Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~November 3, 2017,~~May 2, 2022, the registrant had ~~14,245,138~~22,335,003 shares of common stock ~~$0.001 par value per share,~~ outstanding.

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2022			2021
ASSETS
Current assets:
Cash	$	15,741		$	9,116
Accounts receivable, net of allowances of $459 and $307 as of September 30, 2017 and December 31, 2016, respectively		10,642			9,430
Cash and cash equivalents							$	27,614		$	28,553
Restricted cash								1,074			1,254
Accounts receivable, net of allowances of $2,668 and $2,745 as of March 31, 2022 and December 31, 2021, respectively								19,452			19,963
Inventories		13,396			11,596			20,493			19,924
Prepaid expenses and other current assets		2,492			1,510			2,673			3,032
Total current assets		42,271			31,652			71,306			72,726
Property and equipment, net		2,117			2,416			4,341			4,066
Operating lease right-of-use assets								1,780			2,088
Intangible assets, net		4,728			5,820			6,182			6,445
Goodwill								10,288			10,268
Other assets		722			712			1,012			1,070
Total assets	$	49,838		$	40,600		$	94,909		$	96,663
LIABILITIES AND STOCKHOLDERS´ EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,552		$	6,024		$	11,335		$	10,502
Current portion - payment obligation		877			786
Current portion - financial liabilities, net of discount and debt issuance costs of $596 and $181, respectively		9,957			8,119
Operating lease liabilities								1,143			1,269
Deferred revenue		1,143			1,085			1,489			2,153
Accrued compensation and related benefits		1,639			1,520			2,675			3,150
Other accrued expenses and liabilities		2,978			5,032			3,316			3,774
Total current liabilities		24,146			22,566			19,958			20,848
Long-term payment obligation		3,281			3,987
Long-term financial liabilities, net of discount and debt issuance costs of $1,463 and $221, respectively		6,474			9,779
Long-term operating lease liabilities								748			938
Long-term deferred revenue								295			280
Other long-term liabilities		181			335			74			85
Total liabilities		34,082			36,667			21,075			22,151
Commitments and contingencies (see Note 11)
Stockholders´ equity:
Identiv, Inc. stockholders' equity:
Preferred stock, $0.001 par value: 10,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.001 par value: 50,000 shares authorized; 15,082 and 11,836 shares issued and 14,234 and 11,109 shares outstanding as of September 30, 2017 and December 31, 2016, respectively		14			11
Commitments and contingencies (see Note 15)
Stockholders' equity:
Preferred stock, $0.001 par value: 10,000 shares authorized; 5,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021								5			5
Common stock, $0.001 par value: 50,000 shares authorized; 23,794 and 23,707 shares issued and 22,300 and 22,230 shares outstanding as of March 31, 2022 and December 31, 2021, respectively								24			24
Additional paid-in capital		415,776			400,266			493,552			492,657
Treasury stock, 848 and 727 shares as of September 30, 2017 and December 31, 2016, respectively		(7,302	)		(6,708	)
Treasury stock, 1,494 and 1,477 shares as of March 31, 2022 and December 31, 2021, respectively								(11,533	)		(11,134	)
Accumulated deficit		(395,131	)		(391,509	)		(409,988	)		(408,989	)
Accumulated other comprehensive income		2,556			2,053			1,774			1,949
Total Identiv, Inc. stockholders' equity		15,913			4,113
Noncontrolling interest		(157	)		(180	)
Total stockholders´ equity		15,756			3,933
Total liabilities and stockholders´equity	$	49,838		$	40,600
Total stockholders' equity								73,834			74,512
Total liabilities and stockholders' equity							$	94,909		$	96,663

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2022			2021
Net revenue	$	15,432		$	15,560		$	43,664		$	41,521		$	25,061		$	22,162
Cost of revenue		9,571			8,640			26,423			24,038			16,095			14,470
Gross profit		5,861			6,920			17,241			17,483			8,966			7,692
Operating expenses:
Research and development		1,597			1,480			4,584			4,997			2,529			2,337
Selling and marketing		3,448			3,312			10,142			10,807			5,110			4,064
General and administrative		1,247			2,115			5,119			9,674			2,488			2,125
Restructuring and severance		(49	)		160			(49	)		3,100			(140	)		388
Total operating expenses		6,243			7,067			19,796			28,578			9,987			8,914
Loss from operations		(382	)		(147	)		(2,555	)		(11,095	)		(1,021	)		(1,222	)
Non-operating income (expense):
Interest expense, net		(643	)		(525	)		(1,995	)		(1,814	)		(25	)		(245	)
Gain on extinguishment of debt		—			—			977			—
Foreign currency (losses) gains, net		(51	)		35			(202	)		309
Loss before income taxes and noncontrolling interest		(1,076	)		(637	)		(3,775	)		(12,600	)
Income tax benefit		42			(105	)		161			(35	)
Loss before noncontrolling interest		(1,034	)		(742	)		(3,614	)		(12,635	)
Less: Income (loss) attributable to noncontrolling interest		2			(1	)		(8	)		4
Net loss attributable to Identiv, Inc.	$	(1,032	)	$	(743	)	$	(3,622	)	$	(12,631	)
Basic and diluted net loss per share attributable to Identiv, Inc.	$	(0.07	)	$	(0.07	)	$	(0.28	)	$	(1.16	)
Weighted average shares used to compute basic and diluted loss per share		14,409			11,024			12,806			10,855
Gain on investment														24			—
Foreign currency gains, net														19			46
Loss before income tax benefit (provision)														(1,003	)		(1,421	)
Income tax benefit (provision)														4			(44	)
Net loss														(999	)		(1,465	)

Other comprehensive loss:
Foreign currency translation adjustment														(175	)		(283	)
Comprehensive loss													$	(1,174	)	$	(1,748	)

Net loss per common share:
Basic													$	(0.06	)	$	(0.09	)
Diluted													$	(0.06	)	$	(0.09	)
Weighted average common shares outstanding, basic and diluted														22,574			18,443

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

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE LOSS~~STOCKHOLDERS’ EQUITY

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net loss

$
(1,034
)

$
(742
)

$
(3,614
)

$
(12,635
)
Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustment

378

(64
)

518

(285
)
Total other comprehensive income (loss), net of income
   taxes

378

(64
)

518

(285
)
Comprehensive loss

(656
)

(806
)

(3,096
)

(12,920
)
Less: Comprehensive (income) loss attributable to
   noncontrolling interest

(16
)

11

(23
)

23

Comprehensive loss attributable to Identiv, Inc. common
   stockholders

$
(672
)

$
(795
)

$
(3,119
)

$
(12,897
)

	Series B Convertible Preferred Stock				Common Stock					Additional Paid-in		Treasury			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Stock			Deficit			Income			Equity
Balances, December 31, 2020		5,000	$	5		18,055		$	19	$	452,129	$	(9,933	)	$	(410,609	)	$	2,578		$	34,189
Net loss		—		—		—			—		—		—			(1,465	)		—			(1,465	)
Unrealized loss from foreign currency translation adjustments		—		—		—			—		—		—			—			(283	)		(283	)
Issuance of common stock in connection with vesting of stock awards		—		—		98			—		—		—			—			—			—
Proceeds from exercise of stock options		—		—		5			—		34		—			—			—			34
Stock-based compensation		—		—		—			—		758		—			—			—			758
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(25	)		—		—		(253	)		—			—			(253	)
Issuance of common stock in connection with warrant exercise		—		—		28			—		—		—			—			—			—
Balances, March 31, 2021		5,000	$	5		18,161		$	19	$	452,921	$	(10,186	)	$	(412,074	)	$	2,295		$	32,980

	Series B Convertible Preferred Stock				Common Stock					Additional Paid-in		Treasury			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Stock			Deficit			Income			Equity
Balances, December 31, 2021		5,000	$	5		22,230		$	24	$	492,657	$	(11,134	)	$	(408,989	)	$	1,949		$	74,512
Net loss		—		—		—			—		—		—			(999	)		—			(999	)
Unrealized loss from foreign currency translation adjustments		—		—		—			—		—		—			—			(175	)		(175	)
Issuance of common stock in connection with vesting of stock awards		—		—		88			—		—		—			—			—			—
Stock-based compensation		—		—		—			—		895		—			—			—			895
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		—		—		(18	)		—		—		(399	)		—			—			(399	)
Balances, March 31, 2022		5,000	$	5		22,300		$	24	$	493,552	$	(11,533	)	$	(409,988	)	$	1,774		$	73,834

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

Identiv, Inc. Stockholders´ Equity

Additional

Accumulated
Other

Common Stock

Paid-in

Treasury

Accumulated

Comprehensive

Noncontrolling

Total

Shares

Amount

Capital

Stock

Deficit

Income

Interest

Equity

Balances, December 31, 2016

11,109

$
11

$
400,266

$
(6,708
)

$
(391,509
)

$
2,053

$
(180
)

$
3,933

Net loss

—

—

—

—

(3,622
)

—

8

(3,614
)
Other comprehensive loss

—

—

—

—

—

503

15

518

Issuance of common stock in
   connection with public
   offering

2,845

3

12,557

—

—

—

—

12,560

Issuance of warrants

—

—

2,319

—

—

—

—

2,319

Issuance of common stock
   in connection with
   vesting of stock awards

401

—

—

—

—

—

—

—

Stock-based compensation

—

—

1,916

—

—

—

—

1,916

Shares withheld in payment
   of taxes in connection with
   net share settlement of
   restricted stock units

(121
)

—

—

(594
)

—

—

—

(594
)
Cancellation of reacquired
   warrants from
   extinguishment of debt

—

—

(1,282
)

—

—

—

—

(1,282
)
Balances, September 30, 2017

14,234

$
14

$
415,776

$
(7,302
)

$
(395,131
)

$
2,556

$
(157
)

$
15,756

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(999	)	$	(1,465	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		509			466
Gain on investment		(24	)		—
Accretion of interest on contractual payment obligation		—			19
Amortization of debt issuance costs		—			68
Stock-based compensation expense		895			758
Impairment of right-of-use operating lease asset		—			281
Changes in operating assets and liabilities:
Accounts receivable		501			20
Inventories		(541	)		977
Prepaid expenses and other assets		417			(223	)
Accounts payable		816			(736	)
Contractual payment obligation liability		—			(271	)
Deferred revenue		(649	)		(401	)
Accrued expenses and other liabilities		(959	)		96
Net cash used in operating activities		(34	)		(411	)
Cash flows from investing activities:
Capital expenditures		(510	)		(1,131	)
Proceeds from investment		24			—
Net cash used in investing activities		(486	)		(1,131	)
Cash flows from financing activities:
Borrowings under revolving loan facility, net of issuance costs		—			3,975
Repayments under revolving loan facility		—			(1,793	)
Taxes paid related to net share settlement of restricted stock units		(399	)		(253	)
Proceeds from exercise of stock options		—			34
Net cash provided by (used in) financing activities		(399	)		1,963
Effect of exchange rates on cash, cash equivalents, and restricted cash		(200	)		(312	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(1,119	)		109
Cash, cash equivalents, and restricted cash at beginning of period		29,807			11,409
Cash, cash equivalents, and restricted cash at end of period	$	28,688		$	11,518
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	3		$	170
Taxes paid, net	$	32		$	15

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

Nine Months Ended

September 30,

2017

2016

Cash flows from operating activities:

Net loss

$
(3,614
)

$
(12,635
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

2,081

2,492

Gain on extinguishment of debt

(977
)

—

Accretion of interest on long-term payment obligation

277

335

Amortization of debt issuance costs

617

633

Stock-based compensation expense

1,916

2,245

Loss on disposal of fixed assets

—

329

Changes in operating assets and liabilities:

Accounts receivable

(1,197
)

(1,166
)
Inventories

(1,785
)

2,741

Prepaid expenses and other assets

(992
)

(182
)
Accounts payable

1,531

154

Payment obligation liability

(892
)

(925
)
Deferred revenue

58

(370
)
Accrued expenses and other liabilities

(2,087
)

155

Net cash used in operating activities

(5,064
)

(6,194
)
Cash flows from investing activities:

Capital expenditures

(686
)

(425
)
Net cash used in investing activities

(686
)

(425
)
Cash flows from financing activities:

Proceeds from issuance of debt, net of issuance costs

42,735

—

Repayments of debt

(42,805
)

—

Sale of common stock, net of issuance costs

12,560

—

Taxes paid related to net share settlement of restricted stock units

(594
)

(180
)
Net cash provided by (used in) financing activities

11,896

(180
)
Effect of exchange rates on cash

479

(685
)
Net increase (decrease) in cash

6,625

(7,484
)
Cash at beginning of period

9,116

16,667

Cash at end of period

$
15,741

$
9,183

Supplemental Disclosures of Cash Flow Information

Interest paid

$
1,379

$
1,181

Taxes paid, net

$
96

$
158

Non-cash investing and financing activities:

Warrants issued as debt issuance costs in connection with debt agreements

$
2,319

$
376

Liability to be settled in common stock

$
250

$
—

Property and equipment included in accruals

$
—

$
83

Restricted stock units issued to settle liability

$
—

$
387

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

The accompanying unaudited condensed consolidated financial statements include the accounts of Identiv, Inc. and ~~Summary of Significant Accounting Policies~~its wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of ~~Identiv, Inc. (“Identiv” or~~ the ~~“Company”)~~Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, ~~including~~consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements have been included. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~2022 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date, but does not include all disclosures required by U.S. GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” ~~“Quantitative and Qualitative Disclosures About Market Risk,”~~ and the audited ~~Consolidated Financial Statements~~consolidated financial statements and ~~footnotes~~notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016. The preparation of unaudited condensed consolidated financial statements necessarily requires~~2021.

No material changes have been made to the ~~Company to make estimates~~Company's significant accounting policies disclosed in Note 2, Significant Accounting Policies and ~~assumptions that affect~~Recent Accounting Pronouncements, in the ~~reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the condensed consolidated balance sheet dates and the reported amounts of revenues and expenses~~Company’s Annual Report on Form 10-K for the periods presented. The Company may experience significant variations in demand for its products quarter to quarter and typically experiences a stronger demand cycle in the second half of its fiscal year. As a result, the quarterly results may not be indicative of the full year ~~results. The~~ended December 31, ~~2016 balance sheet was derived from the audited financial statements as of that date.~~

~~Concentration of Credit Risk~~ — No customer represented more than 10% of net revenue for either of the three or nine months ended September 30, 2017. No customer represented more than 10% of net revenue for the three months ended September 30, 2016 and one customer accounted for 10% of net revenue for the nine months ended September 30, 2016, respectively. No customer represented more than 10% of the Company’s accounts receivable balance at September 30, 2017 or December 31, 2016.

~~Research and Development~~ — Costs to research, design, and develop the Company’s products are expensed as incurred and consist primarily of employee compensation and fees for the development of prototype products. Software development costs are capitalized beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. Generally, the Company’s products are released soon after technological feasibility has been established. Costs incurred subsequent to achieving technological feasibility have not been significant and generally have been expensed as incurred. At September 30, 2017, the amount of capitalized software development costs totaled $0.5 million and is included in prepaid expenses and other current assets the accompanying condensed consolidated balance sheet. No software development costs were capitalized in 2016.2021.

~~From time to time, new accounting pronouncements are issued by~~In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on external information, or ~~other standard setting bodies that~~a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the ~~Company adopts~~existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvement to Topic 326, Financial Instruments – Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ASU 2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU 2016-13, the FASB issued ASU 2019-10 Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments – Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU 2016-13.

