | Accrued compensation                                                                                                                       |                            |                                            | 3,894    |          |         |         | 2,948    |        
|                                               | Other accrued liabilities                                                                                                                  |                            |                                            | 3,634    |          |         |         | 4,992    |        
|                                               | Deferred revenue                                                                                                                           |                            |                                            | 6,738    |          |         |         | 6,408    |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            | Total current liabilities  |                                            |          | 20,863   |         |         |          | 19,229  |        
|Deferred revenue                               |                                                                                                                                            |                            | 1,947                                      |          |          |         | 462     |         
|Other liabilities                              |                                                                                                                                            |                            | 159                                        |          |          |         | 5,647   |         
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            | Total liabilities          |                                            |          | 22,969   |         |         |          | 25,338  |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|Commitments and contingencies (Note 16 and 17) |                                                                                                                                            |                            |                                            |          |          |         |         |         
|Stockholders equity:                          |                                                                                                                                            |                            |                                            |          |          |         |         |         
|                                               | Common stock, $0.01 par value; 200,000,000 shares
    authorized 88,976,326 and 88,429,821 shares issued and
    outstanding, respectively |                            |                                            | 889      |          |         |         | 884      |        
|                                               | Additional paid-in capital                                                                                                                 |                            |                                            | 552,507  |          |         |         | 549,956  |        
|                                               | Accumulated deficit                                                                                                                        |                            |                                            | (361,159 | )        |         |         | (347,193 | )      
|                                               | Deferred stock-based compensation                                                                                                          |                            |                                            |         |          |         |         | (14      | )      
|                                               | Accumulated other comprehensive loss                                                                                                       |                            |                                            | (151     | )        |         |         | (144     | )      
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            | Total stockholders equity |                                            |          | 192,086  |         |         |          | 203,489 |        
|                                               |                                                                                                                                            |                            |                                            |          |          |        
|                                               |                                                                                                                                            |                            | Total liabilities and stockholders equity |          | $        | 215,055 |         |          | $       | 228,827 | 
|                                               |                                                                                                                                            |                            |                                            |          |          |        



42



---



##### 



IDENTIX INCORPORATED


CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)


|                                                                                        |                                                        |                                            |         |        |          |   |         |        |        |   |          |         |         |  
|--------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------ | ------- | ------ | -------- | - | ------- | ------ | ------ | - | -------- | ------- | ------- | -
|                                                                                        |                                                        | Fiscal Year Ended June 30,                 |        
|                                                                                        |                                                        |                                            |        
|                                                                                        |                                                        |                                            |         | 2004   |          |   |        
|                                                                                        |                                                        | 2005                                       |         |        | Restated |   |         | 2003   |       
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Revenues:                                                                               |                                                        |                                            |         |        |          |   |         |        |        |   |          |        
|                                                                                        | Product revenues                                       |                                            | $       | 42,019 |          |   | $       | 25,644 |        |   | $        | 28,072  |        
|                                                                                        | Service revenues                                       |                                            |         | 31,813 |          |   |         | 29,555 |        |   |          | 24,612  |        
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|                                                                                        |                                                        | Total revenues                             |         | $      | 73,832   |   |         | $      | 55,199 |   |          | $       | 52,684  |  
|Cost and expenses:                                                                      |                                                        |                                            |         |        |          |   |         |        |        |   |          |        
|                                                                                        | Cost of product revenues                               |                                            |         | 28,965 |          |   |         | 19,803 |        |   |          | 20,813  |        
|                                                                                        | Cost of service revenues                               |                                            |         | 24,561 |          |   |         | 22,529 |        |   |          | 18,946  |        
|                                                                                        | Research and development                               |                                            |         | 11,215 |          |   |         | 9,675  |        |   |          | 11,060  |        
|                                                                                        | Marketing and selling                                  |                                            |         | 11,771 |          |   |         | 10,867 |        |   |          | 12,137  |        
|                                                                                        | General and administrative                             |                                            |         | 12,380 |          |   |         | 13,814 |        |   |          | 12,930  |        
|                                                                                        | Amortization of acquired intangible assets             |                                            |         | 1,005  |          |   |         | 871    |        |   |          | 981     |        
|                                                                                        | Impairment of goodwill                                 |                                            |         |       |          |   |         |       |        |   |          | 154,799 |        
|                                                                                        | Restructuring and other, net                           |                                            |         | (507   | )        |   |         | 2,115  |        |   |          | 6,327   |        
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|                                                                                        |                                                        | Total costs and expenses                   |         |        | 89,390   |   |         |        | 79,674 |   |          |         | 237,993 |  
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Loss from operations                                                                    |                                                        |                                            | (15,558 | )      |          |   | (24,475 | )      |        |   | (185,309 | )      
|Interest and other income, net                                                          |                                                        |                                            | 1,634   |        |          |   | 1,153   |        |        |   | 1,834    |        
|Equity interest in loss of joint venture                                                |                                                        |                                            |        |        |          |   | (302    | )      |        |   | (285     | )      
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Loss from continuing operations before income taxes                                     |                                                        |                                            | (13,924 | )      |          |   | (23,624 | )      |        |   | (183,760 | )      
|(Provision) benefit for income taxes                                                    |                                                        |                                            | (42     | )      |          |   | 1,957   |        |        |   | (180     | )      
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Loss from continuing operations                                                         |                                                        |                                            | (13,966 | )      |          |   | (21,667 | )      |        |   | (183,940 | )      
|Discontinued operations:                                                                |                                                        |                                            |         |        |          |   |         |        |        |   |          |        
|                                                                                        | Loss from discontinued IPS operations                  |                                            |         |       |          |   |         | (809   | )      |   |          | (3,434  | )      
|                                                                                        | Gain on sale of IPS, net of provision for income taxes |                                            |         |       |          |   |         | 3,934  |        |   |          |        |        
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|                                                                                        |                                                        | Income (loss) from discontinued operations |         |        |         |   |         |        | 3,125  |   |          |         | (3,434  | )
|Net loss                                                                                |                                                        | $                                          | (13,966 | )      |          | $ | (18,542 | )      |        | $ | (187,374 | )      
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Basic and diluted loss per share from continuing operations                             |                                                        | $                                          | (0.16   | )      |          | $ | (0.25   | )      |        | $ | (2.16    | )      
|Basic and diluted income (loss) per share from discontinued
    operations              |                                                        | $                                          |        |        |          | $ | 0.04    |        |        | $ | (0.04    | )      
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Basic and diluted net loss per share                                                    |                                                        | $                                          | (0.16   | )      |          | $ | (0.21   | )      |        | $ | (2.20    | )      
|                                                                                        |                                                        |                                            |         |        |          |   |         |        |       
|Weighted average common shares used in basic and diluted loss
    per share computation |                                                        |                                            | 88,696  |        |          |   | 86,758  |        |        |   | 85,242   |        



43



---



##### 



IDENTIX INCORPORATED


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE LOSS


(In thousands, except share amounts)


|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         |          |  
|------------------------------------------------------------------------- | --------------------------------- | --------------- | -------- | - | ------------ | - | ------ | ---------- |  |  | ----------- | -------- | ----------- | --------------- | ----- | - | ------------- | - | ------- | ------------ |  | - | -------- | -------- | - | ----- | ------ | - |  | - | ---- | -- | - | - | ------- | -------- | -
|                                                                          |                                   | Convertible     |          |   |              |   |        |            |  |  |             |          | Accumulated |                 |       |  
|                                                                          |                                   | Preferred Stock |          |   | Common Stock |   |        |            |  |  |             | Deferred |             |                 | Other |   |               |  
|                                                                          |                                   |                 |          |   |              |   |        | Additional |  |  | Accumulated |          |             | Stock-based     |       |   | Comprehensive |   |         |             
|                                                                          |                                   | Shares          |          |   | Amount       |   |        | Shares     |  |  | Amount      |          |             | Paid in Capital |       |   | Deficit       |   |         | Compensation |  |   | Loss     |          |   | Total |       
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|Balance June 30, 2002                                                     |                                   |                 | 234,558  |   |              | $ | 3,702  |            |  |  | 84,651,058  |          |             | $               | 846   |   |               | $ | 532,738 |              |  | $ | (141,277 | )        |   | $     | (2,540 | ) |  | $ | (146 | )  |   | $ | 393,323 |         
|Components of comprehensive loss:                                         |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         |         
|                                                                          | Net loss                          |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          | (187,374 | ) |       |        |  |  |   |      |   |   |   |         | (187,374 | )
|                                                                          | Cumulative Translation Adjustment |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          |         |   |       |        |  |  |   |      | 20 |   |   |         | 20       |  
|Change in Unrealized gain on available for-sale marketable
    securities |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       |       |   |  |   | (30  | )  |   |   | (30     | )       
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|                                                                          | Total comprehensive loss          |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          |         |   |       |        |  |  |   |      |   |   |   |         | (187,384 | )
|Sale of common stock under stock option plans                             |                                   |                 |         |   |              |   |       |            |  |  | 779,221     |          |             |                 | 8     |   |               |   | 2,357   |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 2,365   |         
|Sale of common stock under stock Identix 401(k)Plan                       |                                   |                 |         |   |              |   |       |            |  |  | 104,921     |          |             |                 | 1     |   |               |   | 345     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 346     |         
|Sale of common stock under employee stock purchase plan                   |                                   |                 |         |   |              |   |       |            |  |  | 127,170     |          |             |                 | 1     |   |               |   | 557     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 558     |         
|Exercise of stock warrants                                                |                                   |                 |         |   |              |   |       |            |  |  | 282,581     |          |             |                 | 3     |   |               |   | 380     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 383     |         
|Amortization of deferred stock-based compensation                         |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       | 1,673  |   |  |   |     |    |   |   | 1,673   |         
|Elimination of deferred compensation related to terminated
    employees  |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   | (204    | )            |  |   |         |          |   |       | 204    |   |  |   |     |    |   |   |        |         
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|Balance June 30, 2003                                                     |                                   |                 | 234,558  |   |              |   | 3,702  |            |  |  | 85,944,951  |          |             |                 | 859   |   |               |   | 536,173 |              |  |   | (328,651 | )        |   |       | (663   | ) |  |   | (156 | )  |   |   | 211,264 |         
|Components of comprehensive loss:                                         |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         |         
|                                                                          | Net loss                          |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          | (18,542  | ) |       |        |  |  |   |      |   |   |   |         | (18,542  | )
|                                                                          | Cumulative Translation Adjustment |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          |         |   |       |        |  |  |   |      | 11 |   |   |         | 11       |  
|Change in Unrealized gain on available for-sale marketable
    securities |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       |       |   |  |   | 1    |    |   |   | 1       |         
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|                                                                          | Total comprehensive loss          |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         | (18,530  | )
|Sale of common stock under stock option plans                             |                                   |                 |         |   |              |   |       |            |  |  | 1,192,729   |          |             |                 | 12    |   |               |   | 5,085   |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 5,097   |         
|Sale of common stock under stock Identix 401(k)Plan                       |                                   |                 |         |   |              |   |       |            |  |  | 117,620     |          |             |                 | 1     |   |               |   | 646     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 647     |         
|Issuance of common stock to IIS employees                                 |                                   |                 |         |   |              |   |       |            |  |  | 143,402     |          |             |                 | 2     |   |               |   | 747     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 749     |         
|Stock issued for acquisition of technology                                |                                   |                 |         |   |              |   |       |            |  |  | 675,000     |          |             |                 | 7     |   |               |   | 3,416   |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 3,423   |         
|Convertible preferred stock converted into common stock                   |                                   |                 | (234,558 | ) |              |   | (3,702 | )          |  |  | 234,558     |          |             |                 | 2     |   |               |   | 3,700   |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   |        |         
|Exercise of stock warrants                                                |                                   |                 |         |   |              |   |       |            |  |  | 121,561     |          |             |                 | 1     |   |               |   | 150     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 151     |         
|Issuance of stock options to consultants                                  |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   | 39      |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 39      |         
|Amortization of deferred stock-based compensation                         |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       | 649    |   |  |   |     |    |   |   | 649     |         
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|Balance June 30, 2004                                                     |                                   |                 |         |   |              | $ |       |            |  |  | 88,429,821  |          |             | $               | 884   |   |               | $ | 549,956 |              |  | $ | (347,193 | )        |   | $     | (14    | ) |  | $ | (144 | )  |   | $ | 203,489 |         
|Components of comprehensive loss:                                         |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         |         
|                                                                          | Net loss                          |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          | (13,966  | ) |       |        |  |  |   |      |   |   |   |         | (13,966  | )
|                                                                          | Cumulative translation adjustment |                 |          |  |              |   |        |           |  |  |             |         |             |                 |       |  |               |   |         |             |  |   |          |         |   |       |        |  |  |   |      | (1 | ) |   |         | (1       | )
|Change in unrealized gain on available for-sale marketable
    securities |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       |       |   |  |   | (6   | )  |   |   | (6      | )       
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|                                                                          | Total comprehensive loss          |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |        |   |  |   |      |    |   |   |         | (13,973  | )
|Sale of common stock under stock option plans                             |                                   |                 |         |   |              |   |       |            |  |  | 441,673     |          |             |                 | 4     |   |               |   | 1,919   |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 1,923   |         
|Sale of common stock under Identix 401(k)Plan                             |                                   |                 |         |   |              |   |       |            |  |  | 104,832     |          |             |                 | 1     |   |               |   | 614     |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 615     |         
|Issuance of stock options to consultants                                  |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   | 18      |              |  |   |         |          |   |       |       |   |  |   |     |    |   |   | 18      |         
|Amortization of deferred stock-based compensation                         |                                   |                 |         |   |              |   |       |            |  |  |            |          |             |                 |      |   |               |   |        |              |  |   |         |          |   |       | 14     |   |  |   |     |    |   |   | 14      |         
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       
|Balance June 30, 2005                                                     |                                   |                 |         |   |              | $ |       |            |  |  | 88,976,326  |          |             | $               | 889   |   |               | $ | 552,507 |              |  | $ | (361,159 | )        |   | $     |       |   |  | $ | (151 | )  |   | $ | 192,086 |         
|                                                                          |                                   |                 |          |   |              |   |        |            |  |  |             |          |             |                 |       |   |               |   |         |              |  |   |          |          |   |       |       



