Activist Shareholder David Callan Sends Letter to Identiv Board of Directors in Response to Q1 Earnings, Current Share Price

Shareholder activist David Callan has issued a letter to the Board of Directors of Identiv, Inc.

, following the company's disappointing Q1 results and falling share price. Callan continues to push for the sale of the company. Identiv's share price has declined 47% since the start of 2015, closing at $7.44 on Friday. May 18, 2015 Gentlemen, Unfortunately I do not financially benefit here by saying: "I told you so", instead quite the opposite. With the level of intelligence on this Board, I hope after the results of the first quarter (as well as the low end 4th quarter results), you now have enough sufficient evidence to not only see what I have told you would happen for the last 7 months, but you have enough experience to acknowledge a classic text book example of a company that has hit a wall. The ever so famous $100M "acquire or be acquired" level. The first quarter results clearly support my theory that you have exhausted the capabilities of our resources at these levels. You cannot manage great new accounts like Cisco, Verizon, and Disney, without taking your eye off the ball elsewhere. In this case it was Europe. You clearly left those barn doors open and now we are being told that you will cut staff and rebuild that sales force? And that now it might be a good idea to hedge against the foreign currency after getting creamed for the last 5 months? So while you band aid that portion of the World where other large companies dominate with existing skilled staff, what area will suffer next as a result? How many new opportunities will be lost, as our top personnel are tasked with supporting the "big accounts". And how long will the high margin Hirsch legacy business continue to suffer while you shift majority focus to the growing Internet of Things (IoT) business? At what point will you recognize that we are simply over tasked and now growth restricted going forward with everything that is on our plate? Along those same lines, what good are announcing 4 new patents, when this company does not have the resources to enforce the existing 75+? These are just a few of the reasons for potential acquirers to like this deal even more now. They can manage and grow it all substantially. We hear much talk about Identiv Labs and the "incubator" platform, increasing R&D costs, increasing personnel cost, and increased stock based compensation. We are competing for skilled labor in the Silicon Valley area where for every dollar we spend for talent, the titans of industry will spend two or three. Granting Jason Hart hundreds of thousand of shares during his short tenure, and now the Board seeking approval of an additional 750,000 shares (or roughly 7% of the company) for further stock based employee compensation should sound off alarms for everyone. Identiv shareholders cannot afford this. There is a reason why this company is losing money and it is obvious. The fact that Jason Hart said the opportunities at Identiv Labs are extremely exciting and some "may or may not" become tangible, should be talk for a company that is generating positive earnings and can afford to take those risks, but certainly not a company with our resource restrictions. Continuing down the failed over spending path where Identiv now has negative retained earnings of $345M, is not prudent. The purpose of business is to generate profits. Our stock closed at $7.44 on Friday. It would have to appreciate 100% simply to get back to the levels of the secondary raise from 8 months ago. Back out the cash from that raise and the stock is being valued today at roughly $4.50. Do you view that as progress for shareholders, and this with a stock buyback in place? And trying to improve transparency will not help. In our one material press release in the last the 20 months with Jason Hart as CEO, the stock went up for one day, only to give it all back up and then some in the week to follow. Two of the analysts have dropped their price targets below the secondary raise at $15, which in my opinion is outrageous. We are now being valued by them at less than 1.5 times sales, while the rest of the industry trades at 3-5 times sales. In fairness, their previous price targets would now require a 200% upswing, which is far too high for market analyst's comfort (more reason not to seek additional coverage). The Institutional holders continue to sell this position (negative outflow of over 1.2M shares), and after speaking with several of the past and present, they blamed it on lack of transparency and being challenged as a stand-alone company (my exact sentiment as communicated to you often). Unlike myself they don't bother to tell you what is wrong with your leadership, they just sell. Paying for an Investor relations firm, spending time and money doing presentations, and attempting to gain additional research coverage has all proven to be an absolute waste of shareholder money. Delaying the sale of the company in the first quarter has cost us time, $5.8M in losses, market trust, and has opened the window for a costly and distracting potential class action lawsuit to defend against the "complaint". You have placed us in a "penalty box" worse than the one you blamed prior management for. And rather than hand the company off to a larger more established company, we are to now pay more severance costs and rebuild a sales team in Europe on top of everything else we have endured? I hope that Jason admitting on this conference call and at the B Riley presentation that he is "humbled", as well as acknowledging that we are a tiny microcap size company that does not have infinite resources, and that it indeed places restrictions on us, means there will be immediate action by this Board. Unfortunately for shareholders, until we see a formal press release that this Board has hired an investment bank to explore strategic alternatives, shareholders will continue to suffer. The company is trading now at a market valuation of $79M, a far cry from the $400M valuation ($37/share) Jason said we should be valued at on the quarterly conference call back in August. Time is money Gentlemen, and you are wasting both of it for your shareholders. In a Computerworld article dated May 15, 2015, according to 451 Research, buyers so far this year have spent $14.8 billion to purchase 39 IoT related companies, surpassing the $14.3 billion spent for 62 such companies in all of 2014, which itself was a record-breaking year. Jason Hart in his B Riley presentation last week when comparing us to our big name competitors that could only touch on a few points of the business, he stated "that we were unique because we are the only ones to be a full end to end provider of privacy and security utilizing its pedigree of government and apply it the IoT. This has resulted in our success for toys, wearable's, and consumer products." Knowing that we are so uniquely positioned in this hot M&A sector, we need to publicly offer ourselves up for sale to this massive market of interested parties looking to gain immediate access in to this market place. Selling this business now is in the best interest of our employees for needed support and future growth. It is clearly in the best interest of our customer base and prospective customers, who expect and deserve the highest level of account support and service. And most of all, it is in the best interest of your shareholders who have suffered financially for far too long. Selling for a significant premium will finally reward all the hard work and costs to streamline this business and position it well in explosive new markets (unrecognized by the public markets). Please prove that you have common business sense and are not just another entrenched Board putting your needs before shareholders. Respectfully, David Callan/ Shareholder Activist Cc: Joel Bernstein, Esq.