In February 2020, the FASB issued ASU 2020-02, which provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. The subsequent amendments will have the same effective date and transition requirements as ASU No. 2016-13. Early adoption is permitted. Topic 326 requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the ~~specified effective date. Unless otherwise discussed,~~beginning of the period of adoption. The Company ~~does~~adopted this standard on January 1, 2022, and it did not ~~believe that the impact of recently issued standards that are not yet effective will~~ have a material impact on ~~its financial position or results of operations upon adoption.~~

~~In March 2016,~~ the ~~FASB issued~~ ~~Accounting Standards Update (“ASU”) 2016-09,~~ ~~Compensation – Stock Compensation, which provides~~ guidance to simplify several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2016. ~~The Company adopted this guidance effective January 1, 2017. The Company's adoption of this standard did not have a significant impact on its~~Company’s condensed consolidated financial statements. ~~No excess income tax benefit~~

Revenue is recognized upon transfer of control of promised products or tax deficiencies have been recorded as a result of the adoption and there will be no change to accumulated deficit with respect to previously unrecognized excess tax benefits. The Company is electing to continue to account for forfeitures on an estimated basis. The Company has elected to present the condensed consolidated statements of cash flows on a prospective transition method and no prior periods have been adjusted.

~~In February 2016, the FASB issued~~ ~~ASU 2016-02,~~ ~~Leases~~ ~~(“ASU 2016-02”), which~~ amends accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities but will recognize expenses similar to current lease accounting. The guidance is effective for reporting periods beginning after December 15, 2018; however early adoption is permitted. The new guidance must be adopted using a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is currently evaluating the impact of the adoption of this guidance will have on its condensed consolidated financial statements.

~~In May 2014, the FASB issued ASU No. 2014-09~~ ~~Revenue from Contracts with Customers~~ ~~(“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or~~ services ~~are transferred~~ to customers in an amount that reflects the consideration ~~to which an entity~~the Company expects to ~~be entitled~~receive in exchange for those products or services. The Company enters into contracts that can include various combinations of its products, software licenses, and services, which are generally capable of being distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation, generally on a relative basis using its standalone selling price. The stated contract value is generally the transaction price to be allocated to the separate performance obligations. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities.

The Company derives revenues from sales of hardware products, software licenses, subscriptions, professional services, software maintenance and support, and extended hardware warranties.

Hardware Product Revenue —The Company generally has two performance obligations in arrangements involving the sale of hardware products. The first performance obligation is to transfer the hardware product (which includes software integral to the functionality of the hardware product). The second performance obligation is to provide assurance that the product complies with its agreed-upon specifications and is free from defects in material and workmanship for a period of one to three years (i.e., assurance warranty). The entire transaction price is allocated to the hardware product and is generally recognized as revenue at the time of shipment because the customer obtains control of the product at that point in time. The Company has concluded that control generally transfers at that point in time because the customer has title to the hardware, and a present obligation to pay for the hardware. None of the transaction price is allocated to the assurance warranty component, as the Company accounts for these product warranty costs in accordance with Accounting Standards Codification (“ASC”) 460, Guarantees (“ASC 460”).

Software License Revenue— The Company’s license arrangements grant customers the perpetual right to access and use the licensed software products at the outset of an arrangement. Technical support and software updates are generally made available throughout the term of the support agreement, which is generally one to three years. The Company accounts for these arrangements as two performance obligations: (1) the software licenses, and (2) the related updates and technical support. The software license revenue is recognized when the license is delivered to the customer or made available for download, while the software updates and technical support revenue is recognized over the term of the support contract.

Subscription Revenue—Subscription revenue consist of fees received in consideration for providing customers access to one or more of the Company’s software-as-a-service (“SaaS”) based solutions. These SaaS arrangements include access to the Company’s licensed software and, in certain arrangements, use of various hardware devices over the contract term. These SaaS arrangements do not provide the customer the right to take possession of the software supporting the subscription service, or if applicable, any hardware devices at any time during the contract period, and as such are not considered separate performance obligations. Revenue is recognized ratably on a straight-line basis over the term of the contract beginning when the service is made available to the customer. Subscription contract terms range from month-to-month to six years in length and billed monthly or annually.

Professional Services Revenue—Professional services revenue consists primarily of programming customization services performed relating to the integration of the Company’s software products with the customers other systems, such as human resources systems. Professional services contracts are generally billed on a time and materials basis and revenue is recognized as the services are performed.

Software Maintenance and Support Revenue— Support and maintenance contract revenue consists of the services provided to support the specialized programming applications performed by the Company’s professional services group. Support and maintenance contracts are typically billed at inception of the contract and recognized as revenue over the contract period, typically over a one-or three-year period.

Extended Hardware Warranties Revenue— Sales of the Company’s hardware products may also include optional extended hardware warranties, which typically provide assurance that the product will continue to function as initially intended. Extended hardware warranty contracts are typically billed at inception of the contract and recognized as revenue over the respective contract period, typically over one-to-two-year periods after the expiration of the original assurance warranty.

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling price (“SSP”).

Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, the Company estimates SSP using historical transaction data. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The determination of SSP is an ongoing process and information is reviewed regularly in order to ensure SSPs reflect current information or trends.

The Company disaggregates revenue from contracts with customers based on the timing of transfer of goods or ~~services. ASU 2014-09 defines~~services to customers (point-in-time or over time) and geographic region based on the shipping location of the customer. The geographic regions that are tracked are the Americas, Europe and the Middle East, and Asia-Pacific regions.

Total net revenue based on the disaggregation criteria described above is as follows (in thousands):

Amounts invoiced in advance of services being provided are accounted for as deferred revenue. Nearly all of the Company’s deferred revenue balance is related to software maintenance contracts. Payment terms and conditions vary by contract type, although payment is typically due within 30 to 60 days of contract inception. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a ~~five step process~~significant financing component. The primary purpose of the Company’s invoicing terms is to ~~achieve~~provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to receive financing from its customers.

Changes in deferred revenue during the three months ended March 31, 2022 and March 2021 were as follows (in thousands):

Revenue expected to be recognized in future periods related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, and contracts where revenue is recognized as invoiced, was approximately $0.5 million as of March 31, 2022. Since the Company typically invoices customers at contract inception, this ~~core principle and,~~amount is included in ~~doing so, more judgment and estimates may be required within~~the deferred revenue balance. As of March 31, 2022, the Company expects to recognize 43% of the revenue ~~recognition process than are required under existing U.S. GAAP.~~ ~~In August 2015,~~related to these unsatisfied performance obligations during the ~~FASB issued ASU 2015-14,~~ ~~Revenue From Contracts With Customers~~ ~~(Topic 606) (“ASU 2015-14”), which defers the effective date~~remainder of ASU 2014-09 by one year to annual periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance is effective for the Company beginning January 1, 2018. ~~Companiescanelect~~ a ~~fullretrospectivemethod~~to ~~recast~~ ~~prior-periodfinancialstatements~~or a ~~modifiedretrospectivemethod~~to~~recognizethecumulative~~ ~~effect~~ as an ~~adjustment~~to~~theretainedearnings~~in~~theinitial~~ y~~ear~~. ~~The Company~~ ~~plans~~to ~~implementthestandard~~in~~thefirstquarter~~of ~~2018~~on a ~~modifiedretrospectivebasis. The Company~~ does ~~notanticipatethatthisstandard~~ ~~will~~ ~~have~~ ~~a m~~aterial ~~impact~~ ~~on its~~ ~~condensed consolidated financial statements~~.2022, 30% during 2023, and 27% thereafter.

The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. Under ~~the Accounting Standards Codification (“ASC”),~~ ASC 820, Fair Value Measurement and Disclosures ~~(“ASC 820”)~~, the fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016, there were no~~2021, the only assets ~~that are~~ measured and recognized at fair value on a recurring ~~basis. There~~basis were nonominal cash ~~equivalents as~~equivalents. As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016.~~2021, there were no liabilities measured and recognized at fair value on a recurring basis.

Certain of the Company's assets, including goodwill, intangible assets, and privately-held investments, are measured at fair value on a nonrecurring basis if impairment is indicated. Purchased intangible assets are measured at fair value primarily using discounted cash flow projections. For additional discussion of measurement criteria used in evaluating potential impairment involving goodwill and intangible assets, refer to Note 5, Goodwill and Intangible Assets.

Privately-held investments, which are normally carried at cost, are measured at fair value due to events and circumstances that the Company identified as significantly impacting the fair value of investments. The Company estimates the fair value of its privately-held investments using an analysis of the financial condition and near-term prospects of the investee, including recent financing activities and the investee's capital structure.

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, the Company had ~~$0.3 million~~$348,000 of privately-held investments measured at fair value on a nonrecurring basis, which were classified as Level 3 assets due to the absence of quoted market prices and inherent lack of liquidity. The Company reviews its investments to identify and evaluate investments that have an indication of possible impairment. The Company adjusts the carrying value for its privately-held investments for any impairment if the fair value is less than the carrying value of the respective assets on an other-than-temporary basis. The amount of privately-held investments is included in other assets in the accompanying condensed consolidated balance sheets.

As of ~~September 30, 2017, the Company had $0.3 million of~~March 31, 2022 and December 31, 2021, there were 0 liabilities that are measured and recognized at fair value on a nonrecurring basis which were classified as Level 1 liabilities due to the settlement provisions being a set amount of shares of the Company’s common stock. There were no share settled liabilities as of December 31, 2016. The share settled liabilities is included in accrued expenses in the accompanying condensed consolidated balance sheet.non-recurring basis.

The carrying amounts of the Company's accounts receivable, prepaid expenses and other current assets, accounts payable, ~~financial liabilities~~ and other accrued liabilities approximate fair value due to their short maturities.

In accordance with ASC 350, Intangibles – Goodwill and Other, the Company tests goodwill for impairment on an annual basis, in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company performs an initial assessment of qualitative factors to determine whether the existence of events and circumstances leads to a determination that it is ~~authorized to issue 10,000,000 shares~~more likely than not that the fair value of ~~preferred stock, 40,000 of which have been designated as Series A Participating Preferred Stock, par value $0.001 per share. No shares of~~a reporting unit is less than its carrying amount. In performing the Company’s preferred stock, including the Series A Participating Preferred Stock, were outstanding as of September 30, 2017 and December 31, 2016. The Company’s board of directors may from time to time, without further action by the Company’s stockholders, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the rights, preferences and limitations of each series, including voting rights, dividend rights and redemption and liquidation preferences. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of the Company’s common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up ofqualitative assessment, the Company ~~before any payment is made to~~identifies and considers the ~~holders~~significance of ~~shares~~relevant key factors, events, and circumstances that affect the fair value of its reporting units. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. If, after assessing the ~~Company’s common stock. Upon the affirmative vote~~totality of ~~the Board, without stockholder approval,~~relevant events and circumstances, the Company ~~may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of its common stock.~~

In May 2017, the Company sold an aggregate of 2,845,360 shares of its common stock at a public offering price of $4.85 per share in an underwritten public offering. The Company received net proceeds of approximately $12.6 million from the sale of the common stock in the public offering, after deducting the underwriting discount and other offering related expenses of $1.2 million. The Company intends to use the net proceeds from the offering for working capital and other general corporate purposes. The Company may also use a portion of the net proceeds from the offering to acquire or invest in complementary technologies or other assets.

On August 13, 2014, in connection with the Company’s entry into a consulting agreement, the Company issued a consultant a warrant to purchase up to 85,000 shares of the Company’s common stock at a per share exercise price of $10.70 (the “2014 Consultant Warrant”). One fourth of the shares under the warrant are exercisable for cash three months from the date the 2014 Consultant Warrant was issued and quarterly thereafter. The 2014 Consultant Warrant expires on August 13, 2019. In the event of an acquisition of the Company, the 2014 Consultant Warrant shall terminate and no longer be exercisable as of the closing of the acquisition. As of September 30, 2017, none of the shares under the 2014 Consultant Warrant had been exercised.

On February 8, 2017, the Company entered into Loan and Security Agreements with each of East West Bank ("EWB") and Venture Lending & Leasing VII, Inc. and Venture Lending & Leasing VIII, Inc. (collectively referred to as “VLL7 and VLL8”) ~~as discussed in Note 7,~~ ~~Financial Liabilities~~. In connection with the Company's Revolving Loan Facility and Term Loan, the Company issued to EWB a warrant (the "EWB Warrant") to purchase up to 40,000 shares of the Company's common stock at a per share exercise price of $3.64, and issued to each of VLL7 and VLL8 a warrant to purchase 290,000 shares of the Company's common stock at a per share exercise price of $2.00 (the “VLL7 Warrant” and the “VLL8 Warrant,” respectively). ~~The Company calculated~~determines that it is more likely than not that the fair value of the ~~EWB Warrant, the VLL7 Warrant~~reporting unit exceeds its carrying value and ~~the VLL8 Warrant using the Black-Scholes pricing model using the following assumptions: estimated volatility~~there is no indication of ~~78.8%, risk-free interest rate of 1.94%,~~impairment, no ~~dividend yield, and an expected life of five years. In accordance with ASC 505-50,~~ ~~Equity-Based Payments to Non-Employees,~~ the fair values of the EWB Warrant, the VLL7 Warrant and the VLL8 Warrant of $125,000, $1,037,500 and $1,037,500, respectively, were classified as equity as the settlement of the warrants will be in shares andfurther testing is ~~within the control of the Company.~~ ~~Each of the EWB Warrant, the VLL7 Warrant and the VLL8 Warrant is immediately exercisable for cash or by net exercise and will expire five years after its issuance, or on February 8, 2022.~~ ~~None of the shares under the EWB Warrant had been exercised.~~ ~~In connection with entering~~ into Loan and Security Agreements with EWB and VLL7 and VLL8, warrants to purchase an aggregate of 400,000 shares of common stock issued to the Company’s previous lender, Opus Bank (“Opus”) were cancelled.

~~In connection with~~ ~~securing of the new credit facility and cancelling of all the warrants previously issued to Opus,~~performed; however, if the Company ~~issued a warrant to a consultant to purchase 60,000 shares of its common stock at an exercise price of $4.60 per share (the “2017 Consultant Warrant”). The~~concludes otherwise, then the Company ~~calculated~~will perform the quantitative impairment test which compares the estimated fair value of the ~~2017 Consultant Warrant using~~reporting unit to its carrying value, including goodwill. If the ~~Black-Scholes pricing model using~~carrying amount of the ~~following assumptions: estimated volatility~~reporting unit is in excess of ~~78.8%, risk-free interest rate of 1.22%, no dividend yield, and an expected life of two years. The~~its fair value, ~~of the 2017 Consultant Warrant of $119,000 was classified as equity as the settlement of the warrant will~~an impairment loss would be ~~in shares and is within the control of the Company. The 2017 Consultant Warrant~~ ~~is immediately exercisable for cash or by net exercise and will expire two years after its issuance, or on February 8, 2019. None of the shares under the 2017 Consultant Warrant had been exercised.~~

On August 14, 2013, in a private placement, the Company issued 834,847 shares of its common stock at a price of $8.50 per share and warrants to purchase an additional 834,847 shares of its common stock with an exercise price of $10.00 per share (the “2013 Private Placement Warrants”) to accredited and other qualified investors (the “Investors”). The 2013 Private Placement Warrants had a term of four years and were exercisable beginning six months following the date of issuance. In addition, the placement agent was issued warrants to purchase 100,000 shares of common stock at an exercise price of $10.00 per share as compensation. Subsequent to issuance, warrants to purchase an aggregate of 747,969 shares were exercised. The number of shares issuable upon exercise of the 2013 Private Placement Warrants was subject to adjustment for any stock dividends, stock splits or distributions by the Company, or upon any merger or consolidation or sale of assets of the Company, tender or exchange offer for the Company’s common stock, or a reclassification of the Company’s common stock. On August 14, 2017, the remaining 186,878 warrants expired unexercised.