44



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IDENTIX INCORPORATED


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |          |         |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------- | ------- | ------ | - | ------ | ------- | ------ | - | ------- | -------- | ------- | -
|                                                         |                                                                                                             | Twelve Months Ended June 30,                         |        
|                                                         |                                                                                                             |                                                      |        
|                                                         |                                                                                                             | 2005                                                 |         |         | 2004   |   |        | 2003    |       
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Cash flows from operating activities:                    |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |         
|                                                         | Net loss                                                                                                    |                                                      | $       | (13,966 | )      |   | $      | (18,542 | )      |   | $       | (187,374 | )      
|                                                         | Adjustments to reconcile net loss to net cash used in operating
    activities:                             |                                                      |         |         |        |   |        |         |        |   |         |          |        
|                                                         |                                                                                                             | Impairment of Goodwill                               |         |         |       |   |        |         |       |   |         |          | 154,799 |  
|                                                         |                                                                                                             | Gain on sale of discontinued IPS operations, pre-tax |         |         |       |   |        |         | (5,934 | ) |         |          |        |  
|                                                         |                                                                                                             | Depreciation and amortization                        |         |         | 6,378  |   |        |         | 7,822  |   |         |          | 8,280   |  
|                                                         |                                                                                                             | Equity interest in loss of joint venture             |         |         |       |   |        |         | 302    |   |         |          | 285     |  
|                                                         |                                                                                                             | Realized gain on sales of marketable securities      |         |         | (143   | ) |        |         | (46    | ) |         |          | (458    | )
|                                                         |                                                                                                             | Stock-based compensation expense                     |         |         | 32     |   |        |         | 688    |   |         |          | 1,673   |  
|                                                         |                                                                                                             | Amortization of premiums on marketable securities    |         |         |       |   |        |         |       |   |         |          | 16      |  
|                                                         |                                                                                                             | Bad debt expense(recoveries),net                     |         |         | 23     |   |        |         | (539   | ) |         |          | 801     |  
|                                                         |                                                                                                             | Loss on disposal of equipment                        |         |         | 18     |   |        |         | 188    |   |         |          | 265     |  
|                                                         |                                                                                                             | Inventory obsolescence provision                     |         |         | 1,561  |   |        |         | 3,563  |   |         |          | 2,344   |  
|                                                         |                                                                                                             | Restructuring and other, net                         |         |         | (507   | ) |        |         | 1,609  |   |         |          | 758     |  
|                                                         | Changes in assets and liabilities excluding impact of sale of
    IPS and acquisitions in fiscal year 2004: |                                                      |         |         |        |   |        |         |        |   |         |          |        
|                                                         |                                                                                                             | Restricted Cash                                      |         |         | (1,821 | ) |        |         | 431    |   |         |          | (710    | )
|                                                         |                                                                                                             | Accounts receivable                                  |         |         | (3,994 | ) |        |         | 4,745  |   |         |          | (2,335  | )
|                                                         |                                                                                                             | Inventories                                          |         |         | (730   | ) |        |         | (1,366 | ) |         |          | (1,169  | )
|                                                         |                                                                                                             | Prepaid expenses and other assets                    |         |         | (41    | ) |        |         | 480    |   |         |          | 171     |  
|                                                         |                                                                                                             | Accounts payable                                     |         |         | 1,716  |   |        |         | (2,674 | ) |         |          | (2,702  | )
|                                                         |                                                                                                             | Accrued compensation                                 |         |         | 946    |   |        |         | (378   | ) |         |          | (2,489  | )
|                                                         |                                                                                                             | Other accrued liabilities                            |         |         | (6,339 | ) |        |         | (3,172 | ) |         |          | 1,045   |  
|                                                         |                                                                                                             | Deferred revenue                                     |         |         | 1,815  |   |        |         | (119   | ) |         |          | 79      |  
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|                                                         | Net cash used in operating activities                                                                       |                                                      |         | (15,052 | )      |   |        | (12,942 | )      |   |         | (26,721  | )      
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Cash flows from investing activities:                    |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |         
|                                                         | Proceeds from sale of IPS, net of transaction costs                                                         |                                                      |         |        |        |   |        | 7,808   |        |   |         |         |        
|                                                         | Cash paid in acquisition, net of cash acquired                                                              |                                                      |         |        |        |   |        | 1,307   |        |   |         |         |        
|                                                         | Net proceeds from the sales of marketable securities                                                        |                                                      |         | 25,100  |        |   |        | 21,000  |        |   |         | 42,472   |        
|                                                         | Purchases of marketable securities                                                                          |                                                      |         | (25,238 | )      |   |        | (20,929 | )      |   |         | (36,144  | )      
|                                                         | Additions of intangibles and other assets                                                                   |                                                      |         |        |        |   |        |        |        |   |         | (500     | )      
|                                                         | Intangible asset refund                                                                                     |                                                      |         |        |        |   |        | 102     |        |   |         |         |        
|                                                         | Capital expenditures                                                                                        |                                                      |         | (847    | )      |   |        | (1,009  | )      |   |         | (1,393   | )      
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|                                                         | Net cash provided by (used in) investing activities                                                         |                                                      |         | (985    | )      |   |        | 8,279   |        |   |         | 4,435    |        
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Cash flows from financing activities:                    |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |         
|                                                         | Proceeds from sales of common stock                                                                         |                                                      |         | 2,538   |        |   |        | 5,895   |        |   |         | 3,652    |        
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|                                                         | Net cash provided by financing activities                                                                   |                                                      |         | 2,538   |        |   |        | 5,895   |        |   |         | 3,652    |        
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Net increase (decrease) in cash and cash equivalents     |                                                                                                             |                                                      | (13,499 | )       |        |   | 1,232  |         |        |   | (18,634 | )       
|Cash and cash equivalents at period beginning            |                                                                                                             |                                                      | 35,944  |         |        |   | 34,712 |         |        |   | 53,346  |         
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Cash and cash equivalents at period end                  |                                                                                                             | $                                                    | 22,445  |         |        | $ | 35,944 |         |        | $ | 34,712  |         
|                                                         |                                                                                                             |                                                      |         |         |        |   |        |         |       
|Supplemental disclosures of cash flow information:       |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |         
|                                                         | Cash paid during the year for:                                                                              |                                                      |         |         |        |   |        |         |        |   |         |          |        
|                                                         | Interest                                                                                                    |                                                      | $       | 11      |        |   | $      | 2       |        |   | $       | 8        |        
|                                                         | Taxes                                                                                                       |                                                      | $       | 12      |        |   | $      | 94      |        |   | $       | 128      |        
|Schedule of non-cash investing and financing activities: |                                                                                                             |                                                      |         |         |        |   |        |         |        |   |         |         
|                                                         | Stock issued for acquisition of technology                                                                  |                                                      | $       |        |        |   | $      | 3,423   |        |   | $       |         |        
|                                                         | Conversion of preferred stock to common stock                                                               |                                                      | $       |        |        |   | $      | 3,702   |        |   | $       |         |        
|                                                         | Issuance of common stock to IIS employees                                                                   |                                                      | $       |        |        |   | $      | 749     |        |   | $       |         |        



45



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|         |                                                    
|-------- | ---------------------------------------------------
|Note 1  | The Company and Its Significant Accounting Policies





Basis of
Consolidation




Management Estimates and
Assumptions




Liquidity




Joint Venture




Revenue Recognition




46



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##### 







Product Revenues








47



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##### 









Service Revenues








Reclassifications




Major Customers




48



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##### 



Cash Equivalents and
Marketable Securities




Restricted Cash




Concentration of Credit
Risk






Trade Accounts
Receivable




Suppliers




Fair Value of Financial
Instruments




Inventories




49



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##### 





Property and
Equipment




|                        |  |      |                                             | 
|----------------------- |  | ---- | ------------------------------------------- | 
|Class                   |  | Life |                                            
|                        |  |      |                                            
|Tools and Dies          |  |      | 2 Years                                     | 
|Software                |  |      | 2 Years                                     | 
|Machinery and Equipment |  |      | 3 Years                                     | 
|Furniture and Fixtures  |  |      | 10 Years                                    | 
|Capital Lease Equipment |  |      | Over the shorter of the term or useful life | 
|Leasehold Improvements  |  |      | Over the shorter of the term or useful life | 







| |                  
| | -----------------
| | Intangible Assets





| |         
| | --------
| | Goodwill



50



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##### 







| |                               
| | ------------------------------
| | Research and Development Costs





| |                           
| | --------------------------
| | Software Development Costs





| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                 
| | ----------------
| | Product Warranty





| |             
| | ------------
| | Income Taxes





| |                         
| | ------------------------
| | Stock-Based Compensation



