Revenue for the quarter ended September 30, 2008 was $15.6 million,compared to $13.8 million for the quarter ended September 30, 2007.Revenue for the year ended September 30, 2008 was $59.0 million, comparedto $59.6 million for the prior year.

Net loss for the quarter ended September 30, 2008 was $23.9 million or$(0.52) per basic and diluted share, compared to a net loss of $1.7million, or $(0.04) per basic and diluted share for the three months endedSeptember 30, 2007. Net loss for the year ended September 30, 2008 was$77.3 million or $(1.69) per basic and diluted share, compared to a netloss of $9.3 million or $(0.20) per share for the prior year.

Non-GAAP net loss for the quarter ended September 30, 2008 was $4.4 millionor $(0.10) per basic and diluted share compared to a loss of $0.4 millionor $(0.01) for the fourth quarter of fiscal 2007. Non-GAAP net loss forthe full year ended September 30, 2008 was $10.3 million or $(0.23) perbasic and diluted share compared to a loss of $3.7 million or $(0.08) perbasic and diluted share in the year-ago period. Quarterly non-GAAP netloss excluded $0.7 million of stock-based compensation expense, $0.6million of amortization expense, $0.8 million of severance expenses relatedto our global cost reduction program and an estimated impairment charge of$17.4 million for auction rate securities. Please refer to the GAAP tonon-GAAP reconciliation table for further detail. Certain financialresults are subject to the application of accounting estimates, especiallywith regards to fair value accounting. Management has used what itbelieves to be appropriate valuation techniques to assess the fair value ofimpaired investments and the fair value of undelivered elements inmulti-element software arrangements.

Fiscal Fourth Quarter and Fiscal Year Financial Highlights

-- Fourth quarter revenues were higher on both a sequential and year-over- year basis due to new large customers in banking both in Europe and North America and large enterprise deals, which drove both software and hardware revenue streams.-- Although 2008 revenues were flat compared with 2007, the Company finished the 2008 fiscal year with momentum, reflecting the new "ID360" business strategy which will focus on targeting 3 key markets: Employer-to- Employee, Business-to-Customer, and Government-to-Citizen.-- EBITDA, adjusted for non-recurring and non-cash items such as stock- based compensation expense, depreciation, severance, amortization of intangibles and asset impairments, was a loss of $2.0 million, representing an improvement over losses in the previous two quarters of $3.9 million and $2.7 million, respectively.-- In the fiscal fourth quarter, ActivIdentity continued to rationalize its business model by aligning expenses with revenues, and reduced total headcount to 260 people, down from 283 at the end of the third quarter.-- As of September 30, 2008, cash and short-term investments were $79.8 million.

"Revenue growth in the fiscal fourth quarter reflects our new go-to-marketstrategy aimed at focusing our sales efforts on the Employer-to-Employee,Business-to-Customer, and Government-to-Citizen space, which we believecollectively represents a multi-billion dollar market," said Grant Evans,Chairman and Chief Executive Officer of ActivIdentity. "We have alreadyshown significant progress executing on this strategy with the signing of amajor contract with the State of Queensland in Australia for the issuanceof smartcard driver's licenses to millions of Queensland citizens. Thiscontract proves the viability of our new strategy, the worldwide acceptanceof identity assurance solutions and, specifically, the significant marketopportunity in the government space."

Conference Call Details

ActivIdentity will host its Fourth Quarter and Fiscal Year 2008 conferencecall on Thursday, November 20, 2008 at 4:30 PM Eastern Standard Time / 1:30PM Pacific Standard Time.

To access the conference call within the U.S. or Canada, please dial (877)292-2820 and enter conference ID 72348549. To access the conference calloutside the U.S. or Canada please dial (706) 679-4390 and enter conferenceID 72348549.

The conference call web cast will be available on the investor relationssection of the Company's website at www.actividentity.com. A replay of theweb cast will be available approximately two hours after the conclusion ofthe call at www.actividentity.com through December 4, 2008.