~~Below is the summary of outstanding warrants issued by the Company as of September 30, 2017:~~

The Company has various stock-based compensation plans to attract, motivate, retain and reward employees, directors and consultants by providing its Board or a committee of the Board the discretion to award equity incentives to these persons. The Company’s stock-based compensation plans consist of the 2007 Stock Option Plan (the “2007 Plan”) and the 2011 Incentive Compensation Plan (the “2011 Plan”), as amended.

On June 6, 2011, the Company’s stockholders approved the 2011 Plan, which is administered by the Compensation Committee of the Board. The 2011 Plan provides that stock options, stock units, restricted shares, and stock appreciation rights may be granted to executive officers, directors, consultants, and other key employees. The Company reserved 400,000 shares of common stock under the 2011 Plan, plus 459,956 shares of common stock that remained available for delivery under the 2007 Plan and the 2010 Plan as of June 6, 2011. In aggregate, as of June 6, 2011, 859,956 shares were available for future grants under the 2011 Plan, including shares rolled over from 2007 Plan and 2010 Plan. Subsequent to June 6, 2011 through December 31, 2015, the number of shares of common stock authorized for issuance under the 2011 Plan had been increased by 1.0 million shares. On May 12, 2016, the Company’s stockholders approved an amendment and restatement of the 2011 Plan to, among other things, increase the number of shares of common stock authorized for issuance by 2.0 million shares and extend the term of the 2011 Plan.

~~A summary of activity for the Company’s stock option plans for the nine months ended September 30, 2017 follows:~~

~~The following table summarizes information about options outstanding as of September 30, 2017:~~

At September 30, 2017, there was $0.7 million of unrecognized stock-based compensation expense, net of estimated forfeitures related to unvested options, that is expected to be recognized over a weighted-average period of 1.7 years.

~~The following is a summary of restricted stock and restricted stock unit (“RSU”) activity for the nine months ended September 30, 2017:~~

The fair value of the Company’s restricted stock awards and RSUs is calculated based upon the fair market value of the Company’s stock at the date of grant. As of September 30, 2017, there was $4.7 million of unrecognized compensation cost related to unvested RSUs granted, which is expected to be recognized over a weighted average period of 2.8 years. As of September 30, 2017, an aggregate of 1,403,514 RSUs were outstanding under the 2011 Plan.

~~The following table illustrates all employee stock-based compensation expense related to stock options and RSUs included~~recorded in the condensed consolidated ~~statements~~statement of ~~operations for the three and nine months ended September 30, 2017 and 2016 (in thousands):~~

~~Common stock reserved for future issuance as of September 30, 2017 was as follows:~~

Basic and diluted net loss per share is based upon the weighted average number of common shares outstanding during the period. For the three and nine months ended September 30, 2017 and 2016, common stock equivalents consisting of outstanding stock options, RSUs and warrants were excluded from the calculation of diluted net loss per share because these securities were anti-dilutive due to the net loss in the respective periods. The total number of common stock equivalents excluded from diluted net loss per share relating to these securities was 3,203,620 common stock equivalents for both the three and nine months ended September 30, 2017, and 3,129,479 common stock equivalents for both the three and nine months ended September 30, 2016, respectively.

~~Accumulated other~~ comprehensive ~~income (“AOCI”) at September 30, 2017 and December 31, 2016 consists of foreign currency translation adjustments totaling $2.6 million and $2.1 million, respectively.~~

~~The Company’s inventories are stated at the lower of cost or net realizable value. Inventories consist of (in thousands):~~

~~The Company recorded depreciation expense of $0.3 million and $0.5 million during~~loss. During the three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016, respectively,~~ 2021, the Company noted 0 indicators of goodwill impairment and ~~$1.0 million and $1.4 million during the nine months ended September 30, 2017 and 2016, respectively.~~ concluded no further testing was necessary.

The following table summarizes the gross carrying amount and accumulated amortization for intangible assets resulting from acquisitions (in thousands):

Existing

Customer

Technology

Relationship

Total

Amortization period (in years)

11.75

4.0 – 11.75

Gross carrying amount at December 31, 2016

$
4,600

$
10,639

$
15,239

Accumulated amortization

(2,809
)

(6,610
)

(9,419
)

Intangible Assets, net at December 31, 2016

$
1,791

$
4,029

$
5,820

Gross carrying amount at September 30, 2017

$
4,600

$
10,639

$
15,239

Accumulated amortization

(3,145
)

(7,366
)

(10,511
)

Intangible Assets, net at September 30, 2017

$
1,455

$
3,273

$
4,728

				Developed			Customer
	Trademarks			Technology			Relationships			Total
Amortization period (in years)	5			10 – 12			4 – 12

Gross carrying amount as of March 31, 2022	$	767		$	9,136		$	15,779		$	25,682
Accumulated amortization		(575	)		(6,331	)		(12,594	)		(19,500	)
Intangible assets, net as of March 31, 2022	$	192		$	2,805		$	3,185		$	6,182

Gross carrying amount as of December 31, 2021	$	764		$	9,127		$	15,774		$	25,665
Accumulated amortization		(536	)		(6,219	)		(12,465	)		(19,220	)
Intangible assets, net as of December 31, 2021	$	228		$	2,908		$	3,309		$	6,445

Each period, the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. If a revision to the remaining period of amortization is warranted, amortization is prospectively adjusted over the remaining useful life of the intangible asset. Intangible assets subject to amortization are amortized on a straight-line basisover their useful lives as ~~shown~~indicated in the table above. The Company ~~evaluates~~performs an evaluation of its amortizable intangible assets for impairment at the end of each reporting period. The Company did ~~not~~0t identify any impairment indicators during the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2022 and 2021.

The following table ~~illustrates~~summarizes the amortization expense included in the condensed consolidated statements of ~~operations~~ comprehensive loss for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively (in thousands):

The estimated annual future amortization expense for purchased intangible assets with definite lives ~~over the next five years~~ as of ~~September 30, 2017 is~~March 31, 2022 was as follows (in thousands):

~~Hirsch Acquisition – Secure Keyboards and Secure Networks~~. Prior to the 2009 acquisition of Hirsch Electronics Corporation (“Hirsch”) by the Company, effective November 1994, Hirsch had entered into a settlement agreement (the “1994 Settlement Agreement”) with two limited partnerships, Secure Keyboards, Ltd. (“Secure Keyboards”) and Secure Networks, Ltd. (“Secure Networks”). At the time, Secure Keyboards and Secure Networks were related to Hirsch through certain common shareholders and limited partners, including Hirsch’s then President Lawrence Midland, who resigned as President of the Company effective July 31, 2014. Immediately following the acquisition, Mr. Midland owned 30% of Secure Keyboards and 9% of Secure Networks. Secure Networks was dissolved in 2012 and Mr. Midland owned 24.5% of Secure Keyboards upon his resignation from the Company effective July 31, 2014.

On April 8, 2009, Secure Keyboards, Secure Networks and Hirsch amended and restated the 1994 Settlement Agreement to replace the royalty-based payment arrangement under the 1994 Settlement Agreement with a new, definitive installment payment schedule with contractual payments to be made in future periods through 2020 (the “2009 Settlement Agreement”). The Company was not an original party to the 2009 Settlement Agreement as the acquisition of Hirsch occurred subsequent to the 2009 Settlement Agreement being entered into. The Company has, however, provided Secure Keyboards and Secure Networks with a limited guarantee of Hirsch’s payment obligations under the 2009 Settlement Agreement (the “Guarantee”). The 2009 Settlement Agreement and the Guarantee became effective upon the acquisition of Hirsch on April 30, 2009. The Company’s ~~annual payment to Secure Keyboards~~inventories are stated at the lower of cost or net realizable value. Inventories consists of (in thousands):

Property and ~~Secure Networks in any given year under the 2009 Settlement Agreement is subject to an increase based on the percentage increase in the Consumer Price Index during the previous calendar year.~~equipment, net consists of (in thousands):

The final payment to Secure Networks was made on January 30, 2012. The Company’s payment obligations under the 2009 Settlement Agreement to Secure Keyboards will continue through the calendar year ending December 31, 2020, with the final payment due on January 30, 2021, unless the Company elects at any time to satisfy its obligations by making a lump-sum payment to Secure Keyboards. The Company does not intend to make a lump-sum payment and therefore a portion of the payment obligation amount is classified as a long-term liability in the condensed consolidated balance sheets.

The Company ~~included $0.1~~recorded depreciation expense of $0.2 million ~~and $0.3 million~~during each of ~~interest expense during~~ the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022 and ~~$0.1 million~~2021.

Other accrued expenses and $0.3 million of interest expense during the three and nine months ended September 30, 2016, respectively, in its condensed consolidated statements of operations for interest accreted on the long-term payment obligation.

~~The ongoing payment obligation in connection with the Hirsch acquisition as of September 30, 2017 is as follows (in thousands):~~

On March 31, 2014, the Company entered into a credit agreement (the “Credit Agreement”) with Opus. The Credit Agreement provided for a term loan in aggregate principal amount of $10.0 million (“Term Loan”) and an additional $10.0 million revolving loan facility (“Revolving Loan Facility”). On February 8, 2017, the Company entered into ~~new~~a Loan and Security ~~Agreements. In connection~~Agreement with ~~the closing of such agreements,~~East West Bank (“EWB”). Following subsequent amendments, on February 8, 2021 the Company ~~repaid all outstanding amounts under its Credit Agreement, as~~ amended ~~with Opus.~~ ~~In evaluating~~and restated the ~~transaction, the Company compared the net present value cash flows under the existing Credit Agreement and the new~~ Loan and Security Agreements to determine whether the terms of the new debt facility and the existing facility were "substantially different." As the net present value of cash flows varied by more than 10%, the Company concluded that the transaction should be accounted for as a debt extinguishment. As a result, the Company recorded a gain on extinguishment of debt totaling $977,000, representing the ~~difference between the reacquisition price of the previous debt facility, net of cancelled warrants previously issued to Opus, and~~Agreement in its ~~net carrying amount.~~

~~On February 8, 2017, the Company entered into Loan~~entirety (the “Loan and Security ~~Agreements with each of EWB and VLL7 and VLL8.~~Agreement”). The Loan and Security Agreement ~~with EWB provides~~provided for a ~~$10.0~~$20.0 million revolving loan facility ~~("Revolving Loan Facility"), and the Loan Security Agreement with VLL7 and VLL8 provides for a term loan in aggregate principal amount of $10.0 million (the "Term Loan").~~ ~~The obligations of the Company under each of the Revolving Loan Facility and the Term Loan and Security Agreements are secured by substantially all assets of the Company.~~

The Revolving Loan Facility bears interest at prime rate plus 2.0% and matures and becomes due and payable on February 8, 2019. Interest is payable monthly beginning on March 1, 2017. The Company may voluntarily prepay amounts outstanding under the Revolving Loan Facility, without prepayment charges. In the event the Revolving Loan Facility is terminated prior to its maturity, the Company would be required to pay an early termination fee in the amount of 1.0% of the revolving line, and an additional cash early termination fee of 1.0% if terminated prior to February 8, 2018. Additional borrowing requests under the Revolving Loan Facility are subject to ~~various customary conditions precedent, including satisfaction of~~ a borrowing base ~~test as more fully described in the Revolving Loan Facility.~~

~~The Term Loan matures on August 8, 2020. Payments~~and a $4.0 million non-formula revolving loan facility that was not subject to a borrowing base. Advances under the ~~Term Loan are interest-only for the first twelve months~~revolving loan facility, as amended on April 30, 2021, bear interest at a per annum rate ~~of 12.5%, followed by principal and interest payments amortized over~~equal to the ~~remaining term~~prime rate. The maturity date of the ~~Term Loan. If~~main revolving loan facility is February 8, 2023. The non-formula revolving loan facility terminated on February 7, 2022.

On April 14, 2022, the Company ~~elects~~and EWB amended the Loan and Security Agreement replacing the $20.0 million revolving loan facility subject to ~~prepay~~a borrowing base with a non-formula revolving loan facility with no borrowing base requirement and a maturity date of February 8, 2023. In addition, the ~~Term Loan before its maturity, all accrued~~interest rate was lowered from prime to prime minus 0.25%, and ~~unpaid interest outstanding at the prepayment date will be due and payable, together with all the scheduled interest that would have accrued and been payable through the stated maturity of~~

the Term Loan, provided that at any time after the Company has made at least twelve scheduled amortization payments of principal and interest on the Term Loan the Company shall only be required to pay 80% of the scheduled interest that would have accrued and been payable through the stated maturity of the Term Loan,certain financial covenants were amended.

The ~~Company is obligated to pay customary fees~~Loan and expenses, including customary facility fees for credit facilities of this size and type, in the aggregate amount of approximately $120,000, in connection with the closing of the two facilities. An additional facility fee of $40,000 will be payable in connection with the Revolving Loan Facility on February 8, 2018.

~~Each of the Revolving Loan Facility and the Term Loan contain~~Security Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, limits or restrictions on the ~~Company's~~Company’s ability to incur liens, incur indebtedness, make certain restricted payments (including dividends), merge or consolidate and dispose of ~~assets.~~assets, as well as other financial covenants. The Revolving Loan Facility also contains various financial covenants as set forth in the Revolving Loan Facility, including but not limited to a liquidity covenant requiring the Company to maintain at least $4.0 million of cash. In addition, each of the Revolving Loan Facility and the Term Loan contains customary events of default that entitle the EWB or VLL7 and VLL8, as appropriate, to cause any or all of the Company's indebtedness under the Revolving Loan Facility or the Term Loan, respectively, to become immediately due and payable. The events of default (some of which are subject to applicable grace or cure periods), include, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. Upon the occurrence and during the continuance of an event of default, EWB and VLL7 and VLL8 may terminate their lending commitments and/or declare all or any part of the unpaid principal of all loans, all interest accrued and unpaid thereon and all other amounts payableCompany’s obligations under the Loan and Security ~~Agreements to be immediately due and payable.~~

Agreement are collateralized by substantially all of its assets. As of ~~September 30, 2017,~~March 31, 2022, there were 0 amounts outstanding and the Company was in compliance with all financial covenants under the ~~Revolving Loan Facility and the Term Loan.~~

~~The proceeds of the Term~~ Loan and the initial draw under Revolving Loan Facility, after payment of fees and expenses, were used to repay all outstanding amounts under the Credit Agreement with Opus. In connection with the repayment, warrants to purchase an aggregate of 400,000 shares of common stock issued to Opus were cancelled. The proceeds of any additional draws under the Revolving Loan Facility will be used for working capital and other general corporate purposes.

The following table summarizes the timing of repayment obligations for the Company’s long-term financial liabilities for the next four years under the current terms of the Credit Agreement, as amended, at September 30, 2017 (in thousands):

The Company conducts business globally and, as a result, files federal, state and foreign tax returns. The Company strives to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While the Company has accrued for amounts it believes are the probable outcomes, the final outcome with a tax authority may result in a tax liability that is more or less than that reflected in the condensed consolidated financial statements. Furthermore, the Company may later decide to challenge any assessments, if made, and may exercise its right to appeal.

The Company has no present intention of remitting undistributed retained earnings of any of its foreign subsidiaries. Accordingly, the Company has not established a deferred tax liability with respect to undistributed earnings of its foreign subsidiaries.