51



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##### 







|                                      |                                                                                                                     |                            |         |         |      |   |         |        |   |   |          |        |  
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ---- | - | ------- | ------ | - | - | -------- | ------ | -
|                                      |                                                                                                                     | Fiscal Year Ended June 30, |        
|                                      |                                                                                                                     |                            |        
|                                      |                                                                                                                     | 2005                       |         |         | 2004 |   |         | 2003   |  
|                                      |                                                                                                                     |                            |         |         |      |   |         |        |  
|                                      |                                                                                                                     | (in thousands)             |        
|Net Loss as reported                  |                                                                                                                     | $                          | (13,966 | )       |      | $ | (18,542 | )      |   | $ | (187,374 | )     
|                                      | Add: Employee stock-based compensation expense included in
    reported net loss                                    |                            |         | 14      |      |   |         | 649    |   |   |          | 1,673  |  
|                                      | Deduct: Total employee stock-based compensation expense
    determined under fair value based method for all awards |                            |         | (11,370 | )    |   |         | (3,836 | ) |   |          | (8,257 | )
|                                      |                                                                                                                     |                            |         |         |      |   |         |        |  
|Proforma net loss                     |                                                                                                                     | $                          | (25,322 | )       |      | $ | (21,729 | )      |   | $ | (193,958 | )     
|                                      |                                                                                                                     |                            |         |         |      |   |         |        |  
|Basic and diluted net loss per share: |                                                                                                                     |                            |         |         |      |   |         |        |   |   |          |       
|                                      | As Reported                                                                                                         |                            | $       | (0.16   | )    |   | $       | (0.21  | ) |   | $        | (2.20  | )
|                                      | Proforma                                                                                                            |                            | $       | (0.29   | )    |   | $       | (0.25  | ) |   | $        | (2.28  | )
|Shares                                |                                                                                                                     |                            | 88,696  |         |      |   | 86,758  |        |   |   | 85,242   |       



|                        |  |                   |      |   |      |  |      |      |  |  |      |  
|----------------------- |  | ----------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                        |  | Fiscal Year Ended |     
|                        |  | June 30,          |     
|                        |  |                   |     
|                        |  | 2005              |      |   | 2004 |  |      | 2003 | 
|                        |  |                   |      |   |      |  |      |      | 
|Expected life (years)   |  |                   | 4.96 |   |      |  | 5.51 |      |  |  | 4.59 |  
|Risk free interest rate |  |                   | 3.62 | % |      |  | 4.00 | %    |  |  | 3.42 | %
|Volatility              |  |                   | 81   | % |      |  | 88   | %    |  |  | 91   | %
|Dividend yield          |  |                   |     | % |      |  |     | %    |  |  |     | %







| |                                                                
| | ---------------------------------------------------------------
| | Comprehensive Loss and Accumulated Other Comprehensive
    Loss



52



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|                                           |  |                |      |   |          |   |      |  
|------------------------------------------ |  | -------------- | ---- | - | -------- | - | ---- | -
|                                           |  | June 30,       |      |   | June 30, |  
|                                           |  | 2005           |      |   | 2004     |  
|                                           |  |                |      |   |          |  
|                                           |  | (In thousands) |     
|Cumulative translation adjustment          |  | $              | (151 | ) |          | $ | (150 | )
|Unrealized gain on marketable securities   |  |                |     |   |          |   | 6    |  
|                                           |  |                |      |   |          |  
|Total accumulated other comprehensive loss |  | $              | (151 | ) |          | $ | (144 | )
|                                           |  |                |      |   |          |  



| |                   
| | ------------------
| | Earnings Per Share







| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements







53



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##### 







Note 2  Restatement of Fiscal Year 2004
Consolidated Financial Statements


Accounting for Income Taxes


54



---



##### 



|                                                      |                                                        |                                     |         |       |             |   |                   |               |        |   |         |       |       | 
|----------------------------------------------------- | ------------------------------------------------------ | ----------------------------------- | ------- | ----- | ----------- | - | ----------------- | ------------- | ------ | - | ------- | ----- | ----- | 
|                                                      |                                                        | Fiscal Year Ended                   |         |       |             |   |                  
|                                                      |                                                        | June 30, 2004                       |         |       |             |   | Fiscal Year Ended |              
|                                                      |                                                        | (as previously                      |         |       |             |   | June 30, 2004     |              
|                                                      |                                                        | reported)                           |         |       | Adjustments |   |                   | (as restated) |       
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|Loss from continuing operations before income taxes   |                                                        | $                                   | (23,624 | )     |             | $ |                  |               |        | $ | (23,624 | )    
|Benefit (provision) for income taxes                  |                                                        |                                     | (43     | )     |             |   | 2,000             |               |        |   | 1,957   |      
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|Loss from continuing operations                       |                                                        |                                     | (23,667 | )     |             |   | 2,000             |               |        |   | (21,667 | )    
|Discontinued Operations:                              |                                                        |                                     |         |       |             |   |                   |               |        |   |         |      
|                                                      | Loss from discontinued IPS operations                  |                                     |         | (809  | )           |   |                   |              |        |   |         | (809  | )    
|                                                      | Gain on sale of IPS, net of provision for income taxes |                                     |         | 5,934 |             |   |                   | (2,000        | )      |   |         | 3,934 |      
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|                                                      |                                                        | Income from discontinued operations |         |       | 5,125       |   |                   |               | (2,000 | ) |         |       | 3,125 | 
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|Net loss                                              |                                                        | $                                   | (18,542 | )     |             | $ |                  |               |        | $ | (18,542 | )    
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|Basic and diluted loss per share:                     |                                                        |                                     |         |       |             |   |                   |               |        |   |         |      
|                                                      | Continuing operations                                  |                                     | $       | (0.27 | )           |   | $                 | 0.02          |        |   | $       | (0.25 | )    
|                                                      | Discontinued operations                                |                                     |         | 0.06  |             |   |                   | (0.02         | )      |   |         | 0.04  |      
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|                                                      | Basic and diluted net loss per share                   |                                     | $       | (0.21 | )           |   | $                 |              |        |   | $       | (0.21 | )    
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       
|Weighted average shares outstanding basic and diluted |                                                        |                                     | 86,758  |       |             |   |                  |               |        |   | 86,758  |      
|                                                      |                                                        |                                     |         |       |             |   |                   |               |       



|         |             
|-------- | ------------
|Note 3  | Acquisitions







|         |                                   
|-------- | ----------------------------------
|Note 4  | Discontinued Operations (Restated)



55



---



##### 







|                                      |  |                   |        |   |      |   |        |  
|------------------------------------- |  | ----------------- | ------ | - | ---- | - | ------ | -
|                                      |  | Fiscal Year Ended |       
|                                      |  | June 30,          |       
|                                      |  |                   |       
|                                      |  | 2004*             |        |   | 2003 |  
|                                      |  |                   |        |   |      |  
|                                      |  | (In thousands)    |       
|Revenue                               |  | $                 | 20,078 |   |      | $ | 39,830 |  
|Cost of sales                         |  |                   | 17,550 |   |      |   | 35,023 |  
|Operating Expenses                    |  |                   | 3,337  |   |      |   | 8,241  |  
|                                      |  |                   |        |   |      |  
|Loss from discontinued IPS operations |  | $                 | (809   | ) |      | $ | (3,434 | )
|                                      |  |                   |        |   |      |  






|  |                                                                                           
|- | ------------------------------------------------------------------------------------------
|* | This period reflects activity only through February 13,
    2004, the date of disposition.



|                                                      |  |                   |        |  
|----------------------------------------------------- |  | ----------------- | ------ | -
|                                                      |  | Fiscal Year Ended |       
|                                                      |  | June 30, 2004     |       
|                                                      |  | Restated          |       
|                                                      |  |                   |       
|                                                      |  | (In thousands)    |       
|Gain on sale of IPS                                   |  | $                 | 5,934  |  
|Provision for income taxes                            |  |                   | (2,000 | )
|                                                      |  |                   |       
|Gain on sale of IPS net of provision for income taxes |  | $                 | 3,934  |  
|                                                      |  |                   |       



|         |                        
|-------- | -----------------------
|Note 5  | Restructuring and Other



|                                                               |                                    |                   |      |      |      |   |       |      |  |   |       |       | 
|-------------------------------------------------------------- | ---------------------------------- | ----------------- | ---- | ---- | ---- | - | ----- | ---- |  | - | ----- | ----- | 
|                                                               |                                    | Fiscal Year Ended |     
|                                                               |                                    |                   |     
|                                                               |                                    | 2005              |      |      | 2004 |   |       | 2003 | 
|                                                               |                                    |                   |      |      |      |   |       |      | 
|                                                               |                                    | (In thousands)    |     
|Charges related to restructuring in actions initiated in 2002: |                                    |                   |      |      |      |   |       |      |  |   |       |      
|                                                               | Severence and benefits             |                   | $    |     |      |   | $     |     |  |   | $     | 2,283 | 
|                                                               | Disposal of property and equipment |                   |      |     |      |   |       |     |  |   |       | 370   | 
|                                                               | Lease exit costs                   |                   |      | (620 | )    |   |       | 610  |  |   |       | 1,061 | 
|                                                               | Internal merger costs and other    |                   |      |     |      |   |       |     |  |   |       | 2,613 | 
|Severence costs                                                |                                    |                   | 113  |      |      |   | 250   |      |  |   |      |      
|Employee agreement obligation                                  |                                    |                   |     |      |      |   | 506   |      |  |   |      |      
|SIFC acquisition related                                       |                                    |                   |     |      |      |   | 749   |      |  |   |      |      
|                                                               |                                    |                   |      |      |      |   |       |      | 
|                                                               |                                    | $                 | (507 | )    |      | $ | 2,115 |      |  | $ | 6,327 |      
|                                                               |                                    |                   |      |      |      |   |       |      | 

56



---



##### 



2005 Restructuring
Actions




2004 Restructuring and Other
Actions




2002 Restructuring
Program


Severence and benefits




Disposal of property and
equipment




Lease exit costs






57



---



##### 





Internal merger costs and
other






|                                   |  |                |        |  |          |   |       |          |               |   |                 |  |  |   |     | 
|---------------------------------- |  | -------------- | ------ |  | -------- | - | ----- | -------- | ------------- | - | --------------- |  |  | - | --- | 
|                                   |  | Total Charges  |        |  |          |   |       |          |              
|                                   |  | from           |        |  |          |   |       |          | Restructuring |  
|                                   |  | Continuing     |        |  | Non-Cash |   |       | Cash     |               |   | Liability as of | 
|                                   |  | Operations     |        |  | Charges  |   |       | Payments |               |   | June 30, 2005   | 
|                                   |  |                |        |  |          |   |       |          |               |   |                 | 
|                                   |  | (In thousands) |       
|Severance and benefits             |  | $              | 8,626  |  |          | $ | 900   |          |               | $ | 7,618           |  |  | $ | 108 | 
|Disposal of property and equipment |  |                | 1,664  |  |          |   | 1,664 |          |               |   |                |  |  |   |    | 
|Lease exit costs                   |  |                | 10,558 |  |          |   | 388   |          |               |   | 9,809           |  |  |   | 361 | 
|Internal merger costs and other    |  |                | 3,684  |  |          |   |      |          |               |   | 3,684           |  |  |   |    | 
|                                   |  |                |        |  |          |   |       |          |               |   |                 | 
|Total                              |  | $              | 24,532 |  |          | $ | 2,952 |          |               | $ | 21,111          |  |  | $ | 469 | 
|                                   |  |                |        |  |          |   |       |          |               |   |                 | 



|                       |  |                 |       |               |            |   |      |               |  |                 |               |  |  |   |     | 
|---------------------- |  | --------------- | ----- | ------------- | ---------- | - | ---- | ------------- |  | --------------- | ------------- |  |  | - | --- | 
|                       |  |                 |       | Total Charges |            |   |      |               | 
|                       |  | Restructuring   |       |               | from       |   |      |               |  | Restructuring   |              
|                       |  | Liability as of |       |               | Continuing |   |      |               |  | Liability as of |              
|                       |  | June 30, 2004   |       |               | Operations |   |      | Cash Payments |  |                 | June 30, 2005 | 
|                       |  |                 |       |               |            |   |      |               |  |                 |               | 
|                       |  | (In thousands)  |      
|Severance and benefits |  | $               | 120   |               |            | $ |     |               |  | $               | 12            |  |  | $ | 108 | 
|Lease exit costs       |  |                 | 7,600 |               |            |   | (620 | )             |  |                 | 6,619         |  |  |   | 361 | 
|                       |  |                 |       |               |            |   |      |               |  |                 |               | 
|Total                  |  | $               | 7,720 |               |            | $ | (620 | )             |  | $               | 6,631         |  |  | $ | 469 | 
|                       |  |                 |       |               |            |   |      |               |  |                 |               | 





|         |                     
|-------- | --------------------
|Note 6  | Balance Sheet Detail

|                                      |                          |                |        |        |      |   |        |        | 
|------------------------------------- | ------------------------ | -------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                      |                          | June 30,       |       
|                                      |                          |                |       
|                                      |                          | 2005           |        |        | 2004 |  
|                                      |                          |                |        |        |      |  
|                                      |                          | (In thousands) |       
|Accounts receivable:                  |                          |                |        |        |      |   |        |       
|                                      | Commercial and other     |                | $      | 14,607 |      |   | $      | 11,669 | 
|                                      | United States Government |                |        | 1,286  |      |   |        | 790    | 
|                                      | Other receivables        |                |        | 34     |      |   |        | 77     | 
|Less: allowance for doubtful accounts |                          |                | (551   | )      |      |   | (1,124 | )     
|                                      |                          |                |        |        |      |  
|                                      |                          | $              | 15,376 |        |      | $ | 11,412 |       
|                                      |                          |                |        |        |      |  