About ActivIdentity

ActivIdentity Corporation has provided identity assurance and credentialmanagement solutions to enterprise, government, and financial servicesorganizations worldwide for more than a decade. Trusted identity is thecore of the ActivIdentity platform, enabling secure credential management.

ActivIdentity customers experience multiple benefits including increaseddigital and physical security, protection against on-line fraud, enhancedbusiness process efficiencies, secure access to digital assets, and apathway to regulatory compliance.

Headquartered in Fremont, CA (USA), ActivIdentity develops products in theUnited States, Australia, and France, and has sales and technical servicecenters in more than ten countries. Millions of users worldwide rely onActivIdentity identity assurance and credential management system toaddress growing internal and external identity risks. For more information,visit www.actividentity.com.

ActivIdentity and ActivCard are registered trademarks in the United Statesand/or other countries. All other trademarks are the property of theirrespective owners in the United States and/or other countries.

Safe Harbor Statement

The statements in this press release that are not historical facts areforward-looking statements that involve risks and uncertainties. Theserisks and uncertainties include risks relating to changes to our managementteam, the use of estimates and assumptions in our financial reporting, andother risks identified under the caption "Risk Factors" in our most recentAnnual Report on Form 10-K, and in subsequent Quarterly Reports on Form10-Q, which are filed with the United States Securities and ExchangeCommission (SEC). Copies of these filings are available from the Companyand on the SEC's website at www.sec.gov. Actual results, events andperformance may differ materially from our forward-looking statements andfinal results may vary from our preliminary reports. Readers are cautionednot to place undue reliance on these forward-looking statements, whichspeak only as of the date hereof. The Company disclaims any intention toupdate or revise any forward-looking statements, whether as a result of newinformation, future events, or otherwise.

