GAAP gross profit margin was 39% in Q4 2012, compared with 41% in Q4 2011, reflecting a higher mix of product revenues versus systems and services. Total base operating expenses (consisting of research and development, sales and marketing, and general and administrative expenses) were $10.5 million in Q4 2012, down 22% from $13.4 million in Q4 2011 as a result of cost reductions implemented under the restructuring plan the Company initiated in June 2012 and from ongoing initiatives to improve the efficiency of the business.

In Q4 2012, Identive recorded GAAP net income of $0.2 million, or $0.00 per share, compared with net loss of $(2.6) million, or $(0.05) per share in Q4 2011. Net income in Q4 2012 includes a $1.4 million benefit for income taxes mainly related to impairment charges taken earlier in the year.

On a non-GAAP basis, gross profit margin was 41% in Q4 2012, compared with 43% in Q4 2011. Non-GAAP net income was $0.6 million, or $0.01 per share in Q4 2012, compared with non-GAAP net loss of $(1.2) million, or $(0.02) per share in Q4 2011. Adjusted EBITDA was $1.2 million in Q4 2012, compared with $0.2 million in Q4 2011.

Non-GAAP gross profit margin, adjusted EBITDA and non-GAAP net loss and net loss per share all exclude various items that are detailed in the financial table and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Cash and cash equivalents were $7.4 million at December 31, 2012 and reflected proceeds of $6.9 million from a secured loan facility and a $3.6 million increase in working capital during the quarter . This compares with $6.3 million of cash and cash equivalents (net of restricted cash) at September 30, 2012.

Outlook for Q1 and Full Year 2013

Commenting on management's outlook, Ashour said, "The positive demand trends we saw in Q4 are continuing, setting the stage for a favorable outlook for 2013. Our transponder production is booked at full capacity through the middle of Q2 and new sales activity remains strong for NFC tags, SmartCore card technology and RFID products for electronic payment, ticketing, M2M and ID applications. We continue to extend our activities in the payment sector with new customer contracts and additional applications. The U.S. budget sequestration introduces uncertainty and potential disruption into our otherwise stable U.S. Government business, but we believe any effects would be confined to the near term as the majority of programs we address are mandate-driven and tied to security initiatives."

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