58



---



##### 



|                                                |                                          |                |        |       |      |   |        |       | 
|----------------------------------------------- | ---------------------------------------- | -------------- | ------ | ----- | ---- | - | ------ | ----- | 
|                                                |                                          | June 30,       |       
|                                                |                                          |                |       
|                                                |                                          | 2005           |        |       | 2004 |  
|                                                |                                          |                |        |       |      |  
|                                                |                                          | (In thousands) |       
|Inventories:                                    |                                          |                |        |       |      |   |        |      
|                                                | Purchased parts and materials            |                | $      | 3,403 |      |   | $      | 1,620 | 
|                                                | Work-in-process                          |                |        | 2,008 |      |   |        | 4,361 | 
|                                                | Finished goods, including spares         |                |        | 929   |      |   |        | 1,190 | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          | $              | 6,340  |       |      | $ | 7,171  |      
|                                                |                                          |                |        |       |      |  
|Property and equipment:                         |                                          |                |        |       |      |   |        |      
|                                                | Manufacturing, test and office equipment |                | $      | 6,919 |      |   | $      | 5,632 | 
|                                                | Furniture and fixtures                   |                |        | 795   |      |   |        | 1,284 | 
|                                                | Leasehold improvements                   |                |        | 543   |      |   |        | 543   | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          |                | 8,257  |       |      |   | 7,459  |      
|Less: accumulated depreciation and amortization |                                          |                | (6,519 | )     |      |   | (5,306 | )    
|                                                |                                          |                |        |       |      |  
|                                                |                                          | $              | 1,738  |       |      | $ | 2,153  |      
|                                                |                                          |                |        |       |      |  
|Other assets:                                   |                                          |                |        |       |      |   |        |      
|                                                | Deposits                                 |                | $      | 317   |      |   | $      | 152   | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          |                | 317    |       |      |   | 152    |      
|                                                |                                          |                |        |       |      |  
|Accrued compensation:                           |                                          |                |        |       |      |   |        |      
|                                                | Salary and wages                         |                | $      | 1,525 |      |   | $      | 1,016 | 
|                                                | Severance                                |                |        | 41    |      |   |        | 136   | 
|                                                | Benefits                                 |                |        | 2,116 |      |   |        | 1,724 | 
|                                                | Payroll taxes                            |                |        | 212   |      |   |        | 72    | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          | $              | 3,894  |       |      | $ | 2,948  |      
|                                                |                                          |                |        |       |      |  
|Other accrued liabilities                       |                                          |                |        |       |      |   |        |      
|                                                | Lease exit costs                         |                | $      | 361   |      |   | $      | 2,448 | 
|                                                | Warranty reserve                         |                |        | 1,416 |      |   |        | 921   | 
|                                                | Customer deposits                        |                |        | 798   |      |   |        | 781   | 
|                                                | Other accrued liabilities                |                |        | 1,059 |      |   |        | 842   | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          | $              | 3,634  |       |      | $ | 4,992  |      
|                                                |                                          |                |        |       |      |  
|Other accrued liabilities  noncurrent          |                                          |                |        |       |      |   |        |      
|                                                | Lease exit costs                         |                | $      |      |      |   | $      | 5,152 | 
|                                                | Severance                                |                |        | 72    |      |   |        | 85    | 
|                                                | Other accrued liabilities                |                |        | 87    |      |   |        | 410   | 
|                                                |                                          |                |        |       |      |  
|                                                |                                          | $              | 159    |       |      | $ | 5,647  |      
|                                                |                                          |                |        |       |      |  



|         |               
|-------- | --------------
|Note 7  | Line Of Credit



59



---



##### 









|         |                  
|-------- | -----------------
|Note 8  | Intangible Assets



|                                                |  |                |        |  |                |   |         |     |  |          |        |  |             |              |        |  |     |   |         |   |  |   |        | 
|----------------------------------------------- |  | -------------- | ------ |  | -------------- | - | ------- | --- |  | -------- | ------ |  | ----------- | ------------ | ------ |  | --- | - | ------- | - |  | - | ------ | 
|                                                |  | June 30, 2005  |        |  | June 30, 2004  |  
|                                                |  |                |        |  |                |  
|                                                |  | Gross          |        |  |                |   | Gross   |     |  |         
|                                                |  | Carrying       |        |  | Accumulated    |   |         |     |  | Carrying |        |  | Accumulated |              |        | 
|                                                |  | Amount         |        |  | Amortization   |   |         | Net |  |          | Amount |  |             | Amortization |        |  | Net |  
|                                                |  |                |        |  |                |   |         |     |  |          |        |  |             |              |        |  |     |  
|                                                |  | (In thousands) |        |  | (In thousands) |  
|Acquired intangible assets:                     |  |                |        |  |                |   |         |     |  |          |        |  |             |              |        |  |     |   |         |   |  |   |        | 
|Developed technology                            |  | $              | 16,100 |  |                | $ | (9,706  | )   |  | $        | 6,394  |  |             | $            | 16,100 |  |     | $ | (6,484  | ) |  | $ | 9,616  | 
|Service/maintenance agreements                  |  |                | 4,440  |  |                |   | (2,103  | )   |  |          | 2,337  |  |             |              | 4,440  |  |     |   | (1,287  | ) |  |   | 3,153  | 
|Patents/core technology                         |  |                | 11,410 |  |                |   | (6,803  | )   |  |          | 4,607  |  |             |              | 11,410 |  |     |   | (5,895  | ) |  |   | 5,515  | 
|Tradename/ Trademark                            |  |                | 500    |  |                |   | (500    | )   |  |          |       |  |             |              | 500    |  |     |   | (337    | ) |  |   | 163    | 
|Order backlog and employee contracts            |  |                | 300    |  |                |   | (275    | )   |  |          | 25     |  |             |              | 300    |  |     |   | (250    | ) |  |   | 50     | 
|Patents and licenses                            |  |                | 204    |  |                |   | (204    | )   |  |          |       |  |             |              | 204    |  |     |   | (204    | ) |  |   |       | 
|Internal Capitalized software development costs |  |                | 179    |  |                |   | (179    | )   |  |          |       |  |             |              | 179    |  |     |   | (179    | ) |  |   |       | 
|                                                |  |                |        |  |                |   |         |     |  |          |        |  |             |              |        |  |     |  
|                                                |  | $              | 33,133 |  |                | $ | (19,770 | )   |  | $        | 13,363 |  |             | $            | 33,133 |  |     | $ | (14,636 | ) |  | $ | 18,497 | 
|                                                |  |                |        |  |                |   |         |     |  |          |        |  |             |              |        |  |     |  





|                             |       |   |       |        | 
|---------------------------- | ----- | - | ----- | ------ | 
|For year ended June 30, 2006 |       | $ | 4,929 |       
|For year ended June 30, 2007 |       | $ | 4,861 |       
|For year ended June 30, 2008 |       | $ | 1,567 |       
|For year ended June 30, 2009 |       | $ | 395   |       
|For year ended June 30, 2010 |       | $ | 345   |       
|Thereafter                   |       | $ | 1,266 |       
|                             |       |   |      
|                             | Total |   | $     | 13,363 | 
|                             |       |   |      



|         |         
|-------- | --------
|Note 9  | Goodwill



60



---



##### 







|                                     |  |                            |         |  |      |   |         |      |  |   |          |  
|------------------------------------ |  | -------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | -------- | -
|                                     |  | Fiscal Year Ended June 30, |        
|                                     |  |                            |        
|                                     |  | 2005                       |         |  | 2004 |   |         | 2003 | 
|                                     |  |                            |         |  |      |   |         |      | 
|                                     |  | (In thousands)             |        
|Balance at the beginning of the year |  | $                          | 141,213 |  |      | $ | 140,945 |      |  | $ | 295,744  |  
|Acquisition of IIS                   |  |                            |        |  |      |   | 268     |      |  |   |         |  
|Impairment                           |  |                            |        |  |      |   |        |      |  |   | (154,799 | )
|                                     |  |                            |         |  |      |   |         |      | 
|Balance at the end of the year       |  | $                          | 141,213 |  |      | $ | 141,213 |      |  | $ | 140,945  |  
|                                     |  |                            |         |  |      |   |         |      | 



|          |                      
|--------- | ---------------------
|Note 10  | Marketable Securities



|                                       |  |                                 |       |            |       |   |            |  |  |   |       | 
|-------------------------------------- |  | ------------------------------- | ----- | ---------- | ----- | - | ---------- |  |  | - | ----- | 
|                                       |  | Fiscal Year Ended June 30, 2005 |      
|                                       |  |                                 |      
|                                       |  |                                 |       | Gross      |       |  
|                                       |  |                                 |       | Unrealized |       |  
|                                       |  | Cost                            |       |            | Gains |   | Fair Value | 
|                                       |  |                                 |       |            |       |   |            | 
|                                       |  | (In thousands)                  |      
|U.S. government and agency obligations |  | $                               | 8,765 |            |       | $ |           |  |  |   | 8,765 | 
|Commercial Paper                       |  |                                 | 988   |            |       |   |           |  |  |   | 988   | 
|                                       |  |                                 |       |            |       |   |            |  | 
|                                       |  | $                               | 9,753 |            |       | $ |           |  |  | $ | 9,753 | 
|                                       |  |                                 |       |            |       |   |            |  | 

|                                       |  |                                 |       |            |       |   |   |            |  |   |       | 
|-------------------------------------- |  | ------------------------------- | ----- | ---------- | ----- | - | - | ---------- |  | - | ----- | 
|                                       |  | Fiscal Year Ended June 30, 2004 |      
|                                       |  |                                 |      
|                                       |  |                                 |       | Gross      |       |   |  
|                                       |  |                                 |       | Unrealized |       |   |  
|                                       |  | Cost                            |       |            | Gains |   |   | Fair Value | 
|                                       |  |                                 |       |            |       |   |   |            | 
|                                       |  | (In thousands)                  |      
|U.S. government and agency obligations |  | $                               | 7,975 |            |       | $ |  |            |  |   | 7,975 | 
|Commercial Paper                       |  |                                 | 991   |            |       |   |  |            |  |   | 991   | 
|Corporate Bonds                        |  |                                 | 500   |            |       |   | 6 |            |  |   | 506   | 
|                                       |  |                                 |       |            |       |   |   |            | 
|                                       |  | $                               | 9,466 |            |       | $ | 6 |            |  | $ | 9,472 | 
|                                       |  |                                 |       |            |       |   |   |            | 