ActivIdentity Corporation Condensed Consolidated Unaudited Balance Sheets (in thousands) September September 30, 30, 2008 2007 (1) ========= ========= ASSETS Current assets: Cash and cash equivalents $ 70,173 $ 30,639 Short-term investments 9,656 91,084 Accounts receivable, net of allowance for doubtful accounts 11,792 14,566 Inventories, net 1,760 2,146 Prepaid and other current assets 1,696 2,077 --------- --------- Total current assets 95,077 140,512 --------- --------- Long-term investments 11,752 - Property and equipment, net 2,877 4,267 Other intangible assets, net 4,150 6,695 Other long-term assets 863 1,104 Goodwill - 35,874 --------- --------- Total assets $ 114,719 $ 188,452 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,652 $ 2,116 Accrued compensation and related benefits 5,935 6,942 Current portion of accrual for restructuring liability 616 733 Accrued and other current liabilities 3,702 3,484 Current portion of deferred revenue 11,024 11,710 --------- --------- Total current liabilities 22,929 24,985 Deferred revenue, net of current portion 1,125 1,391 Accrual for restructuring liability, net of current portion 962 1,574 Long-term deferred rent 430 705 Other long-term liabilities 479 - --------- --------- Total liabilities 25,925 28,655 --------- --------- Minority interest 304 354 Stockholders' equity: Common stock 46 46 Additional paid-in capital 426,141 423,242 Accumulated deficit (323,934) (246,501) Accumulated other comprehensive loss (13,763) (17,344) --------- --------- Total stockholders' equity 88,490 159,443 --------- --------- Total liabilities and stockholders' equity $ 114,719 $ 188,452 ========= =========(1) Derived from audited consolidated financial statements. ActivIdentity Corporation Condensed Consolidated Unaudited Statement of Operations (In thousands, except per share amounts) Three Months Twelve Months Ended September 30, Ended September 30, ==================== ==================== 2008 2007 2008 2007 ========= ========= ========= ========= Revenue: Software $ 5,628 $ 4,422 $ 19,589 $ 19,363 Hardware 3,989 3,116 15,078 16,894 Service 6,031 6,232 24,342 23,296 --------- --------- --------- --------- Total revenue 15,648 13,770 59,009 59,553 --------- --------- --------- --------- Cost of revenue: Software 133 258 963 1,303 Hardware 2,732 1,500 9,551 9,036 Service 2,746 1,976 10,779 7,267 Amortization of acquired developed technology and patents 593 618 2,380 2,949 --------- --------- --------- --------- Total cost of revenue 6,204 4,352 23,673 20,555 --------- --------- --------- --------- Gross profit 9,444 9,418 35,336 38,998 Operating expenses: Sales and marketing 6,054 6,229 25,602 25,282 Research and development 4,775 5,022 18,867 19,935 General and administration 3,113 2,340 11,380 12,124 Restructuring expense (recovery) - - (70) - Amortization of acquired intangible assets 41 42 165 186 Impairment of goodwill - - 35,874 - --------- --------- --------- --------- Total operating expenses 13,983 13,633 91,818 57,527 --------- --------- --------- --------- Operating income (loss) (4,539) (4,215) (56,482) (18,529) Other income (expense): Interest income, net 886 1,714 4,659 6,208 Other income (expense), net (20,213) 1,009 (25,190) 3,440 --------- --------- --------- --------- Total other income (expense), net (19,327) 2,723 (20,531) 9,648 --------- --------- --------- --------- Loss before income tax and minority interest (23,866) (1,492) (77,013) (8,881) Income tax benefit (provision) (96) (274) (375) (429) Minority interest 19 20 50 12 --------- --------- --------- --------- Net loss $ (23,943) $ (1,746) $ (77,338) $ (9,298) ========= ========= ========= ========= Basic and diluted net loss per share $ (0.52) $ (0.04) $ (1.69) $ (0.20) ========= ========= ========= ========= Shares used to compute basic and diluted net loss per share 45,786 45,728 45,770 45,694 ActivIdentity Corporation Condensed Consolidated Unaudited Statement of Cash Flows (In thousands) Twelve Months Ended September 30, -------------------- 2008 2007 --------- ---------Cash flows from operating activities: Net loss $ (77,338) $ (9,298) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of fixed assets 1,566 1,576 Amortization of acquired developed technology and patents 2,380 2,949 Non-realized foreign exchange loss (gain) 1,741 (3,610) Amortization of acquired intangible assets 165 186 Stock-based compensation expense 2,874 2,518 Loss on disposal of property and equipment 24 25 Currency translation loss on liquidation of investment in foreign entity 1,946 - Goodwill impairment charge 35,874 - Investment impairment charge 21,209 - Minority interest in ActivIdentity Europe S.A (50) (12) Changes in: Accounts receivable 2,643 4,254 Inventories 402 (313) Prepaid and other assets 872 924 Accounts payable (444) (135) Accrued compensation and related benefits (838) 4 Accrual for restructuring liability (729) (710) Accrued and other liabilities 446 (1,896) Deferred revenue (872) (2,065) --------- --------- Net cash provided by (used in) operating activities (8,129) (5,603) --------- ---------Cash flows from investing activities: Purchases of property and equipment (307) (2,099) Purchases of short-term investments (37,245) (156,721) Proceeds from sales and maturities of short-term investments 85,165 182,795 Other long-term assets 136 (83) --------- --------- Net cash provided by investing activities 47,749 23,892 --------- ---------Cash flows from financing activities: Proceeds from exercise of options, rights and warrants 25 191 --------- --------- Net cash provided by financing activities 25 191 --------- ---------Effect of exchange rate changes (111) 682 --------- ---------Net increase in cash and cash equivalents 39,534 19,162Cash and cash equivalents, beginning of period 30,639 11,477 --------- ---------Cash and cash equivalents, end of period $ 70,173 $ 30,639 ========= =========

Supplemental Financial Measures -- Adjusted EBITDA

In this press release and our related earnings conference call, we intendto provide investors with a better understanding of operating results andunderlying trends to assess our performance and liquidity. We evaluate ouroperating performance based on several measures, including the non-GAAPfinancial measure of adjusted EBITDA (earnings before interest, taxes,depreciation, amortization, and other income / expense). We believe EBITDAis a useful supplemental financial measure for investors because itfacilitates investors' ability to evaluate the operational strength of thecompany's business. EBITDA, however, is not calculated in accordance withGAAP and should not be considered a substitute for net income as anindicator of operating performance. A reconciliation of EBITDA to operatingincome from continuing operations is presented below.