~~The Company~~ applies the provisions of, and accounted for uncertain tax positions, in accordance with ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

The Company generally is no longer subject to tax examinations for years prior to ~~2012.~~2017. However, if loss carryforwards of tax years prior to ~~2011~~2017 are utilized in the U.S., these tax years may become subject to investigation by the tax authorities. While timing of the resolution and/or finalization of tax audits is uncertain, the Company does not believe that its unrecognized tax benefits would materially change in the next 12 months.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (the “Act”) into law. The $1.9 trillion Act includes COVID-19 relief, as well as broader stimulus, but also includes several revenue-raising and business tax provisions. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) also includes several significant provisions for corporations, including the usage of net operating losses and payroll benefits. Several foreign (non-U.S.) jurisdictions in which the Company operates have taken similar economic stimulus measures. The Act and the CARES Act had no material impact on the Company’s condensed consolidated financial statements and disclosures.

The following table summarizes Series B convertible preferred stock and the accretion of dividend activity for the three months ended March 31, 2022 and 2021 (in thousands):

Based on the current conversion price, the outstanding shares, including the accretion of dividends, of Series B convertible preferred stock as of March 31, 2022 would be convertible into 6,103,819 shares of the Company’s common stock. However, the conversion rate will be subject to adjustment in certain instances, such as if the Company issues shares of its common stock at a price less than $4.00 per common share, subject to a minimum conversion price of $3.27 per share. As of March 31, 2022, none of the contingent conditions to adjust the conversion rate had been met.

Each share of Series B convertible preferred stock is entitled to a cumulative annual dividend of 5% for the first six (6) years following the issuance of such share and 3% for each year thereafter, with the Company retaining the option to settle each year’s dividend after the tenth (10^th) year in cash. The dividends accrue and are payable in kind upon such time as the shares convert into the Company’s common stock. In general, the shares are not entitled to vote except in certain limited cases, including in change of control transactions where the expected price per share distributable to the Company’s stockholders is expected to be less than $4.00 per share. The Certificate of Designation with respect to the Series B convertible preferred stock further provides that in the event of, among other things, any change of control, liquidation or dissolution of the Company, the holders of the Series B convertible preferred stock will be entitled to receive, on a pari passu basis with the holders of the common stock, the same amount and form of consideration that the holders of the Company’s common stock receive (on an as-if-converted-to-common-stock basis and without regard to the Ownership Limitation applicable to the Series B convertible preferred stock).

On May 5, 2020, the Company entered into a Note and Warrant Purchase Agreement with 21 April Fund, LP and 21 April Fund, Ltd., (collectively, the “April 21 Funds”), pursuant to which the Company issued warrants (“April 21 Funds Warrants”) to purchase 275,000 shares of common stock of the Company. The April 21 Funds Warrants have a term of three years (subject to early termination upon the closing of an acquisition). The shares of common stock issuable upon exercise of the April 21 Fund Warrants are entitled to resale registration rights pursuant to a Stockholders Agreement dated December 21, 2017.

Below is the summary of outstanding warrants issued by the Company as of March 31, 2022:

The Company maintains a stock-based compensation plan, the 2011 Incentive Compensation Plan (the “2011 Plan”), as amended, to attract, motivate, retain and reward employees, directors and consultants by providing its Board or a committee of the Board the discretion to award equity incentives to these persons.

A summary of stock option activity for the three months ended March 31, 2022 is as follows:

The aggregate intrinsic value in the table above represents the difference between the fair value of the Company’s common stock as of March 31, 2022 and the exercise price of in-the-money stock options multiplied by the number of such stock options.

The following table summarizes information about stock options outstanding as of March 31, 2022:

As of March 31, 2022, there was 0unrecognized stock-based compensation expense related to stock options.

The following is a summary of RSU activity for the three months ended March 31, 2022:

The fair value of the Company’s RSUs is calculated based upon the fair market value of the Company’s common stock at the date of grant. As of March 31, 2022, there was $5.6 million of unrecognized compensation expense related to unvested RSUs granted, which is expected to be recognized over a weighted average period of 3.3 years. NaN tax benefit was realized from RSUs for the three months ended March 31, 2022.

The Company granted 200,000 PSUs to a certain key employee during the year ended December 31, 2020, with a grant date fair value of $6.38 per share. The PSUs are subject to the attainment of performance goals established by the Company’s Compensation Committee, the periods during which performance is to be measured, and other limitations and conditions. Performance goals are based on pre-established objectives that specify the manner of determining the number of PSUs that will vest if performance goals are attained. If the employee terminates employment, the non-vested portion of the PSUs will not vest and all rights to the non-vested portion will terminate.

The following is a summary of PSU activity for the three months ended March 31, 2022:

As of March 31, 2022, there was $0.4 million of unrecognized compensation expense related to unvested PSUs, which is expected to be recognized over a period of 0.8 years. NaN tax benefit was realized from PSUs for the three months ended March 31, 2022.

The following table summarizes stock-based compensation expense related to stock options, RSUs, and PSUs included in the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2022 and 2021 (in thousands):

During the three months ended March 31, 2022 and 2021, the Company repurchased 17,647 and 25,327 shares, respectively, of common stock surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of RSUs issued to employees.

Basic net loss per common share is computed by dividing net loss available to common stockholders during the period by the weighted average number of common shares outstanding during that period. Diluted net loss per common share is impacted by equity instruments considered to be potential common shares, if dilutive, computed using the treasury stock or the if-converted method of accounting.

The following common stock equivalents have been excluded from diluted net loss per share for the three months ended March 31, 2022 and 2021 because their inclusion would have been anti-dilutive (in thousands):

12. Segment Reporting, ~~and~~ Geographic Information, and Concentration of Credit Risk

ASC 280, Segment Reporting (“ASC 280”) establishes standards for the reporting by public business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses and about which separate financial information is available to its chief operating decision makers (“CODM”). The Company’s CODM is its ~~CEO.~~

~~The Company is organized into four reportable operating segments: Physical Access Control Systems (“PACS”), previously referred to as Premises, Identity, Credentials and All Other.~~Chief Executive Officer.

The CODM reviews financial information and business performance for each operating segment. The Company evaluates the performance of its operating segments at the revenue and gross profit levels. The ~~CODM~~Company does not ~~review~~report total assets, capital expenditures or operating expenses ~~or asset information~~ by operating segment as such information is not used by the CODM for purposes of assessing performance or allocating resources.

Net revenue and gross profit information by segment for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016 is~~2021 are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2022			2021
PACS:
Net revenue	$	6,434		$	7,253		$	17,622		$	17,908
Gross profit		3,412			4,334			9,556			10,244
Gross profit margin		53	%		60	%		54	%		57	%
Identity:
Net revenue		3,421			3,508			10,568			8,923		$	14,579		$	13,658
Gross profit		1,229			1,359			3,666			3,324			3,159			3,359
Gross profit margin		36	%		39	%		35	%		37	%		22	%		25	%
Credentials:
Net revenue		5,577			4,799			15,471			14,110
Gross profit		1,220			1,227			4,013			3,654
Gross profit margin		22	%		26	%		26	%		26	%
All Other:
Premises:
Net revenue		—			—			3			580			10,482			8,504
Gross profit		—			—			6			261			5,807			4,333
Gross profit margin		—			—			200	%		45	%		55	%		51	%
Total:
Net revenue		15,432			15,560			43,664			41,521			25,061			22,162
Gross profit		5,861			6,920			17,241			17,483			8,966			7,692
Gross profit margin		38	%		44	%		39	%		42	%		36	%		35	%
Operating expenses:
Research and development		1,597			1,480			4,584			4,997			2,529			2,337
Selling and marketing		3,448			3,312			10,142			10,807			5,110			4,064
General and administrative		1,247			2,115			5,119			9,674			2,488			2,125
Restructuring and severance		(49	)		160			(49	)		3,100			(140	)		388
Total operating expenses:		6,243			7,067			19,796			28,578			9,987			8,914
Loss from operations		(382	)		(147	)		(2,555	)		(11,095	)		(1,021	)		(1,222	)
Non-operating income (expense):
Interest expense, net		(643	)		(525	)		(1,995	)		(1,814	)		(25	)		(245	)
Gain on extinguishment of debt		—			—			977			—
Foreign currency (losses) gains, net		(51	)		35			(202	)		309
Loss before income taxes and noncontrolling interest	$	(1,076	)	$	(637	)	$	(3,775	)	$	(12,600	)
Gain on investment														24			—
Foreign currency gains, net														19			46
Loss before income tax benefit (provision)													$	(1,003	)	$	(1,421	)

Geographic net revenue is based on the customer’s ship-to location. Information regarding net revenue by geographic region for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2022			2021
Americas	$	10,291		$	9,924		$	28,894		$	27,343		$	16,891		$	15,148
Europe and the Middle East		1,771			2,834			5,767			6,654			3,794			2,460
Asia-Pacific		3,370			2,802			9,003			7,524			4,376			4,554
Total	$	15,432		$	15,560		$	43,664		$	41,521		$	25,061		$	22,162
Revenues:

As percentage of net revenue:
Americas		67	%		64	%		66	%		66	%		67	%		68	%
Europe and the Middle East		11	%		18	%		13	%		16	%		15	%		11	%
Asia-Pacific		22	%		18	%		21	%		18	%		18	%		21	%
Total		100	%		100	%		100	%		100	%		100	%		100	%

NaN customer accounted for 10% or more of net revenue for either of the three months ended March 31, 2022 or 2021. NaNcustomer accounted for 10% or more of net accounts receivable as of March 31, 2022 or December 31, 2021.

Long-lived assets by geographic location as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 are as follows (in thousands):

InDuring the three months ended March 31, 2022, the Company entered into a settlement agreement associated with outstanding rental payments due the landlord on leased office space in San Francisco, California. As a result of the settlement, the Company recorded a net credit of $153,000 representing the difference between amounts accrued and the settlement amount. The settlement credit was partially offset by severance related costs of $13,000.

During the three months ended March 31, 2021, the Company incurred restructuring expenses of $388,000, consisting of facility rental related costs of $329,000, which included a charge of $281,000 resulting from the impairment of a right-of-use operating lease asset for office space the Company vacated in the first quarter of ~~2016,~~2021, and severance related costs of $59,000.

The Company’s leases consist primarily of operating leases for administrative office space, research and development facilities, a manufacturing facility, and sales offices in various countries around the world. The Company determines if an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components, which are accounted for as a single lease component. Total rent expense was approximately$0.3 million for both the three months ended March 31, 2022 and 2021.

Initial lease terms are determined at commencement and may include options to extend or terminate the lease when it is reasonably certain the Company ~~implemented a worldwide restructuring plan designed~~will exercise the option. Remaining lease terms range from one to ~~refocus the Company’s resources~~four years, some of which include options to extend for up to five years. Leases with an initial term of twelve months or less are not recorded on its core business segments, including physical access and transponders, and to consolidate its operations in several worldwide locations. The restructuring plan included reducing the Company’s non-manufacturing employee base, reallocating overhead roles into direct business activities and eliminating certain management and executive roles. In the third quarter of 2017, the Company recorded a credit resulting from actual expenditures being less than originally accrued. In the nine months ended September 30, 2016, the Company incurred restructuring and severance costs of $3.1 million.

~~All unpaid restructuring and severance accruals are included in other accrued expenses and liabilities within current liabilities in~~ the condensed consolidated balance ~~sheets~~sheets. As the Company’s leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s incremental borrowing rate based on information available at ~~September 30, 2017~~the lease commencement date.

The table below reconciles the undiscounted cash flows for the first five years and ~~December~~the total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of March 31, ~~2016. Restructuring and severance activities during the nine months ended September 30, 2017 and 2016 were as follows~~2022 (in thousands):

As of March 31, 2022, the weighted average remaining lease term for the Company’s operating leases was 2.3 years, and the weighted average discount rate used to determine the present value of the Company’s operating leases was 5.9%.

19Cash paid for amounts included in the measurement of operating lease liabilities was $0.3 millionfor the three months ended March 31, 2022.

The following table summarizes the Company’s principal contractual commitments, excluding operating leases, as of ~~September 30, 2017~~March 31, 2022 (in thousands):

Operating Leases

Purchase Commitments

Other Contractual Commitments

Total

2017 (remaining three months)

$
318

$
8,706

$
42

$
9,066

2018

1,195

1,048

—

2,243

2019

1,089

—

—

1,089

2020

893

—

—

893

2021

636

—

—

636

Thereafter

450

—

—

450

Total

$
4,581

$
9,754

$
42

$
14,377

	Purchase Commitments		Other Contractual Commitments		Total
2022 (remaining nine months)	$	53,069	$	51	$	53,120
2023		4,178		—		4,178
Total	$	57,247	$	51	$	57,298

Purchase commitments for inventories are highly dependent upon forecasts of customer demand. Due to the uncertainty in demand from its customers, the Company may have to change, reschedule, or cancel purchases or purchase orders from its suppliers. These changes may lead to vendor cancellation charges on these purchases or contractual commitments.

The following table summarizes the Company’s warranty accrual account activity during the three months ended March 31, 2022 and 2021:

The Company provides warranties on certain product sales for periods ranging from 12 to 2436 months, and allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. The Company currently establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based on the prior 12 months’ sales activities. If actual return rates and/or repair and replacement costs differ significantly from the Company’s estimates, adjustments to recognize additional cost of sales may be required in future periods. Historically the warranty accrual and the expense amounts have been immaterial.

There were no subsequent events except as disclosed within Note 7, Financial Liabilities.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other parts of this Quarterly Report on Form 10-Q (“Quarterly Report”) contain forward-looking statements, within the meaning of the safe harbor provisions under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements ~~provide~~reflect current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “will,” “believe,” “could,” “should,” “would,” “may,” “anticipate,” “intend,” “plan,” “estimate,” “expect,” “project” or the negative of these terms or other similar expressions. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A of this ~~Quarterly~~ Report and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Risk Factors,” ~~which are incorporated herein by reference.~~ The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 inof our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Each of the terms the “Company,” “Identiv,” ~~“we”~~“we,” “us” and ~~“us”~~“our” as used herein refers collectively to Identiv, Inc. and its wholly-owned subsidiaries, unless otherwise stated.

Identiv is a global ~~security~~provider of secure identification and physical security.

We are leveraging our Radio Frequency Identification (“RFID”) based physical device-management expertise as well as our physical access, video and analytics solutions to provide leading solutions as our customers, and our customers’ customers, embracing the Internet of Things (“IoT”). Customers in the technology ~~company that secures~~ and ~~manages access to physical places, things and information. Global organizations in~~mobility, consumer, government, healthcare, education ~~retail, transportation, healthcare~~ and other ~~markets~~sectors rely ~~upon our~~on Identiv’s identification and access solutions. Identiv’s platform encompasses RFID and Near-Field Communication (“NFC”), cybersecurity, and the full spectrum of physical access, video, and audio security. We ~~empower them~~are bringing the benefits of the IoT to ~~create secure and convenient experiences in schools, government offices, factories, critical infrastructure, transportation, hospitals and virtually every type of facility and for~~ a wide range of ~~products.~~physical, connected items.

~~Our operating segments focus~~Identiv’s mission is to digitally enable every physical thing and every physical place on the ~~following solutions:~~

The foundation of our business is our expertise in RFID, smart card technology, and access control, our close customer relationships that allow us to develop customer-relevant products, and our core value of quality.Segments

~~To deliver these solutions, we~~We have organized our operations into ~~four~~two reportable business segments, principally by ~~product~~solution families: ~~PACS,~~ Identity ~~Credentials,~~ and ~~All Other.~~Premises. Our Identity segment includes products and solutions enabling secure access to information serving the logical access and cyber-security market, and protecting connected objects and information using RFID embedded security.Our Premises segment includes our solutions to address the premises security market for government and enterprise, including access control, video surveillance, analytics, audio, access readers and identities.