|          |              
|--------- | -------------
|Note 11  | Capital Stock

Convertible Preferred
Stock




61



---



##### 





Employee Stock
Options
















62



---



##### 





|                                                                  |  |               |            |   |             |  |            |               |  |   |       | 
|----------------------------------------------------------------- |  | ------------- | ---------- | - | ----------- |  | ---------- | ------------- |  | - | ----- | 
|                                                                  |  | Shares        |            |   |             |  |           
|                                                                  |  | Available for |            |   | Options     |  |            | Weighted      | 
|                                                                  |  | Grant         |            |   | Outstanding |  |            | Average Price | 
|                                                                  |  |               |            |   |             |  |            |               | 
|Balance as of June 30, 2002                                       |  |               | 6,403,239  |   |             |  | 9,354,440  |               |  | $ | 7.61  | 
|Shares reserved upon adoption of amendment to Directors
    Plan |  |               | 450,000    |   |             |  |           |               |  |   |       | 
|Options granted                                                   |  |               | (2,008,118 | ) |             |  | 2,008,118  |               |  | $ | 4.66  | 
|Options exercised                                                 |  |               |           |   |             |  | (779,221   | )             |  | $ | 2.77  | 
|Options canceled                                                  |  |               | 2,323,673  |   |             |  | (2,323,673 | )             |  | $ | 10.10 | 
|                                                                  |  |               |            |   |             |  |            |               | 
|Balance as of June 30, 2003                                       |  |               | 7,168,794  |   |             |  | 8,259,664  |               |  | $ | 6.62  | 
|Options granted                                                   |  |               | (1,450,023 | ) |             |  | 1,450,023  |               |  | $ | 5.69  | 
|Options exercised                                                 |  |               |           |   |             |  | (1,192,729 | )             |  | $ | 4.29  | 
|Options canceled                                                  |  |               | 2,162,648  |   |             |  | (2,162,648 | )             |  | $ | 8.55  | 
|                                                                  |  |               |            |   |             |  |            |               | 
|Balance as of June 30, 2004                                       |  |               | 7,881,419  |   |             |  | 6,354,310  |               |  | $ | 6.21  | 
|Options granted                                                   |  |               | (1,668,870 | ) |             |  | 1,668,870  |               |  | $ | 6.14  | 
|Options exercised                                                 |  |               |            |   |             |  | (441,673   | )             |  | $ | 4.35  | 
|Options canceled                                                  |  |               | 491,403    |   |             |  | (522,826   | )             |  | $ | 9.14  | 
|                                                                  |  |               |            |   |             |  |            |               | 
|Balance as of June 30, 2005                                       |  |               | 6,703,952  |   |             |  | 7,058,681  |               |  | $ | 6.09  | 
|                                                                  |  |               |            |   |             |  |            |               | 







|                         |  |                     |           |                |                     |  |          |       |  |   |        |          |  |       |           |  |  |   |       | 
|------------------------ |  | ------------------- | --------- | -------------- | ------------------- |  | -------- | ----- |  | - | ------ | -------- |  | ----- | --------- |  |  | - | ----- | 
|                         |  | Options Outstanding |           |                | Options Exercisable | 
|                         |  |                     |           |                |                     | 
|                         |  |                     |           | Weighted       |                     |  | Weighted |       |  |   |        | Weighted | 
|                         |  |                     |           | Average        |                     |  | Average  |       |  |   |        | Average  | 
|                         |  |                     |           | Remaining Life |                     |  | Exercise |       |  |   |        | Exercise | 
|Range of Exercise Prices |  | Number              |           |                | (in Years)          |  |          | Price |  |   | Number |          |  | Price |          
|                         |  |                     |           |                |                     |  |          |       |  |   |        |          |  |       |          
|$0.51-$1.01              |  |                     | 370,470   |                |                     |  | 4.52     |       |  | $ | 0.81   |          |  |       | 370,470   |  |  | $ | 0.81  | 
|$1.01-$3.35              |  |                     | 304,444   |                |                     |  | 2.31     |       |  |   | 2.59   |          |  |       | 304,444   |  |  |   | 2.59  | 
|$3.35-$4.45              |  |                     | 674,718   |                |                     |  | 6.07     |       |  |   | 4.21   |          |  |       | 426,227   |  |  |   | 4.16  | 
|$4.45-$4.88              |  |                     | 738,366   |                |                     |  | 7.50     |       |  |   | 4.75   |          |  |       | 367,430   |  |  |   | 4.73  | 
|$4.88-$5.27              |  |                     | 710,539   |                |                     |  | 7.85     |       |  |   | 5.24   |          |  |       | 710,539   |  |  |   | 5.24  | 
|$5.27-$6.19              |  |                     | 2,123,790 |                |                     |  | 8.50     |       |  |   | 5.81   |          |  |       | 2,123,790 |  |  |   | 5.81  | 
|$6.19-$7.95              |  |                     | 1,198,503 |                |                     |  | 7.55     |       |  |   | 7.10   |          |  |       | 1,116,003 |  |  |   | 7.09  | 
|$7.95-$11.32             |  |                     | 607,747   |                |                     |  | 3.62     |       |  |   | 10.30  |          |  |       | 607,747   |  |  |   | 10.30 | 
|$11.32-$14.97            |  |                     | 295,104   |                |                     |  | 4.94     |       |  |   | 14.08  |          |  |       | 295,104   |  |  |   | 14.08 | 
|$16.38                   |  |                     | 35,000    |                |                     |  | 5.01     |       |  |   | 16.38  |          |  |       | 35,000    |  |  |   | 16.38 | 
|                         |  |                     |           |                |                     |  |          |       |  |   |        |          |  |       |          
|                         |  |                     | 7,058,681 |                |                     |  | 6.87     |       |  | $ | 6.09   |          |  |       | 6,356,754 |  |  | $ | 6.22  | 
|                         |  |                     |           |                |                     |  |          |       |  |   |        |          |  |       |          

63



---



##### 





| |                             
| | ----------------------------
| | Employee Stock Purchase Plan





| |                          
| | -------------------------
| | Defined Contribution Plan





| |         
| | --------
| | Warrants









64



---



##### 





|          |                           
|--------- | --------------------------
|Note 12  | Related Party Transactions



Note 13  Income Taxes (Restated)




|                                                          |  |                            |        |      |          |   |        |      |  |   |         |  
|--------------------------------------------------------- |  | -------------------------- | ------ | ---- | -------- | - | ------ | ---- |  | - | ------- | -
|                                                          |  | Fiscal Year Ended June 30, |       
|                                                          |  |                            |       
|                                                          |  |                            |        | 2004 |          |   |       
|                                                          |  | 2005                       |        |      | Restated |   |        | 2003 | 
|                                                          |  |                            |        |      |          |   |        |      | 
|                                                          |  | (In thousands)             |       
|Federal tax at statutory rate                             |  | $                          | (4,873 | )    |          | $ | (6,489 | )    |  | $ | (65,418 | )
|State tax, net of federal benefit                         |  |                            | (301   | )    |          |   | (1,119 | )    |  |   | 632     |  
|Tax benefit from discontinued operations (see note below) |  |                            |       |      |          |   | (2,000 | )    |  |   |        |  
|Stock-based compensation                                  |  |                            | 5      |      |          |   | 239    |      |  |   | 647     |  
|Gain on sale of subsidiary                                |  |                            |       |      |          |   | 667    |      |  |   |        |  
|Goodwill impairment                                       |  |                            |       |      |          |   |       |      |  |   | 54,180  |  
|Change in valuation allowance                             |  |                            | 5,152  |      |          |   | 6,544  |      |  |   | 10,348  |  
|Other                                                     |  |                            | 59     |      |          |   | 201    |      |  |   | (209    | )
|                                                          |  |                            |        |      |          |   |        |      | 
|                                                          |  | $                          | 42     |      |          | $ | (1,957 | )    |  | $ | 180     |  
|                                                          |  |                            |        |      |          |   |        |      | 





|                                             |                                |                |         |        |      |   |         |        |  
|-------------------------------------------- | ------------------------------ | -------------- | ------- | ------ | ---- | - | ------- | ------ | -
|                                             |                                | June 30,       |        
|                                             |                                |                |        
|                                             |                                | 2005           |         |        | 2004 |  
|                                             |                                |                |         |        |      |  
|                                             |                                | (In thousands) |        
|Net operating loss carryforwards             |                                | $              | 78,837  |        |      | $ | 74,616  |       
|Restructuring reserves and basis differences |                                |                | 2,302   |        |      |   | 6,438   |       
|Accounts receivable and related allowances   |                                |                | 215     |        |      |   | 617     |       
|Deferred revenue                             |                                |                | 551     |        |      |   | 322     |       
|Tax credit carryforward                      |                                |                | 2,786   |        |      |   | 2,786   |       
|Other                                        |                                |                | 77      |        |      |   | 664     |       
|                                             |                                |                |         |        |      |  
|                                             | Gross deferred tax assets      |                |         | 84,768 |      |   |         | 85,443 |  
|Valuation allowance                          |                                |                | (81,077 | )      |      |   | (77,702 | )     
|                                             |                                |                |         |        |      |  
|                                             | Net deferred assets            |                |         | 3,691  |      |   |         | 7,741  |  
|                                             |                                |                |         |        |      |  
|Unbilled accounts receivable                 |                                |                |        |        |      |   | (2,195  | )     
|Acquired intangibles                         |                                |                | (3,691  | )      |      |   | (5,546  | )     
|                                             |                                |                |         |        |      |  
|                                             | Gross deferred tax liabilities |                |         | (3,691 | )    |   |         | (7,741 | )
|                                             |                                |                |         |        |      |  
|                                             | Total net deferred tax asset   |                | $       |       |      |   | $       |       |  
|                                             |                                |                |         |        |      |  



65



---



##### 











|          |                        
|--------- | -----------------------
|Note 14  | Reportable Segment Data



66



---



##### 



|                                          |                   |                            |         |         |      |   |         |         |   |   |          |          |  
|----------------------------------------- | ----------------- | -------------------------- | ------- | ------- | ---- | - | ------- | ------- | - | - | -------- | -------- | -
|                                          |                   | Fiscal Year Ended June 30, |        
|                                          |                   |                            |        
|                                          |                   | 2005                       |         |         | 2004 |   |         | 2003    |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | (In thousands)             |        
|Total revenues:                           |                   |                            |         |         |      |   |         |         |   |   |          |         
|                                          | Biometric systems |                            | $       | 65,055  |      |   | $       | 50,054  |   |   | $        | 48,658   |  
|                                          | Other             |                            |         | 8,777   |      |   |         | 5,145   |   |   |          | 4,026    |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | $                          | 73,832  |         |      | $ | 55,199  |         |   | $ | 52,684   |         
|                                          |                   |                            |         |         |      |   |         |         |  
|Depreciation and amortization             |                   |                            |         |         |      |   |         |         |   |   |          |         
|                                          | Biometric systems |                            | $       | 5,885   |      |   | $       | 7,258   |   |   | $        | 7,803    |  
|                                          | Other(1)          |                            |         | 493     |      |   |         | 564     |   |   |          | 477      |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | $                          | 6,378   |         |      | $ | 7,822   |         |   | $ | 8,280    |         
|                                          |                   |                            |         |         |      |   |         |         |  
|Interest and other income (expense), net: |                   |                            |         |         |      |   |         |         |   |   |          |         
|                                          | Biometric systems |                            | $       | 1,041   |      |   | $       | 1,151   |   |   | $        | 1,834    |  
|                                          | Other             |                            |         | 593     |      |   |         | 2       |   |   |          |         |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | $                          | 1,634   |         |      | $ | 1,153   |         |   | $ | 1,834    |         
|                                          |                   |                            |         |         |      |   |         |         |  
|Capital expenditures:                     |                   |                            |         |         |      |   |         |         |   |   |          |         
|                                          | Biometric systems |                            | $       | 573     |      |   | $       | 969     |   |   | $        | 1,313    |  
|                                          | Other(2)          |                            |         | 274     |      |   |         | 40      |   |   |          | 80       |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | $                          | 847     |         |      | $ | 1,009   |         |   | $ | 1,393    |         
|                                          |                   |                            |         |         |      |   |         |         |  
|Loss from operations:                     |                   |                            |         |         |      |   |         |         |   |   |          |         
|                                          | Biometric systems |                            | $       | (15,473 | )    |   | $       | (24,349 | ) |   | $        | (185,574 | )
|                                          | Other             |                            |         | (85     | )    |   |         | (126    | ) |   |          | 265      |  
|                                          |                   |                            |         |         |      |   |         |         |  
|                                          |                   | $                          | (15,558 | )       |      | $ | (24,475 | )       |   | $ | (185,309 | )       
|                                          |                   |                            |         |         |      |   |         |         |  