ActivIdentity Corporation Unaudited Reconciliation from GAAP Results to Adjusted EBITDA (In thousands) Three Months Twelve Months Ended September 30, Ended September 30, ==================== ==================== 2008 2007 2008 2007 ========= ========= ========= =========Operating income (loss) (4,539) (4,215) (56,482) (18,529)Add back depreciation expense 341 376 1,566 1,533Add back amortization expense 634 660 2,545 3,135Add back impairment of goodwill - - 35,874 -Add back stock compensation expense 746 719 2,874 2,518Add back restructuring expense (recovery) - - (70) -Add back severance expense 818 211 2,825 297 --------- --------- --------- ---------Adjusted EBITDA (2,000) (2,249) (10,868) (11,046) ========= ========= ========= =========

Supplemental Financial Measures -- Non-GAAP Results

This press release contains non-GAAP financial measures. The followingtable reconciles the non-GAAP financial measures in the press release tothe most directly comparable financial measures prepared in accordance withGenerally Accepted Accounting Principles (GAAP). These non-GAAP measuresinclude non-GAAP costs of revenue, operating expenses, other expenses, netloss and net loss per share amounts.

Non-GAAP financial measures should not be considered as a substitute for,or superior to, GAAP financial measures, which should be considered as theprimary financial metrics for evaluating our financial performance.Significantly, non-GAAP financial measures are not based on a comprehensiveset of accounting rules or principles. Instead, they are based onsubjective determinations by management designed to supplement our GAAPfinancial measures. They are subject to a number of important limitationsand should be considered only in conjunction with our consolidatedfinancial statements prepared in accordance with GAAP. Our non-GAAPfinancial measures differ from GAAP measures with the same names, may varyover time, and may differ from non-GAAP financial measures with the same orsimilar names used by other companies. Accordingly, investors shouldexercise caution when evaluating our non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial measuresprovide meaningful supplemental information about our operating results,primarily because they exclude goodwill and investment impairments as wellas costs and expenses that we do not believe are indicative of the ongoingoperating performance of our business and our senior management. Althoughthese items should properly be considered in our GAAP financial measures,we believe they should be excluded when evaluating our current operatingperformance. The non-GAAP financial measures disclosed in the accompanyingpress release are used by our Board of Directors and senior management toevaluate our current operating performance, are used in evaluating theperformance of our senior management, and are used in our budget andplanning processes. We believe that our non-GAAP financial measures arehelpful to investors by facilitating comparisons of our current and prioroperating results and by facilitating comparisons of our operating resultswith those of other software companies.

ActivIdentity Corporation Unaudited Reconciliation from GAAP Results to Non-GAAP (In thousands) Three Months Twelve Months Ended September Ended September 30, 30, ================ ================ 2008 2007 2008 2007 ======= ======= ======= =======Reported net income (loss) (GAAP basis) (23,943) (1,746) (77,338) (9,298)Add back amortization expense 634 660 2,545 3,135Add back impairment of goodwill - - 35,874 -Add back stock compensation expense 746 719 2,874 2,518Add back restructuring expense (recovery) - - (70) -Add back severance expense 818 211 2,825 297Add back investment impairment charge 17,396 - 21,209 -Add back loss on liquidation of investment in a foreign entity - - 1,946 -Tax effect of non-GAAP adjustments (79) (291) (183) (369) ------- ------- ------- -------Non-GAAP net income (loss) (4,428) (447) (10,318) (3,717) ======= ======= ======= =======Net income (loss) per share reconciliation (0.52) (0.04) (1.69) (0.20)Add back amortization expense 0.01 0.01 0.06 0.07Add back impairment of goodwill - - 0.78 -Add back stock compensation expense 0.02 0.02 0.06 0.06Add back restructuring expense (recovery) - - (0.00) -Add back severance expense 0.02 0.00 0.06 0.01Add back investment impairment charge 0.38 - 0.46 -Add back loss on liquidation of investment in a foreign entity - - 0.04 -Tax effect of non-GAAP adjustments (0.00) (0.01) (0.00) (0.01) ------- ------- ------- -------Non-GAAP net income (loss) per share - basic and diluted (0.10) (0.01) (0.23) (0.08) ======= ======= ======= =======Weighted average shares - basic 45,786 45,728 45,770 45,694