Our financial performance depends on the pace, scope and depth of end-user adoption of our ~~physical access platform is~~RFID products in multiple industries. Such pace, scope and depth accelerated during 2020, causing large fluctuations in our operating results. During 2021, we believe RFID deployments occurred at a much faster pace of growth than historically. We believe significant improvement in chip capabilities at lower costs, combined with the ~~Hirsch line~~incorporation of ~~controllers~~the full NFC Data Exchange Format (“NDEF”) protocol by Apple in its iPhone 12 and iOS 14, has accelerated the opportunities for product engineers to integrate RFID into their products to create new and more engaging customer experiences, product reliability and performance. As the market hit this pivot point, we expanded both our capacity and technical leadership. We track growth indicators including ~~the advanced MX line, Hirsch's Velocity management software~~design wins, customer launches and ~~a wide range of integrations that provide Velocity/MX’s unique flexibility across a wide range of industries and implementations.~~technology launches. We have ~~further extended~~made investments in our ~~physical access platform with our Identiv Connected Physical Access Manager (“ICPAM”) software, derived from Cisco’s Physical Access Manager (“CPAM”) system~~technology, world class quality and ~~available in partnership with Cisco. Both of these platforms are available with our MX multi-door controllers as well as our edge controllers, which are targeted as one to two door installations~~automation, and leverage existing Ethernet infrastructure (“Power-over-Ethernet”). Additionally, we sell either individual components or complete bundled solutions which can include any or all among software, edge controllers, multi-door panels, access readers, access cards and other components.

Our modular Hirsch MX controllers are designed to be scalable, allowing customers to start with a small system and expand over time. Hirsch MX controllers can operate autonomously, whether as a single controller or as part of a networked system with Velocity software. The Hirsch Velocity software platform enables centralized management of access and security operations across an organization, including control of doors, gates, turnstiles, elevators and other building equipment, monitoring users as they move around a facility, preventing unwanted access, maintaining compliance and providing a robust audit trail.

~~To our price/performance/quality-leading commercial offerings, we have added what~~ we believe that our competitive advantages will continue to bedrive growth.

We believe the ~~highest performance, lowest per-door cost access control system for the U.S. federal government security mandate known as the Federal Identity, Credential~~underlying, long-term trend is continued RFID adoption by multiple verticals. We also believe that expanding use cases fosters adoption across verticals and ~~Access Management (“FICAM”) architecture. This brings all of the advantages above~~ into ~~the next generation of physical security for the U.S. government departments and agencies to achieve FIPS 201 compliance.~~

Our TouchSecure (“TS”) door readers provide unique features to support a wide range of security standards. We support the majority of legacy card credentials with a robust next-generation platform that can help companies migrate to more secure credentials and technologies, including smart cards, near field communication ("NFC") and government-issued credentials including CAC, PIV, PIV-I and others. Additionally, our Scramblepad readers employ numerical scrambling on the keypad to protect access codes from being stolen as they are entered, and providing both secure two-factor authentication and convenient alternative-factor access.

other markets. In addition, ~~to our core products,~~ we do not have ~~a range~~any significant concentration of product initiatives to leverage leading technology advances across mobile, biometric, machine-learning and other areas, to provide convenient, frictionless, low-cost yet highly secure physical access. We invest independently and in partnership with other leading technology companies in these emerging aspects of access enabling platforms.

Our Identity products include smart card readers, which includes a broad range of contact, contactless, portable and mobile smart card readers, tokens and terminals that are utilized around the world to enable logical access (i.e., PC, network or data access) and security and identification applications, such as national ID, payment, e-Health and e-Government.

With over 20 years of smart card reader, application and token experience, we are known for our expertise in this complex ecosystem. We combine our deep technical expertise with an optimized supply chain, to provide whatcustomers so we believe to be the most optimal, cost-effective and high-quality smart card-based products. Whether Identiv branded products, original equipment manufacturers (“OEM”) branded, or embedded chips or modules,that our ~~position is as the trusted business solution provider for all users and issuers of smart cards and embedded-chip applications.~~

Our Credentials segment include NFC and RFID products, including inlays and inlaybased and other cards, labels, tags and stickers, as well as other radio frequency (“RF”) and integrated circuits (“IC”) components and are generally grouped into access cards and transponders. Our TS Cards product line, we believe, is the first complete solution to allow customers to pay only for the most basic low-frequency proximity access technology while having the ability to evolve to the higher-security, high-frequency and highest-security PKI-based access credentials. This product line exemplifies our values: we place no burden on our customers, instead providing the most cost-effective solution to their basic needs; and then delivering within this platform the ability for them to move to higher-level needs and capabilities, when they want, when they are ready and when theydemand will ~~realize economic and experience benefits.~~

Our transponder products span the full range of high frequency (“HF”) and ultra-high frequency (“UHF”) technologies. Our differentiation is analogous to application-specific integrated circuits (“ASICS”) in the semiconductor market. We leverage our flexible platform, our deep technical expertise and our infrastructure and supply chain to deliver solutions optimized for our customers’ business goals. We believe we are more responsive, more flexible, more experienced in business-optimized solutions and have a better track record of sustained delivery of solution-specific, high-quality RFID devices than our competitors. These products are manufactured in our state-of-the-art facility in Singapore and are used in a diverse range of physical applications, including electronic entertainment such as virtual reality (“VR”), games, loyalty cards, mobile payment systems, transit and event ticketing, brand authenticity from pharmaceuticals to consumer goods, hospital resource management, cold-chain management and many others.

Leveraging our expertise in RFID, physical access and physical authentication, we are developing new solutions to extend our platforms across a wide variety of physical use cases. The next major opportunity in our connected world is the Internet of Things, which fundamentally is about physical things. We believe our core strength in physical access and physical instrumentation (RFID) markets, our well-established platforms and our deep knowledge of the relevant technologies, position us well in this growth market.

The All Other segment includes legacy product lines, such as Chipdrive and Digital Media readers. The products included in the All Other segment do not meet the quantitative thresholds for determining reportable segments and therefore have been combined for reporting purposes. No revenues are expected to be generated in 2017.

We primarily conduct sales and marketing activities in each of the markets in which we compete, utilizing our own sales and marketing organization to solicit prospective channel partners and customers, provide technical advice and support with respect to products, systems and services, and manage relationships with customers, distributors and/or OEMs. We utilize indirect sales channels that may include OEMs, dealers, systems integrators, value added resellers, resellers or Internet sales, although we also sell directly to end users. In support of our sales efforts, we participate in industry events and conduct sales training courses, targeted marketing programs, and ongoing customer, channel partner and third-party communications programs.

Our corporate headquarters are located in Fremont, California. We maintain research and development facilities in California, Chennai, India, and Munich, Germany, and local operations and sales facilities in Germany, the United Kingdom, Hong Kong, Singapore, India and the United States. We were founded in 1990 in Munich, Germany and incorporated in 1996 under the laws of the State of Delaware.

~~For a discussion of our net revenue by segment and geographic location, see Note 9,~~ ~~Segment Reporting and Geographic Information~~ ~~in the accompanying notes to our unaudited condensed consolidated financial statements.~~

~~Geographic net revenue based on each customer’s ship-to location is as follows (in thousands):~~

Net revenue in the nine months ended September 30, 2017 increased 5% compared with the first nine months of 2016. Approximately 40% of our net revenue in the nine months ended September 30, 2017 came from our PACS segment. Net revenue in the PACS segment was $17.6 million and $17.9 million for the nine months ended September 30, 2017 and 2016, respectively. Net revenue in the Identity segment, which represented approximately 24% of total net revenue, was $10.6 million in the nine months ended September 30, 2017 compared to $8.9 million in the prior year period. Net revenue in our Credentials segment represented approximately 35% of our net revenue. Net revenue in the Credentials segment was $15.5 million in the nine months ended September 30, 2017 compared to $14.1 million in the comparable period in 2016.

Net revenue in the Americas was approximately $28.9 million in the nine months ended September 30, 2017, accounting for 66% of total net revenue, and was up 6% compared to $27.3 million in the nine months of 2016. Net revenue from our PACS solution for security programs within various U.S. government agencies, as well as RFID and NFC products, inlays and tags represented approximately 55% of our net revenue in the Americas region.

Net revenue in our PACS segment for the nine months ended September 30, 2017 was comparable to the prior year period primarily due to higher of software products sales, higher sales through our channel partners, and an increase in professional services engagements, offset by lower sales of physical access control solutions attributable to the timing of orders received from federal government customers late or after the end of the third quarter of 2017. Net revenue in our Identity segment decreased in the nine months ended September 30, 2017 compared to the comparable period of the previous year primarily due to lower smart card reader sales. Net revenue in our Credentials segment increased 22% in the nine months ended September 30, 2017 compared with the same period of the prior year primarily due to higher transponder and access card sales.

~~As a general trend, U.S. Federal agencies~~ continue to be ~~subject~~resilient to ~~security improvement mandates under programs such as Homeland Security Presidential Directive-12 (“HSPD-12”)~~the loss of any individual customer or application.

If RFID market adoption, and ~~reiterated in memoranda from~~adoption of our products specifically, does not meet our expectations then our growth prospects and operating results will be adversely affected. If we are unable to meet end-user or customer volume or performance expectations, then our business prospects may be adversely affected. In contrast, if our RFID sales exceed expectations, then our revenue and profitability may be positively affected.

Given the ~~Office~~uncertainties of ~~Management~~the specific timing of our new customer deployments, we cannot assure you that we have appropriate inventory and ~~Budget (“OMB M-11-11”). We believe~~capacity levels or that ~~our solution for trusted physical access is an attractive offering to help federal agency customers move towards compliance with federal directives and mandates. To expand our sales opportunities~~we will not experience inventory shortfalls or overages in the ~~United States~~future or acquire inventory at costs to maintain gross margins. We attempt to mitigate those risks by being deeply embedded in ~~general and~~our customers design cycle, working with our ~~U.S. Government customers~~chip partners on long lead time components, managing our limited capital equipment needs within a short cycle and future proofing our facilities to accommodate several scenarios for growth potential.

If end users with sizable projects change or delay them, we may experience significant fluctuation in ~~particular,~~revenue on a quarterly or annual basis, and we ~~have strengthened~~anticipate that uncertainty to continue to characterize our ~~U.S. sales organization and our sales presence in Washington D.C.~~

Net revenue in Europe, the Middle East, and Asia-Pacific was approximately $14.8 million in the nine months ended September 30, 2017, accounting for 34% of total net revenue and was up 4% compared to $14.2 million in the first nine months of 2016 primarily as a result of increased sales in our Asia-Pacific region, partially offset by lower sales in our Europe and the Middle East region. Net revenue in these regions are very dependent on the completion of large projects and the timing of orders placed by some of our larger customers. Sales of Identity readers and RFID and NFC products and tags comprise a significant proportion of our net revenue in these regions.

Net revenue from our PACS products decreased in the nine months ended September 30, 2017 from the prior year period due to lower sales of physical access control solutions primarily in the Europe and the Middle East region. Net revenue from our Identity products increased by approximately 40% in the nine months ended September 30, 2017 compared with the same period of the prior year, primarily due to higher sales of smart card readers in the Asia-Pacific region. Identity readers comprised approximately 50% of the net revenue in both the Europe and the Middle East and the Asia-Pacific regions in the first nine months of 2017. Net revenue from our Credentials products, which comprised approximately 37% of sales in both the Europe and the Middle East and the Asia-Pacific regions in the first nine months of 2017, decreased 8% compared with the same period of the prior year primarily as a result of lower transponder and access card product sales in the Asia-Pacific region, partially offset by higher transponder product sales in the Europe and the Middle East region.foreseeable future.

In our business overall, we ~~may~~ experience ~~significant~~ variations in demand for our offerings from quarter to quarter, and typically experience a stronger demand cycle in the second half of our fiscal year. Sales of our ~~PACS~~physical access control solutions and related products to U.S. Government agencies are subject to annual government budget cycles and generally are highest in the third quarter of each year. However, the usual seasonal trend can be negatively impacted by actions such as government shutdowns and the passing of continuing resolutions which can act to delay the completion of certain projects. Sales of our ~~identity reader chips,~~Identity readers, many of which are sold to government agencies worldwide, are impacted by ~~testing and compliance~~project schedules of government ~~bodies~~agencies, as well as roll-out schedules for application ~~deployments, both of which contribute to variability in demand from quarter to quarter.~~deployments. Further, this business is typically subject to seasonality based on differing commercial and global government budget cycles. Lower sales are expected in the U.S. in the first half, and in particular, the first quarter of the year, with higher sales typically in the second half of each year. In the Asia-Pacific, with fiscal year-ends in March and June, order demand can be higher in the first quarter as customers attempt to complete projects before the end of the fiscal year. Accordingly, our net revenue levels in the first quarter each year often ~~depends~~depend on the relative strength of project completions and sales mix between our U.S. customer base and our international customer base.

Purchasing of our Products and Services for U.S. Federal Government Security Programs

In addition to the general seasonality of demand, overall U.S. Federal Government expenditure patterns have a significant ~~impact~~effect on demand for our products due to the significant portion of ~~revenues~~revenue that ~~are~~is typically sourced from U.S. Federal Government agencies. ~~Therefore, any significant reduction~~Drivers of growth included our technology strength and proven security solutions, work-from-home mandates, and continued strength in investments for security across a number of different agencies. We believe that the success and growth of our business will continue through the U.S. Federal Government ~~spending~~focus on security and our successful procurement of government business. If there are changes in government purchasing policies or budgetary constraints, there could ~~adversely impact~~be implications for our ~~financial results~~growth prospects and ~~could cause~~operating results. If we are unable to meet end-user or customer volume or performance expectations, then our business prospects and operating results ~~to fall below any guidance we provide to the market or below the expectations of investors or security analysts.~~

Our base operating expenses (i.e., research and development, selling and marketing, and general and administrative spending) decreased 22% in the first nine months of 2017 compared with the same period of 2016. Research and development spending decreased by 8% in the first nine months of 2017 compared with the same period of 2016 resulting from restructuring initiatives undertaken in the first quarter of 2016 and additional headcount reductions in 2017. Selling and marketing spending in the first nine months of 2017 decreased by 6% compared with the same period of 2016, due to cost savings initiatives taken in the sales and marketing organization reducing marketing program spending. General and administrative spending in the first nine months of 2017 decreased 47% from the same period in the prior year primarily due to lower legal and professional fees, reimbursements received from an insurance provider for legal fees incurred related to legal proceedings, and credits received from service providers for legal fees invoiced in prior periods.may be adversely affected.

In March 2020, the World Health Organization characterized the coronavirus (“COVID-19”) a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment created by the uncertainty related to the depth and or duration of the impact resulting from COVID-19, we have experienced delays in our sales in select vertical markets and are currently unable to determine if there will be any continued disruption and the extent to which this may have future impact on our business. We continue to monitor the progression of the pandemic and its effect on our financial position, results of operations, and cash flows.

The following table includes ~~segment~~ net revenue and ~~segment~~ net profit information ~~for our PACS, Identity, Credentials and All Other segments~~by business segment and reconciles gross profit to ~~results of continuing operations~~loss before income ~~taxes and noncontrolling interest (dollars in~~tax provision (in thousands).