|          |                   |                |         |         |          |   |         |         | 
|--------- | ----------------- | -------------- | ------- | ------- | -------- | - | ------- | ------- | 
|          |                   | June 30,       |         |         | June 30, |  
|          |                   | 2005           |         |         | 2004     |  
|          |                   |                |         |         |          |  
|          |                   | (In thousands) |        
|Goodwill: |                   |                |         |         |          |   |         |        
|          | Biometric systems |                | $       | 140,945 |          |   | $       | 140,945 | 
|          | Other             |                |         | 268     |          |   |         | 268     | 
|          |                   |                |         |         |          |  
|          |                   | $              | 141,213 |         |          | $ | 141,213 |        
|          |                   |                |         |         |          |  

|        |                   |                |         |         |          |   |         |         | 
|------- | ----------------- | -------------- | ------- | ------- | -------- | - | ------- | ------- | 
|        |                   | June 30,       |         |         | June 30, |  
|        |                   | 2005           |         |         | 2004     |  
|        |                   |                |         |         |          |  
|        |                   | (In thousands) |        
|Assets: |                   |                |         |         |          |   |         |        
|        | Biometric systems |                | $       | 208,442 |          |   | $       | 226,047 | 
|        | Other             |                |         | 6,613   |          |   |         | 2,780   | 
|        |                   |                |         |         |          |  
|        |                   | $              | 215,055 |         |          | $ | 228,827 |        
|        |                   |                |         |         |          |  






|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes identifiable expense classified as discontinued
    operations of $300,000 and $525,000 for the years ended
    June 30, 2004 and 2003 respectively.
|   
|(2) | Includes identifiable expenditures from discontinued operations
    of $40,000 and $13,000 for the years ended June 30, 2004
    and 2003 respectively.      

67



---



##### 





|          |                        
|--------- | -----------------------
|Note 15  | Foreign Operations Data



|                |               |                            |        |        |      |   |        |        |  |   |        |        | 
|--------------- | ------------- | -------------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                |               | Fiscal Year Ended June 30, |       
|                |               |                            |       
|                |               | 2005                       |        |        | 2004 |   |        | 2003   | 
|                |               |                            |        |        |      |   |        |        | 
|                |               | (In thousands)             |       
|Total revenues: |               |                            |        |        |      |   |        |        |  |   |        |       
|                | United States |                            | $      | 65,140 |      |   | $      | 48,334 |  |   | $      | 47,759 | 
|                | International |                            |        | 8,692  |      |   |        | 6,865  |  |   |        | 4,925  | 
|                |               |                            |        |        |      |   |        |        | 
|                |               | $                          | 73,832 |        |      | $ | 55,199 |        |  | $ | 52,684 |       
|                |               |                            |        |        |      |   |        |        | 

|                                 |               |                |       |       |          |   |       |       | 
|-------------------------------- | ------------- | -------------- | ----- | ----- | -------- | - | ----- | ----- | 
|                                 |               | June 30,       |       |       | June 30, |  
|                                 |               | 2005           |       |       | 2004     |  
|                                 |               |                |       |       |          |  
|                                 |               | (In thousands) |      
|*Identifiable long lived assets: |               |                |       |       |          |   |       |      
|                                 | United States |                | $     | 1,712 |          |   | $     | 2,088 | 
|                                 | International |                |       | 26    |          |   |       | 65    | 
|                                 |               |                |       |       |          |  
|                                 |               | $              | 1,738 |       |          | $ | 2,153 |      
|                                 |               |                |       |       |          |  






|  |                                                     
|- | ----------------------------------------------------
|* | Long lived assets consist of property and equipment.

Note 16  Commitments and Contingencies


Leases






|                                        |       |          |       |            |           |   |     |       |  |   |       |       | 
|--------------------------------------- | ----- | -------- | ----- | ---------- | --------- | - | --- | ----- |  | - | ----- | ----- | 
|                                        |       |          |       | Unoccupied |           |   |    
|                                        |       | Occupied |       |            | or Sublet |   |     | Total | 
|                                        |       |          |       |            |           |   |     |       | 
|Periods or Fiscal Years Ending June 30: |       |          |       |            |           |   |     |       |  |   |       |      
|2006                                    |       | $        | 1,813 |            |           | $ | 361 |       |  | $ | 2,174 |      
|2007                                    |       |          | 1,600 |            |           |   |    |       |  |   | 1,600 |      
|2008                                    |       |          | 1,309 |            |           |   |    |       |  |   | 1,309 |      
|2009                                    |       |          | 358   |            |           |   |    |       |  |   | 358   |      
|                                        |       |          |       |            |           |   |     |       | 
|                                        | Total |          | $     | 5,080      |           |   | $   | 361   |  |   | $     | 5,441 | 
|                                        |       |          |       |            |           |   |     |       | 



Legal Matters




68



---



##### 









|          |                                                    
|--------- | ---------------------------------------------------
|Note 17  | Indemnification Arrangements and Product Warranties











|                             |  |                |        |   |                |   |       |                |  |   |      |  
|---------------------------- |  | -------------- | ------ | - | -------------- | - | ----- | -------------- |  | - | ---- | -
|                             |  | As of June 30, |        |   | As of June 30, |   |       | As of June 30, | 
|                             |  | 2005           |        |   | 2004           |   |       | 2003           | 
|                             |  |                |        |   |                |   |       |                | 
|                             |  | (In thousands) |       
|Balance at beginning of year |  | $              | 921    |   |                | $ | 374   |                |  | $ | 306  |  
|Warranty Expense             |  |                | 1,768  |   |                |   | 1,121 |                |  |   | 285  |  
|Closed Warranty Claims       |  |                | (1,273 | ) |                |   | (574  | )              |  |   | (217 | )
|                             |  |                |        |   |                |   |       |                | 
|Balance at end of year       |  | $              | 1,416  |   |                | $ | 921   |                |  | $ | 374  |  
|                             |  |                |        |   |                |   |       |                | 



|          |                                                  
|--------- | -------------------------------------------------
|Note 18  | Quarterly Consolidated Financial Data (Unaudited)



69



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##### 







|                                                                                        |  |                |        |   |              |   |        |           |  |   |          |   |  |       |        |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------- | ------ | - | ------------ | - | ------ | --------- |  | - | -------- | - |  | ----- | ------ | - |  | - | ------- | -
|                                                                                        |  | Quarters Ended |       
|                                                                                        |  |                |       
|                                                                                        |  | September 30,  |        |   | December 31, |   |        | March 31, |  |   | June 30, |   |  |      
|                                                                                        |  | 2004           |        |   | 2004         |   |        | 2005      |  |   | 2005     |   |  | Total |       
|                                                                                        |  |                |        |   |              |   |        |           |  |   |          |   |  |       |       
|Revenues                                                                                |  | $              | 16,623 |   |              | $ | 18,558 |           |  | $ | 20,252   |   |  | $     | 18,399 |   |  | $ | 73,832  |  
|Gross profit                                                                            |  |                | 3,899  |   |              |   | 4,830  |           |  |   | 6,794    |   |  |       | 4,783  |   |  |   | 20,306  |  
|Loss from continuing operations                                                         |  |                | (4,833 | ) |              |   | (2,765 | )         |  |   | (1,925   | ) |  |       | (4,443 | ) |  |   | (13,966 | )
|Net loss                                                                                |  | $              | (4,833 | ) |              | $ | (2,765 | )         |  | $ | (1,925   | ) |  | $     | (4,443 | ) |  | $ | (13,966 | )
|Basic and diluted loss per share, continuing operations                                 |  | $              | (0.05  | ) |              | $ | (0.03  | )         |  | $ | (0.02    | ) |  | $     | (0.05  | ) |  | $ | (0.16   | )
|Basic and diluted net loss per share,                                                   |  | $              | (0.05  | ) |              | $ | (0.03  | )         |  | $ | (0.02    | ) |  | $     | (0.05  | ) |  | $ | (0.16   | )
|Weighted average common shares used in basic and diluted loss
    per share computation |  |                | 88,439 |   |              |   | 88,591 |           |  |   | 88,834   |   |  |       | 88,927 |   |  |   | 88,696  |  

|                                                                                        |  |                |        |           |              |   |          |             |  |   |             |   |  |       |        |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------- | ------ | --------- | ------------ | - | -------- | ----------- |  | - | ----------- | - |  | ----- | ------ | - |  | - | ------- | -
|                                                                                        |  | Quarters Ended |       
|                                                                                        |  |                |       
|                                                                                        |  |                |        | March 31, |              |   | June 30, |             |  |  
|                                                                                        |  | September 30,  |        |           | December 31, |   |          | 2004        |  |   | 2004        |   |  |      
|                                                                                        |  | 2003           |        |           | 2003         |   |          | Restated(1) |  |   | Restated(1) |   |  | Total |       
|                                                                                        |  |                |        |           |              |   |          |             |  |   |             |   |  |       |       
|Revenues                                                                                |  | $              | 12,467 |           |              | $ | 12,056   |             |  | $ | 14,491      |   |  | $     | 16,185 |   |  | $ | 55,199  |  
|Gross profit                                                                            |  |                | 3,656  |           |              |   | 3,189    |             |  |   | 1,812       |   |  |       | 4,210  |   |  |   | 12,867  |  
|Loss from continuing operations                                                         |  |                | (4,934 | )         |              |   | (5,522   | )           |  |   | (6,817      | ) |  |       | (4,394 | ) |  |   | (21,667 | )
|Discontinued operations                                                                 |  |                | 278    |           |              |   | (37      | )           |  |   | 2,884       |   |  |       |       |   |  |   | 3,125   |  
|Net loss                                                                                |  | $              | (4,656 | )         |              | $ | (5,559   | )           |  | $ | (3,933      | ) |  | $     | (4,394 | ) |  | $ | (18,542 | )
|Basic and diluted loss per share, continuing operations                                 |  | $              | (0.06  | )         |              | $ | (0.06    | )           |  | $ | (0.08       | ) |  | $     | (0.05  | ) |  | $ | (0.25   | )
|Basic and diluted income (loss) per share, discontinued
    operations                  |  | $              |       |           |              | $ |         |             |  | $ | 0.04        |   |  | $     |       |   |  | $ | 0.04    |  
|Basic and diluted net loss per share                                                    |  | $              | (0.05  | )         |              | $ | (0.06    | )           |  | $ | (0.04       | ) |  | $     | (0.05  | ) |  | $ | (0.21   | )
|Weighted average common shares used in basic and diluted loss
    per share computation |  |                | 86,015 |           |              |   | 86,143   |             |  |   | 86,645      |   |  |       | 88,242 |   |  |   | 86,758  |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | See discussion of the restatement in Note 2. The impact of
    the restatement on the interim financial statements includes an
    increase in our net loss as previously reported in our
    Consolidated Statements of Operations for the three and nine
    month periods ended March 31, 2004 by $400,000 or
    $0.01 per basic and diluted share and our net loss for the
    fourth quarter ended June 30, 2004 was reduced by $400,000
    or $0.01 per basic and dilute share due to the manner in
    which the income tax benefit related to continuing operations is
    allocated between the third and fourth quarters of fiscal year
    2004.