Discussion of Specific Items Excluded from Non-GAAP Financial Measures

We exclude the below items in our non-GAAP financial measures because webelieve they are not closely related to the ongoing operating performanceof our business and management and are generally excluded from our budgetand planning process. In addition, we believe our non-GAAP financialmeasures are helpful to investors by facilitating comparisons of ouroperating results over different time periods and by facilitatingcomparisons of our financial performance with that of other companies.Except for costs and expenses related to restructuring and severance, theseitems are non-cash and do not affect cash flows.

1) Amortization of acquired intangible assets -- In accordance withGAAP, we amortize intangible assets acquired in connection withacquisitions over the estimated useful lives of the assets. We excludethese amortization costs in our non-GAAP financial measures because they(i) result from prior acquisitions, rather than the ongoing operatingperformance of our business, and (ii) absent additional acquisitions, areexpected to decline over time as the remaining carrying amounts of theseassets are amortized. We believe excluding these costs helps investorscompare our financial performance with that of other companies withdifferent acquisition histories. However, as with impairment charges, werecognize that amortization costs provide a helpful measure of thefinancial impact and performance of prior acquisitions and investors shouldconsider our non-GAAP financial measures in conjunction with our GAAPfinancial results that include amortization costs.

2) Impairment of goodwill -- During fiscal 2008, upon completion of anevaluation analysis, we wrote-off the remaining balance of Goodwill.Because the goodwill impairment resulted from a decline in the market valueof our stock price rather than as a result of any current periodoperational activity, we include this non-GAAP financial adjustment toprovide investors a more comparative report of financial performance forthe period. However, as with amortization of intangible charges, werecognize that impairment costs provide a helpful measure of the financialimpact and performance of prior acquisitions and investors should considerour non-GAAP financial measures in conjunction with our GAAP financialresults that include impairment costs.

3) Stock based compensation -- We exclude stock based compensationexpense associated with stock options and stock granted to employees andnon-executive directors in our non-GAAP financial measures. While stockbased compensation is a significant component of our expenses, we believethat investors wish to be able to exclude the effects of stock basedcompensation expense in comparing our financial performance with that ofother companies.

4) Restructuring and severance -- We exclude restructuring andseverance in our non-GAAP financial measures because these costs areunrelated to our ongoing operations. We believe excluding restructuring andseverance expenses helps investors compare our operating performance withthat of other companies. We recognize, however, that restructuring andseverance will impact cash flows and that we and investors should carefullyconsider the impact of these costs on future cash flows.

5) Impairment of investments -- During fiscal 2008, due to conditionsexisting in the financial markets, we recorded other-than-temporaryimpairments of Auction Rate Securities holding. In order to provideinvestors with financial information that facilitates comparison of bothhistorical and future results, we have provided non-GAAP financial measureswhich exclude the impact of the impairment of ARS investments. We believethat this non-GAAP financial adjustment is useful to investors because itallows investors to (i) evaluate the effectiveness of the methodology andinformation used by management in its financial and operationaldecision-making and (ii) compare past and future reports of financialresults of the Company excluding the impact of uncertainty in the creditmarkets.

6) Loss on liquidation of investment in foreign entity -- Duringfiscal 2008, in accordance with GAAP, we reclassified the cumulativetranslation adjustment attributable to our liquidated Australian entityfrom Other Comprehensive Income (Loss) to other expense on our incomestatement. The accumulated loss related to the historic translation of theforeign entity's Australian dollar local books in our consolidationprocess. We exclude this loss on liquidation from our non-GAAP financialmeasures as the liquidation was (i) a non-recurring transaction with nooperational impact on current period earnings, and (ii) the accumulatedloss related to the fluctuation of foreign exchange rates over the pastseveral years.

Contact:Investor Relations:Jacques KerrestCFOActivIdentity Corporation 510-574-1792