	Three Months Ended March 31,
	2022			2021			% Change
Identity:
Net revenue	$	14,579		$	13,658			7	%
Gross profit		3,159			3,359			(6	%)
Gross profit margin		22	%		25	%
Premises:
Net revenue		10,482			8,504			23	%
Gross profit		5,807			4,333			34	%
Gross profit margin		55	%		51	%
Total:
Net revenue		25,061			22,162			13	%
Gross profit		8,966			7,692			17	%
Gross profit margin		36	%		35	%
Operating expenses:
Research and development		2,529			2,337			8	%
Selling and marketing		5,110			4,064			26	%
General and administrative		2,488			2,125			17	%
Restructuring and severance		(140	)		388			(136	%)
Total operating expenses:		9,987			8,914			12	%
Loss from operations		(1,021	)		(1,222	)		(16	%)
Non-operating income (expense):
Interest expense, net		(25	)		(245	)		(90	%)
Gain on investment		24			—			100	%
Foreign currency gains, net		19			46			(59	%)
Loss before income tax benefit (provision)	$	(1,003	)	$	(1,421	)		(29	%)

Geographic net revenue based on each customer’s ship-to location is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

% Change

2017

2016

% Change

PACS:

Net revenue

$
6,434

$
7,253

(11
%)

$
17,622

$
17,908

(2
%)
Gross profit

3,412

4,334

(21
%)

9,556

10,244

(7
%)
Gross profit margin

53
%

60
%

54
%

57
%

Identity:

Net revenue

3,421

3,508

(2
%)

10,568

8,923

18
%
Gross profit

1,229

1,359

(10
%)

3,666

3,324

10
%
Gross profit margin

36
%

39
%

35
%

37
%

Credentials:

Net revenue

5,577

4,799

16
%

15,471

14,110

10
%
Gross profit

1,220

1,227

(1
%)

4,013

3,654

10
%
Gross profit margin

22
%

26
%

26
%

26
%

All Other:

Net revenue

—

—

0
%

3

580

(99
%)
Gross profit

—

—

0
%

6

261

(98
%)
Gross profit margin

—

—

200
%

45
%

Total:

Net revenue

15,432

15,560

(1
%)

43,664

41,521

5
%
Gross profit

5,861

6,920

(15
%)

17,241

17,483

(1
%)
Gross profit margin

38
%

44
%

39
%

42
%

Operating expenses:

Research and development

1,597

1,480

8
%

4,584

4,997

(8
%)
Selling and marketing

3,448

3,312

4
%

10,142

10,807

(6
%)
General and administrative

1,247

2,115

(41
%)

5,119

9,674

(47
%)
Restructuring and severance

(49
)

160

(131
%)

(49
)

3,100

(102
%)
Total operating expenses:

6,243

7,067

(12
%)

19,796

28,578

(31
%)
Loss from operations

(382
)

(147
)

160
%

(2,555
)

(11,095
)

(77
%)
Non-operating income (expense):

Interest expense, net

(643
)

(525
)

22
%

(1,995
)

(1,814
)

10
%
Gain on extinguishment of debt

—

—

0
%

977

—

0
%
Foreign currency gains (losses), net

(51
)

35

(246
%)

(202
)

309

(165
%)
Loss before income taxes and noncontrolling interest

$
(1,076
)

$
(637
)

69
%

$
(3,775
)

$
(12,600
)

(70
%)

	Three Months Ended March 31,
	2022			2021
Americas	$	16,891		$	15,148
Europe and the Middle East		3,794			2,460
Asia-Pacific		4,376			4,554
Total	$	25,061		$	22,162

Percentage of net revenue:
Americas		67	%		68	%
Europe and the Middle East		15	%		11	%
Asia-Pacific		18	%		21	%
Total		100	%		100	%

~~Total net~~revenue for the three months ended March 31, 2022 was $25.1 million, an increase of 13% compared with $22.2 million for the comparable period of 2021. Net revenue in the ~~third quarter of 2017~~Americas was ~~$15.4~~$16.9 million ~~down 1% compared with $15.6 million in~~ for the ~~third quarter of 2016. For the nine~~three months ended ~~September 30, 2017, total net revenue was $43.7 million, up 5%~~March 31, 2022, an increase of 12% compared ~~with $41.5~~to $15.1 million for the comparable period ~~for 2016. Total net revenue was higher in the first nine months~~ of ~~2017, mainly driven by higher sales in our Identity and Credentials segments. A more detailed discussion of net revenue by segment follows below.~~

2021. Net revenue in ~~our PACS segment~~Europe, the Middle East, and the Asia-Pacific was ~~$6.4~~approximately $8.2 million infor the third quarter of 2017, a decrease of 11% from $7.3 million in the third quarter of 2016. The decrease was primarily due to lower sales of physical access control solutions attributable to the timing of orders received from federal government customers late or after the quarterthree months ended ~~partially offset by~~March 31, 2022, an increase ~~in professional services engagements and higher sales through our channel partners. Net revenue in~~of 16% compared with the ~~nine months ended September 30, 2017~~comparable period of ~~$17.6 million was comparable to $17.9 million in the nine months ended September 30, 2016.~~2021.

Net revenue in our Identity segment, which represented 58% of ~~$3.4~~our net revenue, was $14.6 million for the three months ended March 31, 2022, an increase of 7% compared with $13.7 million for the comparable period of 2021. Net revenue in ~~the third quarter of 2017 decreased 2% from $3.5 million in the third quarter of 2016 as a result of higher smart card reader sales in the Asia-Pacific region, offset by lower smart card reader sales~~this segment in the Americas ~~region. In~~for the ~~nine~~three months ended ~~September 30, 2017, net~~March 31, 2022 was comparable to the same period of 2021.

Net revenue in ~~our Identity~~this segment ~~was $10.6 million, an increase of~~

~~18% from $8.9 million~~ in Europe, the ~~nine~~Middle East, and the Asia-Pacific increased 15% for the three months ended ~~September 30, 2016. The increase was primarily~~March 31, 2022 compared with the comparable period of 2021 due to higher sales of RFID transponder products to mobile phone and consumer products contract manufacturers and higher sales of smart card ~~reader sales in the Asia-Pacific region, partially offset by lower smart card reader sales in the Americas region.~~readers.

Net revenue in our ~~Credentials~~Premises segment, which represented 42% of our net revenue, was ~~$5.6~~$10.5 million infor the ~~third quarter of 2017,~~three months ended March 31, 2022, an increase of ~~16% from $4.8~~23% compared with $8.5 million for the comparable period of 2021. Net revenue in ~~the third quarter of 2016. The increase was primarily a result of higher transponder and access card product sales~~this segment in the Americas ~~region, partially offset by lower transponder product~~for the three months ended March 31, 2022 increased 22% compared with the comparable period of 2021 due to higher sales of Hirsch Velocity hardware and software products to consumers in ~~the~~select commercial verticals.

Net revenue in this segment across Europe, ~~and~~ the Middle East, region. In the nine months ended September 30, 2017, net revenue in our Credentials segment was $15.5 million, an increase of 10% from $14.1 million in the nine months ended September 30, 2016. The increase was primarily a result of higher transponder and access card product sales in the Americas and the ~~Europe and the Middle East regions, partially offset by lower transponder and access card product sales in the~~ Asia-Pacific ~~region.~~

No net revenue was recognized in our All Other segment in the third quarter of 2017 and 2016, respectively. Net revenue in our All Other segment recognized in the nine months ended September 30, 2017 was negligibleincreased 31% compared ~~to $0.6 million in~~ with the comparable period of 2021. The increases in these regions are primarily project driven and can vary period to period.

As a general trend, U.S. Federal agencies continue to be subject to security improvement mandates under programs such as Homeland Security Presidential Directive-12 (“HSPD-12”) and reiterated in memoranda from the Office of Management and Budget (“OMB M-11-11”). We believe that our solutions for trusted physical access is an attractive offering to help federal agency customers move towards compliance with federal directives and mandates. To address sales opportunities in the ~~prior year. The decrease is due to the phasing out of~~United States in general and with our ~~digital media product lines~~U.S. Government customers in particular, we focus on a strong U.S. sales organization and ~~the discontinuation of~~ our ~~Chipdrive product line~~sales presence in ~~the fourth quarter of 2016.~~Washington D.C.

Gross profit for the ~~third quarter of 2017~~three months ended March 31, 2022 was ~~$5.9~~$9.0 million, or ~~38%~~36% of net revenue, compared with ~~$6.9~~$7.7 million, or ~~44%~~35% of net revenue in the ~~third quarter~~comparable period of ~~2016.~~ ~~In the nine months ended September 30, 2017, gross profit was $17.2 million, or 39% of net revenue, compared with $17.5 million, or 42% of net revenue in the nine months ended September 30, 2016.~~ 2021. Gross profit represents net revenue less direct cost of product sales, manufacturing overhead, other costs directly related to preparing the product for sale including freight, scrap, inventory adjustments and amortization, where applicable.

In our PACS segment, gross profit on sales of physical access control solutions, including panels, controllers, and access readers was $3.4 million in the third quarter of 2017 and $4.3 million in the third quarter of 2016~~, and $9.6 million and $10.2 million in the nine months ended September 30, 2017 and 2016, respectively~~. Gross profit was lower in the nine months ended September 30, 2017 as a direct result of lower segment sales and higher sales of lower margin products in the PACS segment during the period. Gross profit margins in the PACS segment of 53% were lower in the third quarter of 2017 compared to 60% in the comparable period of 2016 primarily attributable to the impact of a higher proportion of lower margin sales within the segment.Identity Segment

In our Identity segment, gross profit ~~on sales of information readers and modules as well as cloud-based credential provisioning and management services~~ was ~~$1.2~~$3.2 million in the ~~third quarter of 2017~~three months ended March 31, 2022 compared ~~to $1.4~~with $3.4 million in the ~~third quarter~~comparable period of ~~2016, and $3.7 million and $3.3 million in the nine months ended September 30, 2017 and 2016, respectively. Gross profit was lower in the nine months ended September 30, 2017 as a direct result of higher sales of lower margin products in the Identity segment during the period.~~2021. Gross profit margins in the Identity segment ~~of 36% were lower~~decreased to 22% in the ~~third quarter of 2017 compared to 39%~~three months ended March 31, 2022 from 25% in the comparable period of ~~2016~~2021. The decrease in gross profit margins was primarily attributable to ~~the delivery~~continued investments in technology and manufacturing processes and systems and changes in product mix, with a higher proportion of ~~orders to international customers with~~ lower ~~margins.~~margin RFID transponder product sales.

In our ~~Credentials~~Premises segment, gross profit ~~on sales of physical access credentials and authenticity and tracking applications~~ was ~~$1.2~~$5.8 million in the ~~third quarter of 2017~~three months ended March 31, 2022 compared ~~to $1.2~~with $4.3 million in the ~~third quarter~~comparable period of ~~2016, and $4.0 million and $3.7 million in the nine months ended September 30, 2017 and 2016, respectively.~~ 2021. Gross profit margins in the ~~Credentials~~Premises segment ~~were lower~~increased to 55% in the ~~third quarter of 2017 at 22% compared to 26%~~three months ended March 31, 2022 from 51% in the ~~third quarter~~comparable period of ~~2016~~2021 primarily due to product mix as well as the impact ~~of higher a proportion of lower margin sales.~~resulting from our focus on operational efficiencies.

We expect there will be variation in our total gross profit from period to period, as our gross profit has been and will continue to be affected primarily by varying mix among our products. Within each product category, gross margins have tended to be consistent, but over time may be affected by a variety of factors, including, without limitation, competition, product pricing, the volume of sales in any given quarter, manufacturing volumes, product configuration and mix, the availability of new products, product enhancements, software and services, risk of inventory write-downs and the cost and availability of components.

Information about our operating expenses for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 is set forth below (dollars in thousands).

Research and development expenses consist primarily of employee compensation and fees for the development of hardware, software and firmware products. We focus the bulk of our research and development activities on the continued development of existing products and the development of new offerings for emerging market opportunities.

Research and development expenses infor the ~~third quarter of 2017~~three months ended March 31, 2022 increased compared to the comparable prior year period primarily due to ~~the~~ higher ~~product certification costs. Research~~headcount and ~~development expenses decreased in the nine months ended September 30, 2017 compared to the prior year period~~related costs as ~~a result of the restructuring initiatives undertaken in the first quarter of 2016 and additional headcount reductions in 2017, partially offset by~~well as higher ~~product certification costs.~~stock-based compensation costs associated with PSUs.

Selling and marketing expenses consist primarily of employee compensation as well as amortization expense of certain intangible assets, customer lead generation activities, tradeshow participation, advertising and other marketing and selling costs.

Selling and marketing expenses infor the ~~third quarter of 2017 were comparable~~three months ended March 31, 2022 increased compared to the comparable prior year ~~quarter. Selling and marketing expenses in the nine months ended September 30, 2017 decreased~~period primarily due to ~~a reduction in marketing program spending compared to the same period in the prior year.~~higher salaries and benefits costs and as well as higher trade show and related costs.

General and administrative expenses consist primarily of compensation ~~expense~~expenses for employees performing administrative functions, ~~as well as~~and professional fees ~~arising from~~incurred for legal, auditing and other ~~professional~~consulting services.

General and administrative ~~expenses decreased~~expense for the three months ended March 31, 2022 increased compared to the prior year period primarily due ~~to lower professional~~to higher headcount and legal fees, including reimbursements of $0.8 million and $1.0 million in the three and nine months ended September 30, 2017, respectively, from our insurance provider for legal fees incurred in connection with matters related ~~to a complaint by a former employee, related investigations, the class and derivative litigation and all related proceedings.~~costs as well as higher external contractor costs.

InDuring the ~~first quarter~~three months ended March 31, 2022, we entered into a settlement agreement associated with outstanding rental payments due the landlord on leased office space in San Francisco, California. As a result of 2016, we implemented a worldwide restructuring plan designed to refocus our resources on our core business segments, including physical access and transponders, and to consolidate our operations in several worldwide locations. The restructuring plan included reducing our non-manufacturing employee base, reallocating overhead roles into direct business activities and eliminating certain management and executive roles. In the ~~third quarter of 2017,~~settlement, we recorded a net credit ~~resulting from actual expenditures being less than originally accrued. In~~of $153,000 representing the ~~nine~~difference between amounts accrued and the settlement amount. The settlement credit was partially offset by severance related costs of $13,000.

Information about our non-operating income (expense) for the three months ended ~~September 30, 2016, we incurred restructuring~~March 31, 2022 and ~~severance costs of $3.1 million.~~

~~See Note 10,~~ ~~Restructuring and Severance,~~2021 is set forth below (dollars in ~~the accompanying notes to our unaudited condensed consolidated financial statements for more information.~~

Interest expense, net consists of interest on financial liabilities, amortization of debt issuance costs, and interest accretion expense for a liability toon a ~~long-term~~contractual payment obligation arising from our acquisition of Hirsch Electronics Corporation. The ~~higher net~~decrease in interest expense infor the ~~third quarter of 2017 and the nine~~three months ended ~~September 30, 2017 is~~March 31, 2022 compared to the comparable period of 2021 was attributable to ~~higher interest costs related to~~lower borrowings outstanding under our ~~debt~~revolving loan facility ~~partially offset by~~with our lender (which was fully paid down in August 2021), and lower ~~debt levels compared to the comparable periods in the prior year.~~amounts outstanding under our contractual payment obligations (all amounts outstanding had been paid as of December 31, 2021).

~~The gain on extinguishment of debt represents the~~ ~~difference between the reacquisition price of the existing debt facility and its net carrying amount. See Note 7,~~ ~~Financial Liabilities, in the accompanying notes to our unaudited condensed consolidated financial statements for more information.~~

Changes in currency valuation in the periods mainly were the result of exchange rate movements between the U.S. ~~dollar~~Dollar, the Indian Rupee, the Canadian Dollar, and the Euro. ~~Accordingly, they are predominantly non-cash items.~~ Our foreign currency gains and losses primarily result from the valuation of current assets and liabilities denominated in a currency other than the functional currency of the respective entity in the local financial statements.