70



---



##### 








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

DISCLOSURE CONTROLS AND PROCEDURES






MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING








71



---



##### 



Internal Control-Integrated
Framework






CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Reinforcing the communication around an already existing control
    requiring that all sales representative sign a representation
    letter indicating that there are no side arrangements that the
    sales personnel are aware of, and                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | For all revenue transactions meeting a quantitative threshold or
    including terms such as multiple element arrangements, a
    representative from the accounting department interviewed the
    sales representatives and member of management that was at least
    one level above the sales representative to ensure that our
    finance department was aware of all elements of the transaction
    that may affect revenue recognition, and we instituted a policy
    that requires that the revenue recognition methodology is
    documented and subsequently approved by our Chief Financial
    Officer.



Remediation of Material Weakness




72



---



##### 







|         |                  
|-------- | -----------------
|Item 9B. | Other Information

None


PART III




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation





|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



|                                   |  |                         |           |  |                      |                                |      |                                |  |  |           | 
|---------------------------------- |  | ----------------------- | --------- |  | -------------------- | ------------------------------ | ---- | ------------------------------ |  |  | --------- | 
|                                   |  |                         |           |  |                      | Number of Securities Remaining |     
|                                   |  | Number of Securities to |           |  | Weighted-Average     |                                |      | Available for Future Issuance  | 
|                                   |  | be Issued upon Exercise |           |  | Exercise Price of    |                                |      | under the Equity Compensation  | 
|Equity Compensation plans Approved |  | of Outstanding Options, |           |  | Outstanding Options, |                                |      | Plans (Excluding Securities    | 
|by Shareholders                    |  | Warrants and Rights     |           |  | Warrants and Rights  |                                |      | Reflected in the First Column) | 
|                                   |  |                         |           |  |                      |                                |      |                                | 
|1995 Plan                          |  |                         | 2,355,252 |  |                      | $                              | 6.23 |                                |  |  | 75,527    | 
|Non-Employee Directors Plan       |  |                         | 792,500   |  |                      | $                              | 6.74 |                                |  |  | 317,500   | 
|2002 Plan                          |  |                         | 966,225   |  |                      | $                              | 6.09 |                                |  |  | 4,807,274 | 
|VSNX-1990                          |  |                         | 74,469    |  |                      | $                              | 1.94 |                                |  |  |          | 
|VSNX-1998                          |  |                         | 1,136,031 |  |                      | $                              | 7.12 |                                |  |  | 424,715   | 
|NJ SIP-Plan                        |  |                         | 362,188   |  |                      | $                              | 0.80 |                                |  |  | 57,319    | 

|                              |  |  |           |  |  |   |      |  |  |  |           | 
|----------------------------- |  |  | --------- |  |  | - | ---- |  |  |  | --------- | 
|Equity Compensation Plans not |  |  |           |  |  |  
|Approved by Shareholders      |  |  |           |  |  |  
|                              |  |  |           |  |  |  
|New Employee Plan-2000        |  |  | 1,372,016 |  |  | $ | 6.26 |  |  |  | 1,021,617 | 



|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



73



---



##### 



PART IV




|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

1 Financial Statements.




2 Financial Statement Schedules




3 Exhibits.


|        |   |             |  |                                                                                                                                                                                                                                                                   
|------- | - | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |            
|Number  |   | Description
|        |   |            
|        | 2 | .0          |  | Agreement and Plan of Merger dated as of February 22, 2002
    by and among Identix, Visionics Corporation and Viper
    Acquisition Corporation (incorporated by reference to the
    February 22, 2002 Form 8-K)                                                
|        | 3 | .1          |  | Certificate of Incorporation (incorporated by reference to the
    December 16, 1998 Form 8-K)                                                                                                                                                                    
|        | 3 | .2          |  | Amended and Restated Bylaws (incorporated by reference to the
    May 15, 2002 Form 10-Q)                                                                                                                                                                         
|        | 4 | .1          |  | Registration Rights Agreement dated June 30, 1999
    (incorporated by reference to the registration statement on
    Form S-3, no. 333-82239, filed July 2, 1999)                                                                                                
|        | 4 | .2          |  | Form of Series I Warrant (incorporated by reference to the
    registration statement on Form S-3, no. 333-82239, filed
    July 2, 1999)                                                                                                                         
|        | 4 | .3          |  | Warrant dated June 29, 2001 between Visionics Corporation
    and Morgan Keegan, Inc. (incorporated by reference to the
    post-effective amendment no. 1 to the registration
    statement on Form S-4, no. 333-84428, filed
    September 5, 2002)             
|        | 4 | .4          |  | Warrant dated October 11, 2001 between Visionics
    Corporation and Morgan Keegan & Company, Inc.
    (incorporated by reference to the post effective amendment no. 1
    to the registration statement on Form S-4, no. 333-84428,
    filed September 5, 2002)
|        | 4 | .5          |  | Warrant dated October 24, 2001 between Visionics
    Corporation and Thomas Pierce (incorporated by reference to the
    post-effective amendment no. 1 to the registration
    statement on Form S-4, no. 333-84428, filed
    September 5, 2002)                
|        | 4 | .6          |  | Form of Warrant dated January 8, 1999 (incorporated by
    reference to the post-effective amendment no. 1 to the
    registration statement on Form S-4, no. 333-84428, filed
    September 5, 2002)                                                             
|        | 4 | .7          |  | Form of Warrant dated June 28, 2001 (incorporated by
    reference to the post effective amendment no. 1 to the
    registration statement on Form S-4, no. 333-84428, filed
    September 5, 2002)                                                               
|        | 4 | .8          |  | Securities Purchase Agreement between Identix and Motorola,
    Inc., dated July 2000 (incorporated by reference to the
    September 26, 2000 Form 10-K)                                                                                                         
|        | 4 | .9          |  | Certificate of Designation of Series A Preferred Stock of
    Identix (incorporated by reference to the September 26,
    2000 Form 10-K)                                                                                                                         
|        | 4 | .10         |  | Information and Registration Rights Agreement between Identix
    and Motorola, Inc., dated July 7, 2000 (incorporated by
    reference to the September 26, 2000 Form 10-K)                                                                                      
|        | 4 | .11         |  | Warrant to Purchase 187,647 Shares of Identix Common Stock,
    dated July 6, 2000 (incorporated by reference to the
    September 26, 2000 Form 10-K)                                                                                                            
|        | 4 | .12         |  | Common Stock Purchase Agreement between Identix and VeriSign
    Capital Management, Inc., dated December 22, 2000
    (incorporated by reference to the February 14, 2001
    Form 10-Q)                                                                         
|        | 4 | .13         |  | Share Purchase Agreement between Identix and State of Wisconsin
    Investment Board, dated, June 11, 2001 (incorporated by
    reference to the registration statement on Form S-3, no.
    333-63306, filed June 19, 2001)                                      
|        | 4 | .14         |  | Form of Common Stock Purchase Agreement dated November 30,
    2001 (incorporated by reference to the September 28, 2001
    Form 10-K)                                                                                                                           

74



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##### 



|        |    |             |  |                                                                                                                                                                                                                                                    
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .1          |  | Identix 1983 Incentive Stock Option Plan and form of Incentive
    Stock Option Agreement and Non-Statutory Stock Option Agreement
    (incorporated by reference to Identix registration
    statement no. 29-95551)                             
|        | 10 | .2          |  | ANADAC 1984 Incentive Stock Option Plan and forms of Incentive
    Stock Option Agreement and Non-Statutory Stock Option Agreement
    (incorporated by reference to Identix registration
    statement 33-55074)                                 
|        | 10 | .3          |  | Identix 1992 Employee Stock Option Plan, and forms of Incentive
    Stock Option Agreement and Non-Qualified Stock Option Agreement
    (incorporated by reference to the registration statement on
    Form S-8, no. 333-77803, filed May 5, 1999)
|        | 10 | .4          |  | Amendment to Identix 1992 Employee Stock Option Plan, dated
    June 18, 2001 (incorporated by reference to the
    September 28, 2001 Form 10-K)                                                                                                  
|        | 10 | .5          |  | Second Amendment to Identix 1992 Employee Stock Option Plan,
    dated January 29, 2002 (incorporated by reference to the
    May 15, 2002 Form 10-Q)                                                                                              
|        | 10 | .6          |  | Identix 1995 Equity Incentive Plan, as amended June 18,
    2001 and January 29, 2002 (incorporated by reference to the
    May 15, 2002 Form 10-Q)                                                                                                
|        | 10 | .7          |  | Identix 1995 Non-employee Directors Stock Option Plan, as
    amended June 18, 2001 and January 29, 2002
    (incorporated by reference to the May 15, 2002
    Form 10-Q)                                                                         
|        | 10 | .8          |  | Identix New Employee Stock Incentive Plan, as amended
    June 18, 2001 and January 29, 2002 (incorporated by
    reference to the May 15, 2002 Form 10-Q)                                                                                         
|        | 10 | .9          |  | Identix 2002 Equity Incentive Plan (incorporated by reference to
    the registration statement on Form S-8, no. 333-91858,
    filed July 7, 2002)                                                                                                
|        | 10 | .10         |  | Visionics Corporation 1990 Stock Option Plan (incorporated by
    reference to the registration statement on Form S-8, no.
    333-91858, filed July 7, 2002)                                                                                      
|        | 10 | .11         |  | Visionics Corporation 1998 Stock Option Plan (incorporated by
    reference to the registration statement on Form S-8, no.
    333-91858, filed July 7, 2002)                                                                                      
|        | 10 | .12         |  | Visionics Corporation Stock Incentive Plan (incorporated by
    reference to the registration statement on Form S-8, no.
    333-91858, filed July 7, 2002)                                                                                        
|        | 10 | .13         |  | Employee Stock Purchase Plan (incorporated by reference to the
    registration statement on Form S-8, no. 333-69141, filed
    December 17, 1998)                                                                                                 
|        | 10 | .14         |  | Foreign Subsidiary Employee Stock Purchase Plan (incorporated by
    reference to the registration statement on Form S-8, no.
    333-69141, filed December 17, 1998)                                                                              
|        | 10 | .15         |  | Subcontract between ANADAC and Advanced Engineering and Research
    Associates, Inc., dated August 25, 2000 (incorporated by
    reference to the September 28, 2001 Form 10-K)                                                                   
|        | 10 | .16         |  | Deed of Lease between Brit Limited Partnership and Anadac, Inc.
    dated September 28, 2000 (incorporated by reference to the
    May 15, 2002 Form 10-Q)                                                                                         
|        | 10 | .17         |  | Standard Industrial Commercial Multi-Tenant Lease between
    Identix and Vasona Business Park, dated December 8, 2000
    (incorporated by reference to the February 14, 2001
    Form 10-Q)                                                      
|        | 10 | .18         |  | Office Building Lease between Identix and Pacific Gulf
    Properties Inc., dated July 19, 2000, as amended
    December 12, 2000 (incorporated by reference to the
    September 28, 2001 Form 10-K)                                              
|        | 10 | .19         |  | Office Lease between ANADAC and Federal Center Limited
    Partnership dated April 2, 1999, as amended
    December 1, 1999 and April 11, 2001 (incorporated by
    reference to the September 28, 2001 Form 10-K)                                 
|        | 10 | .20         |  | Lease for the Minnetonka, Minnesota premises dated
    November 7, 1989 (incorporated by reference to Visionics
    Corporations registration statement on Form S-18, no.
    33-36939C, dated December 6, 1990)                                  
|        | 10 | .21         |  | Amendment to Lease for the Minnetonka, Minnesota premises dated
    March 11, 1996 (incorporated by reference to Visionics
    Corporations December 23, 1997 Form 10-K)                                                                          
|        | 10 | .22         |  | Compensation Continuation Agreement between Identix and James P.
    Scullion, dated January 5, 2000 (incorporated by reference
    to the March 31, 2000 Form 10-Q)                                                                               

75



---



##### 



|        |    |             |  |                                                                                                                                                                                                                                             
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .23         |  | Amendment No. 1 to Compensation Continuation Agreement
    between Identix and James P. Scullion, dated August 22,
    2001 (incorporated by reference to the September 28, 2001
    Form 10-K)                                             
|        | 10 | .24         |  | Amendment No. 2 to Compensation Continuation Agreement
    between Identix and James P. Scullion, dated January 29,
    2002 (incorporated by reference to the May 15, 2002
    Form 10-Q)                                                  
|        | 10 | .25         |  | Form of Separation Agreement and Release between Identix and
    James P. Scullion (incorporated by reference to registration
    statement of Form S-4, no. 333-84428, filed May 15,
    2002)                                             
|        | 10 | .26         |  | Employment Agreement between Identix and Oscar Pieper, dated
    April 26, 1999 (incorporated by reference to the
    November 26, 2000 Form 10-Q)                                                                                          
|        | 10 | .27         |  | Employment Agreement between Identix and Grant Evans, dated
    April 26, 1999 (incorporated by reference to the
    November 26, 2000 Form 10-Q)                                                                                           
|        | 10 | .28         |  | Amendment No. 1 to Employment Agreement between Identix and
    Grant Evans, dated August 22, 2001 (incorporated by
    reference to the September 28, 2001 Form 10-K)                                                                      
|        | 10 | .29         |  | Amendment No. 2 to Employment Agreement between Identix and
    Grant Evans, dated October 25, 2001 (incorporated by
    reference to the February 14, 2002 Form 10-Q)                                                                      
|        | 10 | .30         |  | Compensation Agreement between ANADAC and Paul J. Bulger, dated
    May 11, 1999 (incorporated by reference to the
    September 28, 2001 Form 10-K)                                                                                        
|        | 10 | .31         |  | Employment Agreement between Identix and Daniel H. Dellegrotti,
    dated June 21, 2001 (incorporated by reference to the
    September 28, 2001 Form 10-K)                                                                                 
|        | 10 | .32         |  | Employment Agreement between Identix and Robert McCashin, dated
    October 19, 2000 and Option Agreement between Identix and
    Robert McCashin, dated October 19, 2000 (incorporated by
    reference to the February 14, 2001 Form 10-Q)
|        | 10 | .33         |  | Amendment No. 1 to Employment Agreement between Identix and
    Robert McCashin, dated August 22, 2001 (incorporated by
    reference to the November 14, 2001 Form 10-Q)                                                                   
|        | 10 | .34         |  | Form of Amendment No. 2 to Employment Agreement between
    Identix and Robert McCashin (incorporated by reference to the
    registration statement on Form S-4, no. 333-84428, filed
    April 25, 2002)                                  
|        | 10 | .35         |  | Employment Agreement between Identix and Erik E. Prusch, dated
    April 2, 2001 (incorporated by reference to the
    March 5, 2001 Form 10-Q)                                                                                             
|        | 10 | .36         |  | Amendment No. 1 to Employment Agreement between Identix and
    Erik E. Prusch, dated August 22, 2001 (incorporated by
    reference to the November 14, 2001 Form 10-Q)                                                                    
|        | 10 | .37         |  | Secured Promissory Note dated October 5, 2001 by Erik E.
    Prusch in favor of Identix (incorporated by reference to the
    February 14, 2002 Form 10-Q)                                                                                  
|        | 10 | .38         |  | Second Deed of Trust and Assignment of Rents dated
    October 5, 2001 between Erik E. Prusch, as Trustor, and
    Identix, as Beneficiary (incorporated by reference to the
    February 14, 2002 Form 10-Q)                               
|        | 10 | .39         |  | Form of Indemnification Agreement between Identix and certain of
    its officers (incorporated by reference to the November 26,
    2000 Form 10-Q)                                                                                        
|        | 10 | .40         |  | Employment Agreement between Identix and Mark S. Molina, dated
    August 22, 2001 (incorporated by reference to the
    November 14, 2001 Form 10-Q)                                                                                       
|        | 10 | .41         |  | Employment Agreement between Identix and Linda J. Howard, dated
    August 22, 2001 (incorporated by reference to the
    November 14, 2001 Form 10-Q)                                                                                      
|        | 10 | .42         |  | Employment Agreement between Identix and Sunday Lewis, dated
    August 22, 2001 (incorporated by reference to the
    November 14, 2001 Form 10-Q)                                                                                         
|        | 10 | .43         |  | Employment Agreement between Identix and Valerie J. Lyons, dated
    August 22, 2001 (incorporated by reference to the
    November 14, 2001 Form 10-Q)                                                                                     
|        | 10 | .44         |  | Form of Separation Agreement and Release between Identix and
    Valerie J. Lyons                                                                                                                                                           
|        | 10 | .45         |  | Form of Employment Agreement between Identix and Joseph J. Atick
    (incorporated by reference to the registration statement on
    Form S-4, no. 333-84428, filed April 25, 2002)                                                         
|        | 10 | .46         |  | Loan and Security Agreement between Identix and Silicon Valley
    Bank, dated September 26, 2001 (incorporated by reference
    to the November 14, 2001 Form 10-Q)                                                                        

76



---



##### 



|        |    |             |  |                                                                                                                                                                                                             
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .47         |  | Streamline Facility Agreement between Identix and Silicon Valley
    Bank, dated September 26, 2001 (incorporated by reference
    to the November 14, 2001 Form 10-Q)                                      
|        | 10 | .48         |  | Collateral Assignment, Patent Mortgage and Security Agreement
    between Identix and Silicon Valley Bank, dated
    September 26, 2001 (incorporated by reference to the
    November 14, 2001 Form 10-Q)  
|        | 10 | .49         |  | Amendment to Loan Documents dated March 28, 2002
    (incorporated by reference to the May 15, 2002
    Form 10-Q)                                                                                          
|        | 10 | .50         |  | Loan Agreement dated November 19, 2000 between Visionics
    Corporation and Associated Bank Minnesota (incorporated by
    reference to Visionics Corporations December 8, 2000
    Form 10-K)            
|        | 10 | .51         |  | Change in Terms Agreement dated December 19, 2001 between
    Visionics Corporation and Associated Bank Minnesota
    (incorporated by reference to Visionics Corporations
    February 14, 2002 Form 10-Q)
|        | 10 | .52         |  | Business Loan Agreement dated December 19, 2001 between
    Visionics Corporation and Associated Bank Minnesota
    (incorporated by reference to Visionics Corporations
    February 14, 2002 Form 10-Q)  
|        | 10 | .53         |  | Line of Credit Agreement dated May 30, 2003 between Identix
    Corporation and Associated Bank Minnesota (incorporated by
    reference to the September 12, 2003 Form 10-K)                               
|        | 10 | .54         |  | Employment Agreement between Identix and James H. Moar, dated as
    of April 14, 2003 (incorporated by reference to the
    September 12, 2003 Form 10-K)                                                  
|        | 10 | .55         |  | Employment agreement between Identix and Linda Howard, dated
    August 22, 2003(incorporated by reference to the
    November 14, 2004 Form 10-Q)                                                          
|        | 10 | .56         |  | Indemnification Agreement (incorporated by reference to the
    February 12, 2004 Form 10-Q)                                                                                                                
|        | 10 | .57         |  | IPS Stock Purchase Agreement (incorporated by reference to the
    May 17, 2004 Form 10-Q)                                                                                                                  
|        | 10 | .58         |  | LLC Membership Interest Transfer Agreement (incorporated by
    reference to the May 17, 2004 Form 10-Q)                                                                                                    
|        | 10 | .59         |  | Asset Purchase Agreement (incorporated by reference to
    Exhibit 4.1 to the registration statement on Form S-3
    (333-113935) filed March 25, 2004)                                                     
|        | 10 | .60         |  | Employment Agreement between Identix and Elissa J. Lindsoe,
    dated as of June 21, 2004                                                                                                                   
|        | 10 | .61         |  | Amendment No. 2 to Employment Agreement between Identix and
    Mark s. Molina, dated August 22, 2001                                                                                                       
|        | 21 | .1          |  | Subsidiaries of Identix                                                                                                                                                                                     
|        | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                    
|        | 31 | .1          |  | 302 Certification by the Chief Executive Officer                                                                                                                                                            
|        | 31 | .2          |  | 302 Certification by the Chief Financial Officer                                                                                                                                                            
|        | 32 |             |  | 906 Certifications                                                                                                                                                                                          

77



---



##### 



SIGNATURES






| |                     
| | --------------------
| | Identix Incorporated



| |     |                    
| | --- | -------------------
| | By: | /s/ Joseph J. Atick

| |                                     
| | ------------------------------------
| |                                     
| | Joseph J. Atick                     
| | Chief Executive Officer and Director

POWER OF ATTORNEY






|                                           |  |                                                                  |  |                    |  | 
|------------------------------------------ |  | ---------------------------------------------------------------- |  | ------------------ |  | 
|Signature                                  |  | Title                                                            |  | Date              
|                                           |  |                                                                  |  |                   
|                                          
|/s/ Joseph J. AtickJoseph
    J. Atick     |  | President and Chief Executive Officer (Chief Executive Officer)  |  | September 13, 2005
|                                          
|/s/ Elissa J. LindsoeElissa
    J. Lindsoe |  | Chief Financial Officer (Chief Financial and Accounting Officer) |  | September 13, 2005
|                                          
|/s/ Milton E. CooperMilton
    E. Cooper   |  | Chairman                                                         |  | September 13, 2005
|                                          
|/s/ Malcolm J. GudisMalcom
    J. Gudis    |  | Director                                                         |  | September 13, 2005
|                                          
|/s/ John E. HaugoJohn
    E. Haugo         |  | Director                                                         |  | September 13, 2005
|                                          
|/s/ John E. LawlerJohn
    E. Lawler       |  | Director                                                         |  | September 13, 2005
|                                          
|/s/ George LatimerGeorge
    Latimer       |  | Director                                                         |  | September 13, 2005

78



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON


FINANCIAL STATEMENT SCHEDULE






PricewaterhouseCoopers LLP






79



---



##### 



SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


|                                 |                          |                |   |       |            |  |   |            |   |            |               |       |     |  |   |       | 
|-------------------------------- | ------------------------ | -------------- | - | ----- | ---------- |  | - | ---------- | - | ---------- | ------------- | ----- | --- |  | - | ----- | 
|                                 |                          | Balance at     |   |       | Charges to |  |   |            |   |           
|                                 |                          | Beginning of   |   |       | Costs and  |  |   |            |   | Balance at |              
|Description                      |                          | Period         |   |       | Expenses   |  |   | Deductions |   |            | End of Period |      
|                                 |                          |                |   |       |            |  |   |            |   |            |               |      
|                                 |                          | (in thousands) |  
|Allowance for Doubtful Accounts: |                          |                |   |       |            |  |   |            |   |            |               |       |     |  |   |      
|                                 | Year ended June 30, 2003 |                | $ | 2,694 |            |  | $ | 801        |   |            | $             | 469   |     |  | $ | 3,026 | 
|                                 | Year ended June 30, 2004 |                | $ | 3,026 |            |  | $ | (539       | ) |            | $             | 1,363 | (a) |  | $ | 1,124 | 
|                                 | Year ended June 30, 2005 |                | $ | 1,124 |            |  | $ | (32        | ) |            | $             | 541   |     |  | $ | 551   | 
|Inventory Reserve:               |                          |                |   |       |            |  |   |            |   |            |               |       |     |  |   |      
|                                 | Year ended June 30, 2003 |                | $ | 1,955 |            |  | $ | 2,344      |   |            | $             | 2,924 |     |  | $ | 1,375 | 
|                                 | Year ended June 30, 2004 |                | $ | 1,375 |            |  | $ | 3,563      |   |            | $             | 768   |     |  | $ | 4,170 | 
|                                 | Year ended June 30, 2005 |                | $ | 4,170 |            |  | $ | 1,561      |   |            | $             | 3,500 |     |  | $ | 2,231 | 






|    |  |                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------
|(a) |  | Included in deductions for the year ended June 30, 2004, is
    $457,000 related to the disposal of IPS.

80