As of ~~September 30, 2017,~~March 31, 2022, our deferred tax assets are fully offset by a valuation allowance. ~~ASC~~Accounting Standards Codification (“ASC”) 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available

evidence, which includes historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting our future results, we provided a full valuation allowance against all of our net U.S. and foreign deferred tax assets. We reassess the need for our valuation allowance on a quarterly basis. If it is later determined that a portion or all of the valuation allowance is not required, it generally will be a benefit to the income tax provision in the period such determination is made.

We recorded an income tax benefit during the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2022. The effective tax rates for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 differ from the federal statutory rate of ~~34%~~21% primarily due to a change in valuation allowance, ~~a true-up of prior taxes, changes to uncertain tax positions,~~ and the provision or benefit in certain foreign jurisdictions, which are subject to ~~lower~~higher tax rates.

As of ~~September 30, 2017,~~March 31, 2022, our working capital, ~~which we define~~defined as current assets less current liabilities, was ~~$18.1~~$51.3 million, ~~an increase~~a decrease of ~~$9.0~~$0.5 million compared to ~~$9.1~~$51.9 million as of December 31, ~~2016.~~2021. As of ~~September 30, 2017,~~March 31, 2022, our cash and cash equivalents balance was ~~$15.7~~$27.6 million.

On February 8, 2017, we entered into a Loan and Security Agreement with East West Bank (“EWB”). Following subsequent amendments, on February 8, 2021, we amended and restated the Loan and Security Agreement in its entirety (the “Loan and Security Agreement”). The ~~following summarizes our cash flows~~Loan and Security Agreement provided for ~~the nine months ended September 30, 2017 and 2016 (in thousands):~~

~~Significant commitments that will require the use of cash in future periods include obligations under operating leases,~~ a ~~long-term payment obligation, secured note and revolver, purchase commitments and other obligations. Gross committed operating lease obligations were $4.6~~$20.0 million ~~the long-term gross payment obligation was $4.6 million, the bank term loan,~~ revolving loan facility and interest related obligation were $20.7 million, and purchase commitments and other obligations were $9.8 million at September 30, 2017. Total commitments due within one year were $22.0 million and due thereafter were $17.7 million at September 30, 2017. These commitment levels as of September 30, 2017 are based on existing terms of our operating leases, obligations with suppliers, a liabilitysubject to a ~~former related party~~borrowing base and ~~an existing credit agreement~~.

~~Cash used in operating activities for~~a $4.0 million non-formula revolving loan facility that was not subject to a borrowing base. Advances under the ~~nine months ended September~~revolving loan facility, as amended on April 30, ~~2017 was primarily due~~2021, bear interest at a per annum rate equal to the ~~net loss~~prime rate. The maturity date of ~~$3.6~~the main revolving loan facility is February 8, 2023. The non-formula revolving loan facility terminated on February 7, 2022.

On April 14, 2022, we amended the Loan and Security Agreement, replacing the $20.0 million revolving loan facility subject to a borrowing base with a non-formula revolving loan facility with no borrowing base requirement and ~~by decreases~~a maturity date of February 8, 2023. In addition, the interest rate was lowered from prime to prime minus 0.25%, and certain financial covenants were amended. As of March 31, 2022, there were no amounts outstanding and we were in ~~cash from net changes in operating assets~~compliance with all financial covenants under the Loan and ~~liabilities~~Security Agreement.

As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of $5.4 million, partially offset by adjustments for certain non-cash items of $3.9 million, consisting primarily of a gain on extinguishment of debt, depreciation, amortization, amortization of debt issuance costs, and stock-based compensation. For the nine months ended September 30, 2016, cash used in operating activities was primarily duethese earnings to the ~~net loss of $12.6 million, partially offset by an increase in cash from net changes in operating assets and liabilities of $0.4 million and by adjustments for certain non-cash items of $6.0 million.~~

~~Cash used in investing activities for the nine months ended September 30, 2017 and 2016 was $0.7 million and $0.4 million, respectively, and~~U.S. would not incur significant additional taxes related to ~~capital expenditures.~~

~~Cash provided by financing activities during the nine months ended September 30, 2017 related~~such amounts. However, our estimates are provisional and subject to borrowings of debt, net of issuance costs, of $42.7 million, and proceeds from the sale of our common stock, net of issuance costs of $12.6 million, offset by repayments of debt of $42.8 million and taxes paid related to net share settlement of restricted stock units of $0.6 million. Cash used in financing activities during the nine months ended September 30, 2016 was attributable to taxes paid related to net share settlement of restricted stock units of $0.2 million.

~~We consider the undistributed earnings of our foreign subsidiaries, if any, as of September 30, 2017, to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon.~~further analysis. Generally, most of our foreign subsidiaries have accumulated deficits and cash ~~positions~~and cash equivalents that are held outside the ~~U.S. and~~United States are typically not cash generated from earnings that would be subject to tax upon repatriation if transferred to the ~~U.S.~~United States. We have access to the cash held outside the United States to fund domestic operations and obligations without any material income tax consequences. As of ~~September 30, 2017,~~March 31, 2022, the amount of cash ~~held~~included at such subsidiaries was ~~$0.9~~$4.5 million. We have not, nor do we ~~currently~~ anticipate the need to, repatriate funds to the ~~U.S.~~United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.

On February 8, 2017, we entered into Loan and Security Agreements with East West Bank, and Venture Lending & Leasing VII, Inc., or VLL7, and Venture Lending & Leasing VIII, Inc., or VLL8. The Loan and Security Agreement with East West Bank provides for a $10.0 million revolving loan facility, and the Loan and Security Agreement with VLL7 and VLL8 provides for a term loan in aggregate principal amount of $10.0 million. In connection with the closing of both Loan and Security Agreements, we repaid all outstanding amounts under our Credit Agreement with Opus Bank. ~~See Note 7,~~ ~~Financial Liabilities, in the accompanying notes to our condensed consolidated financial statements for more information.~~

We have historically incurred operating losses and negative cash flows from operating activities. As of September 30, 2017, we have a total accumulated deficit of $395.1 million. During the nine months ended September 30, 2017, we had a consolidated net loss of $3.6 million. Although we have, activities, and ~~expect to continue, to realize benefits of our restructuring initiatives implemented in 2016,~~ we may continue to incur losses in the future. As of March 31, 2022, we had an accumulated deficit of $410.0 million. During the three months ended March 31, 2022, we had a net loss of $1.0 million.

We believe our existing cash ~~balance,~~and cash equivalents, together with cash generated from operations and available credit under our Loan and Security ~~Agreements,~~Agreement will be sufficient to satisfy our working capital needs to fund operations for the next twelve months. We may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. We may also choose to finance our ~~cash requirements~~business through public or private equity offerings, debt financings or other arrangements. However, there can be no assurance that additional capital ~~if required,~~ will be available to us or that such capital will be available to us on acceptable terms. If we raise funds by issuing equity securities, dilution to stockholders could result. ~~Any~~Debt or any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or ~~borrowings~~loans could impose significant restrictions on our operations. The incurrence of additional indebtedness or the issuance of certain debt or equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. Our Loan and Security ~~Agreements impose~~Agreement imposes restrictions on our operations, increases our fixed payment obligations and ~~have~~has restrictive covenants. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. If we are not able to secure additional funding when needed, we may have to curtail or reduce the scope of our business or forgo potential business opportunities.

The following summarizes our cash flows for the three months ended March 31, 2022 and 2021 (in thousands):

Cash used in operating activities for the three months ended March 31, 2022 was primarily due to net loss of $1.0 million, a decrease in cash from net changes in operating assets and liabilities of $0.4 million, offset by adjustments for certain non-cash items of $1.4 million, consisting primarily of depreciation, amortization and stock-based compensation. Cash used in operating activities for the three months ended March 31, 2021 was primarily due to net loss of $1.5 million, a decrease in cash from net changes in operating assets and liabilities of $0.5 million, and adjustments for certain non-cash items of $1.6 million, consisting primarily of depreciation, amortization, stock-based compensation, and impairment of a right-of-use operating lease asset.

Cash used in investing activities for the three months ended March 31, 2022 and 2021 was $0.5 million and $1.1 million, respectively, which related to capital expenditures in our manufacturing facility in Singapore and our research and development facility in Germany.

Cash used in financing activities during the three months ended March 31, 2022 was $0.4 million, which related to net share settlement of restricted stock units. Cash provided by financing activities during the three months ended March 31, 2021 was primarily due to net borrowings under our revolving loan facility of $2.2 million, partially offset by taxes paid related to net share settlement of restricted stock units of $0.3 million.

We have not entered into off-balance sheet arrangements, or issued guarantees to third parties.

We believe that neither climate change, nor governmental regulations related to climate change, have had a material effect on our business, financial condition or results of operations.

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these condensed consolidated financial statements requires management to establish accounting policies that contain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These policies relate to revenue recognition, inventory, income taxes, goodwill, intangible and long-lived assets and stock-based compensation. We have other important accounting policies and practices; however, once adopted, these other policies either generally do not require us to make significant estimates or assumptions or otherwise only require implementation of the adopted policy and not a judgment as to the policy itself. Management bases its estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Despite our intention to establish accurate estimates and assumptions, actual results may differ from these estimates under different assumptions or conditions.

During the three months ended ~~September 30, 2017,~~March 31, 2022, management believes there have been no significant changes to the items that we disclosed within our critical accounting policies and estimates in ~~Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

See Note 1, ~~Organization and Summary of Significant~~2, Significant Accounting Policies and Recent Accounting Pronouncements, in the accompanying notes to our unaudited condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report for a description of recent accounting pronouncements, which is incorporated herein by reference.

From time to time, our executive officers and directors have, and we expect they will in the future, enter into written trading plans pursuant to Rule 10b5-1 of the Securities and Exchange Act of 1934.

~~There~~We are primarily exposed to changes in currency exchange rates as certain of our operations are conducted in foreign currencies such as the Indian Rupee, the Canadian Dollar, and the Euro.

We transact business in various foreign currencies and have significant international revenues, as well as costs denominated in foreign currencies. This exposes us to the risk of fluctuations in foreign currency exchange rates. Our objective is to identify material foreign currency exposures and to manage these exposures to minimize the potential effects of currency fluctuations on our condensed consolidated financial statements.

Our exposure to foreign currency transaction gains and losses is the result of assets and liabilities, (including inter-company transactions) that are denominated in currencies other than the relevant entity’s functional currency. In certain circumstances, changes in the functional currency value of these assets and liabilities create fluctuations in our condensed consolidated financial statements. We have performed sensitivity analyses as of March 31, 2022 and December 31, 2021 using a modeling technique that evaluated the hypothetical impact of a 10% movement in the value of the U.S. Dollar compared to the functional currency of the subsidiary, with all other variables held constant, to determine the incremental transaction gains or losses that would have been ~~no significant changes~~incurred. The foreign exchange rates used were based on market rates in effect at each of March 31, 2022 and December 31, 2021. The results of these sensitivity analyses indicated that the impact on a hypothetical 10% movement in foreign currency exchange rates would result in increased foreign currency gains or losses of $0.4 million for the respective periods.

We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. Dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S. Dollars results in a gain or loss which is recorded as a component of accumulated other comprehensive income (loss) in our ~~exposure~~condensed consolidated statements of stockholders’ equity.

With respect to ~~market risk~~our international operations, we have re-measured accounts which are denominated in the non-functional currencies into the functional currency of the subsidiary and recorded the resulting gains (losses) within foreign currency gains (losses), net in our condensed consolidated statements of comprehensive loss. We re-measure all monetary assets and liabilities at the current exchange rate at the end of the period, non-monetary assets and liabilities at historical exchange rates, and revenue and expenses at average exchange rates in effect during the three months ended September 30, 2017. For discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, contained in our Annual Report on Form 10-K for the year ended December 31, 2016.periods.

As of the end of the three months ended September 30, 2017, as required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation under the supervision and with the participation of members of our senior management, including our CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosureWe maintain “disclosure controls and procedures, ~~(as~~” as such term is defined in Rule 13a-15(e) under the Securities Exchange ~~Act). Disclosure controls and procedures are those controls and other procedures~~Act of 1934, or Exchange Act, that are designed to ~~provide reasonable assurance~~ensure that ~~the~~ information required to be disclosed by us in ~~our SEC~~ reports that we file or submit under the Exchange Act ~~(i)~~ is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and ~~(ii)~~that such information is accumulated and communicated to our management, including our ~~CEO~~Chief Executive Officer and ~~CFO,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our ~~evaluation, our management, including our CEO~~Chief Executive Officer and ~~CFO,~~Chief Financial Officer have concluded that, as of ~~September 30, 2017,~~such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and or directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the interim or annual consolidated financial statements.

A control system, no matter how well designed and operated, can only provide reasonable assurance that the objectives of the control system are met. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the audit of the Company’s financial statements as of and for the year ended December 31, 2015, management identified a material weakness in internal control over financial reporting during 2015, and the material weakness was ongoing. Management determined that the design and operating effectiveness of the Company’s controls over the financial statement close process related to the application of our accounting policies and the presentation of disclosures in the financial statements had been inadequate. Specifically, this material weakness arose from insufficient review and oversight of the recording of complex and non-routine transactions, including revenue transactions, due to an insufficient number of accounting personnel with appropriate knowledge, experience or training in U.S. GAAP.

A number of remediation actions and organizational changes were enacted to address specific control weaknesses identified in our revenue and expenditure cycles. During the course of 2016, as part of our restructuring initiatives announced in the first quarter of 2016, we streamlined our global operations, transitioned to a single accounting system across substantially all our businesses, and strengthened our global accounting and finance function in Orange County, California. In 2017, we implemented procedures and controls over the financial statement close process, reallocated worldwide accounting resources, and continued to strengthen our accounting and finance team by hiring additional personnel with U.S. GAAP experience. We believe these initiatives allow for the necessary review and oversight of the recording complex and non-routine transactions. Management has determined that with the remediation measures undertaken in 2016 and through June 30, 2017, the material weakness has been fully remediated as of June 30, 2017. Our conclusion has not been reviewed by our independent registered public accounting firm.

Our management, including our CEO and CFO, assessed our internal control over financial reporting as of September 30, 2017. In making the assessment of internal control over financial reporting, our management based its assessment on the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in “Internal Control — Integrated Framework of 2013.” Our management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. This assessment is supported by testing and monitoring performed by our internal accounting and finance organization, but has not been reviewed by our independent registered public accounting firm.

~~Based on management’s assessment, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2017.~~

~~Other than, the items noted above, we~~We have made no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended ~~September 30, 2017~~March 31, 2022, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

~~On December 16, 2015, we~~We are and certain of our present and former officers and directors were named as defendants in a putative class action lawsuit filed in the United States District Court for the Northern District of California, entitled Rok v. Identiv, Inc., et al., Case No. 15-cv-05775, alleging violations of Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act of 1934. On May 3, 2016, the court-appointed lead plaintiff Thomas Cunningham in the Rok lawsuit filed an amended complaint and a notice of dismissal without prejudice of all current or former officers and directors other than Jason Hart and Brian Nelson. On June 6, 2016, each of us, Jason Hart, and Brian Nelson filed a motion to dismiss for failure to state a claim upon which relief can be granted in the Rok lawsuit; on August 5, 2016, the court granted those motions with leave for the lead plaintiff to file a second amended complaint. On September 12, 2016, the lead plaintiff in the Rok lawsuit filed a second amended complaint. On October 10, 2016, each of us, Jason Hart, and Brian Nelson filed a motion to dismiss that second amended complaint for failure to state a claim upon which relief can be granted in the ~~Rok~~ lawsuit; on January 4, 2017, the court granted those motions with prejudice and entered judgment for us and the other defendants and against the lead plaintiff. On February 6, 2017, the lead plaintiff initiated an appeal of the court’s decision in the Ninth Circuit Court of Appeals. Following the lead plaintiff’s routine request to extend filing deadlines, which the Court of Appeals approved, the lead plaintiff’s opening appellate brief was filed on June 14, 2017. Following Jason Hart’s routine request to extend filing deadlines, which the Court of Appeals approved, the answering briefs of the Company and the other defendants were filed on August 14, 2017. Following the lead plaintiff’s routine request to extend filing deadlines, which the Court of Appeals approved, the lead plaintiff’s optional reply brief was filed on October 5, 2017. The Ninth Circuit Court of Appeals has not yet scheduled oral argument or entered a ruling on the lead plaintiff’s appeal. In addition, three shareholder derivative actions were filed between January and February 2016. On January 1, 2016, certain of our present and former officers and directors were named as defendants, and we were named as nominal defendant, in a shareholder derivative lawsuit filed in the United States District Court for the Northern District of California, entitled Oswald v. Humphreys, et al., Case No. 16-cv-00241-CRB, alleging breach of fiduciary duty and waste claims. On January 25, 2016, certain of our present and former officers and directors were named as defendants, and we were named as nominal defendant, in a shareholder derivative lawsuit filed in the Superior Court of the State of California, County of Alameda, entitled Chopra v. Hart, et al., Case No. RG16801379, alleging breach of fiduciary duty claims. On February 9, 2016, certain of our present and former officers and directors were named as defendants, and we were named as nominal defendant, in a shareholder derivative lawsuit filed in the Superior Court of the State of California, County of Alameda, entitled Wollnik v. Wenzel, et al., Case No. HG16803342, alleging breach of fiduciary duty, corporate waste, gross mismanagement, and unjust enrichment claims. These lawsuits generally allege that we made false and/or misleading statements and/or failed to disclose information in certain public filings and disclosures between 2013 and 2015. Each of the lawsuits seeks one or more of the following remedies: unspecified compensatory damages, unspecified exemplary or punitive damages, restitution, declaratory relief, equitable and injunctive relief, and reasonable costs and attorneys’ fees. On May 2, 2016, the court in the Chopra lawsuit entered an order staying proceedings in the Chopra lawsuit in favor of the Oswald lawsuit, based on a stipulation to that effect filed by the parties in the Chopra lawsuit on April 28, 2016. Similarly, on June 28, 2016, the court in the Wollnik lawsuit entered a stipulated order staying proceedings in the Wollnik lawsuit in favor of the Oswald lawsuit. On June 17, 2016, the plaintiff in the Oswald lawsuit filed an amended complaint. On August 1, 2016, we filed a motion to dismiss for failure by plaintiff to make a pre-lawsuit demand on our board of directors, which motion was heard on October 14, 2016. The judge in the Oswald lawsuit issued an order on November 7, 2016 granting our motion to dismiss, without prejudice. In addition, the court stayed the case so that plaintiff could exercise whatever rights he had under Section 220 of the Delaware General Corporation Law. On or around November 30, 2016, the plaintiff purported to serve a books and records demand under Section 220 of the Delaware General Corporation Law. We have responded to that demand. On March 21, 2017, we and the plaintiff in the Oswald lawsuit filed a stipulation and proposed order lifting the stay of the case, granting the plaintiff leave to amend, and setting a briefing schedule. That stipulation proposed that the judge’s stay of the case entered November 7, 2016 be lifted, that a stay of proceedings as to the individual defendants that the judge previously entered remain in place, that the plaintiff may file a second amended complaint on or before April 10, 2017, that we may file a motion to dismiss that second amended complaint on or before May 12, 2017, that the plaintiff’s opposition to such a motion to dismiss shall be filed on or before June 12, 2017, that our reply in support of such a motion shall be filed on or before June 30, 2017, and that the hearing on such a motion to dismiss shall be held on August 11, 2017 or such other date as the court may order. On March 22, 2017, the court entered an order approving that stipulation. The plaintiff in the Oswald lawsuit filed his second amended complaint on April 10, 2017. We then filed a motion to dismiss that second amended complaint on May 12, 2017, the plaintiff filed an opposition to that motion to dismiss on June 12, 2017, and we filed a reply in support of the motion on June 30, 2017. The hearing on that motion to dismiss was rescheduled by stipulation of the parties to September 22, 2017 and then further rescheduled by the court to October 6, 2017. The hearing on that motion to dismiss was held on October 6, 2017, and that day the court entered a minute entry indicating the motion is denied and the court will issue an order to that effect. The court has not yet issued that order. On October 18, 2017, the court in the Wollnik lawsuit conducted a case management conference, at the conclusion of which the court scheduled a complex determination hearing for November 28, 2017 and, if the complex determination is denied, a further case management conference in July 2018. We intend to vigorously defend against these lawsuits. We cannot currently predict the impact or resolution of each of these lawsuits or reasonably estimate a range of possible loss, if any, which could be material, and the resolution of these lawsuits may harm our business and have a material adverse impact on our financial condition.

~~From~~from time to time, ~~we could~~may become subject to various legal proceedings and claims arising in the ordinary course of business or could be named a defendant in ~~additional~~other lawsuits. Legal proceedings could result in material costs, occupy significant management resources and entail penalties, even if we prevail. The outcome of such claims or other proceedings cannot be predicted with certainty and may have a material effect on our financial condition, results of operations or cash flows.

Our business and results of operations are subject to numerous risks, uncertainties, and other factors that you should be aware of. You should carefully review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 under the heading “Risk Factors.” There have been no material changes from the risk factors disclosed in our 2021 Annual Report on Form 10-K.The risks, uncertainties and other factors described in ~~these~~the risk factors are not the only ones facing our company. Additional risks, uncertainties and other factors not presently known to us or that we currently deem immaterial may also impair our business operations. Any of the risks, uncertainties and other factors could have a materially adverse effect on our business, financial condition, results of operations, cash flows or product market share and could cause the trading price of our common stock to decline substantially.

~~In addition to~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the ~~other information set forth in this Quarterly Report, you should carefully consider the risk factors previously disclosed in Item 1A to Part I~~three months ended March 31, 2022, we repurchased 17,647 shares of our ~~Annual Report on Form 10-K for~~common stock. The table below sets forth information regarding the ~~year~~Company’s purchases of its common stock during the three months ended ~~December~~March 31, ~~2016.~~2022:

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

~~DELAWARE~~Delaware	77-0444317
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2201 Walnut Avenue, Suite 100 Fremont, California	94538
(Address of principal executive offices)	(Zip Code)

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, $0.001 par value per share		INVE		The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer		☐
			☑
Non-accelerated filer	☐ ~~(Do not check if a small reporting company)~~	~~Small~~Smaller reporting company		☒
				☐
Emerging growth company	☐

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021	3
	Condensed Consolidated Statements of ~~Operations~~Comprehensive Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	4
	Condensed Consolidated Statements of ~~Comprehensive Loss~~Stockholders’ Equity for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	5
	Condensed Consolidated ~~Statement~~Statements of ~~Equity~~Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and 2021	6
	~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016~~	7
	Notes to Unaudited Condensed Consolidated Financial Statements	87
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3132
Item 4.	Controls and Procedures	3132

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6.	Exhibits	34

~~Item 6.~~SIGNATURES			~~Exhibits~~	34

~~SIGNATURES~~		35

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Hardware products	When customer obtains control of the product (point-in-time)	Within 30-60 days of shipment	Observable in transactions without multiple performance obligations
Software licenses	When license is delivered to customer or made available for download, and the applicable license period has begun (point-in-time)	Within 30-60 days of the beginning of license period	Established pricing practices for software licenses bundled with software maintenance, which are separately observable in renewal transactions
Subscriptions	Ratably over the course of the subscription term (over time)	In advance of subscription term	Contractually stated or list price
Professional services	As services are performed and/or when contract is fulfilled (point-in-time)	Within 30-60 days of delivery	Observable in transactions without multiple performance obligations
Software maintenance and support services	Ratably over the course of the support contract (over time)	Within 30-60 days of the beginning of the contract period	Observable in renewal transactions
Extended hardware warranties	Ratably over the course of the support contract (over time)	Within 30-60 days of the beginning of the contract period	Observable in renewal transactions

	Identiv, Inc. Stockholders´ Equity
						Additional									Accumulated Other
	Common Stock					Paid-in			Treasury			Accumulated			Comprehensive		Noncontrolling			Total
	Shares			Amount		Capital			Stock			Deficit			Income		Interest			Equity
Balances, December 31, 2016		11,109		$	11	$	400,266		$	(6,708	)	$	(391,509	)	$	2,053	$	(180	)	$	3,933
Net loss		—			—		—			—			(3,622	)		—		8			(3,614	)
Other comprehensive loss		—			—		—			—			—			503		15			518
Issuance of common stock in connection with public offering		2,845			3		12,557			—			—			—		—			12,560
Issuance of warrants		—			—		2,319			—			—			—		—			2,319
Issuance of common stock in connection with vesting of stock awards		401			—		—			—			—			—		—			—
Stock-based compensation		—			—		1,916			—			—			—		—			1,916
Shares withheld in payment of taxes in connection with net share settlement of restricted stock units		(121	)		—		—			(594	)		—			—		—			(594	)
Cancellation of reacquired warrants from extinguishment of debt		—			—		(1,282	)		—			—			—		—			(1,282	)
Balances, September 30, 2017		14,234		$	14	$	415,776		$	(7,302	)	$	(395,131	)	$	2,556	$	(157	)	$	15,756

	Identity		Premises		Total
Balance as of December 31, 2020	$	3,554	$	6,712	$	10,266
Currency translation adjustment		—		15		15
Balance as of March 31, 2021	$	3,554	$	6,727	$	10,281

Balance as of December 31, 2021	$	3,554	$	6,714	$	10,268
Currency translation adjustment		—		20		20
Balance as of March 31, 2022	$	3,554	$	6,734	$	10,288

	Number Outstanding			Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)		Average Intrinsic Value
Balance at December 31, 2016		832,941		$	7.11			$	—
Granted		—			—
Cancelled or Expired		(157,456	)		10.62
Exercised		—			—
Balance at September 30, 2017		675,485		$	6.29		7.75	$	151,116
Vested or expected to vest at September 30, 2017		660,599		$	6.33		7.73	$	146,195
Exercisable at September 30, 2017		432,706		$	7.13		7.32	$	75,558

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$4.36 - $7.20		479,810		8.47	$	4.48		256,300	$	4.58
$7.50 - $11.30		165,388		6.29		9.26		146,119		9.20
$12.00 - $19.70		17,396		4.75		13.66		17,396		13.66
$21.70 - $29.20		12,891		3.59		25.37		12,891		25.37
$4.36 - $29.20		675,485		7.75	$	6.29		432,706	$	7.13

	Number Outstanding			Weighted Average Fair Value
Unvested at December 31, 2016		1,973,459		$	2.80
Granted		338,646			5.12
Vested		(480,764	)		3.41
Forfeited		(132,441	)		3.19
Unvested at September 30, 2017		1,698,900		$	3.06
Shares vested but not released		295,386		$	2.51

~~Exercise of outstanding stock options and vesting of RSUs~~			~~2,374,385~~
~~ESPP~~			~~293,888~~
~~Shares of common stock available for grant under the 2011 Plan~~			~~395,330~~
~~Noncontrolling interest in Bluehill AG~~			~~10,355~~
~~Warrants to purchase common stock~~			~~765,000~~
~~Shares issuable to settle liability~~			~~53,880~~
~~Total~~			~~3,892,838~~

	Existing			Customer
	Technology			Relationship			Total
Amortization period (in years)		11.75		4.0 – 11.75

Gross carrying amount at December 31, 2016	$	4,600		$	10,639		$	15,239
Accumulated amortization		(2,809	)		(6,610	)		(9,419	)

Intangible Assets, net at December 31, 2016	$	1,791		$	4,029		$	5,820

Gross carrying amount at September 30, 2017	$	4,600		$	10,639		$	15,239
Accumulated amortization		(3,145	)		(7,366	)		(10,511	)

Intangible Assets, net at September 30, 2017	$	1,455		$	3,273		$	4,728

2017 (remaining three months)	$	363
2018		1,455
2019		1,455
2020		1,455
Thereafter		—
Total	$	4,728

2022 (remaining nine months)	$	843
2023		1,046
2024		969
2025		969
2026		969
Thereafter		1,386
Total	$	6,182

2017 (remaining three months)	$	300
2018		1,237
2019		1,288
2020		1,433
2021		369
Present value discount factor		(469	)
Total		4,158
Less: Current portion - payment obligation		(877	)
Long-term payment obligation	$	3,281

Exercise of outstanding stock options, vesting of restricted stock units ("RSUs"), vesting of performance stock units ("PSUs"), and issuance of RSUs vested but not released			1,448,112
Employee Stock Purchase Plan			293,888
Shares of common stock available for grant under the 2011 Plan			902,090
Warrants to purchase common stock			275,000
Shares of common stock issuable upon conversion of Series B convertible preferred stock			7,541,449
Total			10,460,539

	Stock Options Outstanding						Stock Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$4.36 - $7.20		452,510		4.12	$	4.41		452,510	$	4.41
$7.50 - $11.25		61,317		1.98		10.19		61,317		10.19
$11.30 - $16.95		500		2.00		11.30		500		11.30
$19.70 - $29.55		33		1.38		19.70		33		19.70
$4.36 - $29.55		514,360		3.87	$	5.11		514,360	$	5.11

	Number Outstanding			Weighted Average Fair Value
Unvested as of December 31, 2021		485,729		$	9.19
Granted		144,738			20.89
Vested		(71,310	)		7.84
Forfeited		(1,844	)		11.71
Unvested as of March 31, 2022		557,313		$	12.40
RSUs vested but not released		301,439		$	5.48

	Number Outstanding
Unvested as of December 31, 2021		175,000
Granted		—
Vested		(20,000	)
Forfeited		(80,000	)
Unvested as of March 31, 2022		75,000

	Operating Leases		Purchase Commitments		Other Contractual Commitments		Total
2017 (remaining three months)	$	318	$	8,706	$	42	$	9,066
2018		1,195		1,048		—		2,243
2019		1,089		—		—		1,089
2020		893		—		—		893
2021		636		—		—		636
Thereafter		450		—		—		450
Total	$	4,581	$	9,754	$	42	$	14,377

	Issuer Purchases of Equity Securities
Period	Total number of shares purchased⁽¹⁾		Average price paid per share		Total number of shares purchased as part of publically announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
January 1, 2022 – January 31, 2022		6,676	$	27.41		—	$	—
February 1, 2022 – February 28, 2022		7,512		19.69		—		—
March 1, 2022 – March 31, 2022		3,459		19.97		—		—
Total		17,647	$	22.66		—

⁽¹⁾ Consists of shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting of RSUs issued to employees.

Exhibit Number		Description

~~31.1~~
10.1		Second Amendment to Amended and Restated Loan and Security Agreement between Identiv, Inc. and East West Bank dated as of April 14, 2022. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 20, 2022.)

31.1^		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

~~31.2~~31.2^		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32*32^#		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	IDENTIV, INC.

~~November 9, 2017~~May 10, 2022	By:	/S/ Steven Humphreys
		Steven Humphreys
		Chief Executive Officer
		(Principal Executive Officer)

~~November 9, 2017~~May 10, 2022	By:	/S/ ~~Sandra Wallach~~Justin Scarpulla
		~~Sandra Wallach~~Justin Scarpulla
		Chief Financial Officer ~~and Secretary~~
		(Principal Financial and Accounting Officer)