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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
COMMISSION FILE NUMBER 000-21129
AWARE, INC.
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(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 04-2911026
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
40 MIDDDLESEX TURNPIKE, BEDFORD, MASSACHUSETTS, 01730
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(Address of Principal Executive Offices)
(Zip Code)
(781) 276-4000
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(Registrant's Telephone Number, Including Area Code)
Indicate by check 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 X NO
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Indicate the number of shares outstanding of the issuer's common stock as of May
1, 1998:
CLASS NUMBER OF SHARES OUTSTANDING
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Common Stock, par value $0.01 per share 20,043,626 shares
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AWARE, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
March 31, 1998 and December 31, 1997........................... 3
Consolidated Condensed Statements of Operations for the
Three Months Ended March 31, 1998
and March 31, 1997............................................. 4
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 1998
and March 31, 1997............................................. 5
Notes to Consolidated Condensed Financial Statements........... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 14
Item 2. Changes in Securities and Use of Proceeds...................... 14
Item 6. Exhibits and Reports on Form 8-K............................... 15
Signatures..................................................... 15
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PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
AWARE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
1998 1997
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ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 22,569,253 $ 23,496,508
Short-term investments ........................................... 2,045,246 2,607,411
Accounts receivable (less allowance for doubtful
accounts of $75,000 in 1998 and $50,000 in 1997) ................ 2,195,621 1,824,119
Inventories ...................................................... 173,490 215,622
Prepaid expenses ................................................. 316,737 290,847
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Total current assets ......................................... 27,300,347 28,434,507
Property and equipment, net of accumulated depreciation and
amortization of $1,667,160 in 1998 and $1,330,281 in 1997 ......... 10,778,285 10,846,025
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Total assets ....................................................... $ 38,078,632 $ 39,280,532
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................. $ 863,665 $ 1,075,126
Accrued expenses ................................................. 247,766 185,676
Accrued compensation ............................................. 216,646 326,558
Accrued professional ............................................. 53,883 73,370
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Total current liabilities .................................... 1,381,960 1,660,730
Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized,
none outstanding ................................................ - -
Common stock, $.01 par value; 30,000,000 shares authorized; issued
and outstanding, 19,838,982 in 1998 and 19,646,024 in 1997 ...... 198,390 196,460
Additional paid-in capital ....................................... 52,717,774 52,640,360
Accumulated deficit .............................................. (16,219,492) (14,764,056)
Treasury stock ................................................... - (452,962)
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Total stockholders' equity ................................... 36,696,672 37,619,802
Total liabilities and stockholders' equity ......................... $ 38,078,632 $ 39,280,532
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The accompanying notes are an integral part of the financial statements.
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AWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
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1998 1997
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Revenue:
Product .................................... $ 435,175 $ 103,790
License and royalty ........................ 769,464 1,310,984
Research and development ................... 799,377 386,311
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Total revenue ............................ 2,004,016 1,801,085
Costs and expenses:
Cost of product revenue ................... 377,133 281,557
Research and development ................... 2,196,431 1,432,779
Selling and marketing ...................... 767,607 374,415
General and administrative ................. 555,971 436,920
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Total costs and expenses ................. 3,897,142 2,525,671
Loss from operations ......................... (1,893,126) (724,586)
Other income and expense ..................... 99,000 -
Interest income .............................. 338,689 448,284
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Net loss before provision for income taxes ... (1,455,437) (276,302)
Provision for income taxes ................... - -
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Net loss ..................................... $(1,455,437) $ (276,302)
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Net loss per share - basic ................... $ (0.07) $ (0.01)
Net loss per share - diluted ................. $ (0.07) $ (0.01)
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Weighted average shares - basic .............. 19,718,820 19,054,759
Weighted average shares - diluted ............ 19,718,820 19,054,759
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The accompanying notes are an integral part of the financial statements.
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AWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
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1998 1997
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Cash flows from operating activities:
Net loss .................................................... $(1,455,437) $ (276,302)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ............................. 336,879 244,652
Increase (decrease) from changes in assets and liabilities:
Accounts receivable ..................................... (371,502) (343,344)
Unbilled accounts receivable ............................ - 7,500
Inventories ............................................. 42,132 102,982
Prepaid expenses ........................................ (25,890) (100,893)
Accounts payable ........................................ (211,461) (48,588)
Accrued expenses ........................................ (67,309) 24,148
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Net cash used in operating activities ......................... (1,752,588) (389,845)
Cash flows from investing activities:
Purchases of property and equipment ......................... (269,138) (754,576)
Net sales (purchases) of short-term investments ............. 562,165 (6,911,203)
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Net cash provided by (used in) investing activities ........... 293,027 (7,665,779)
Cash flows from financing activities:
Proceeds from issuance of common stock ...................... 532,306 266,566
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Decrease in cash and cash equivalents ......................... (927,255) (7,789,058)
Cash and cash equivalents, beginning of period ................ 23,496,508 31,092,273
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Cash and cash equivalents, end of period ...................... $22,569,253 $23,303,215
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The accompanying notes are an integral part of the financial statements.
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AWARE, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
A) BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed balance sheets,
statements of operations, and statements of cash flows reflect all
adjustments (consisting only of normal recurring items) which are, in the
opinion of management, necessary for a fair presentation of financial
position at March 31, 1998, and of operations and cash flows for the
interim periods ended March 31, 1998 and 1997.
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions for Form 10-Q and
therefore do not include all information and footnotes necessary for a
complete presentation of operations, the financial position, and cash flows
of the Company, in conformity with generally accepted accounting
principles. The Company filed audited financial statements which included
all information and footnotes necessary for such presentation for the three
years ended December 31, 1997 in conjunction with its 1997 Annual Report on
Form 10-K.
The results of operations for the interim period ended March 31, 1998 are
not necessarily indicative of the results to be expected for the year.
B) INVENTORY
Inventory consists primarily of the following:
MARCH 31, DECEMBER 31,
1998 1997
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Raw materials..................... $115,632 $163,555
Work-in-process................... - -
Finished goods.................... 57,858 52,067
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Total...................... $173,490 $215,622
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C) NET LOSS PER SHARE
In December 1997, the Company adopted SFAS No. 128, "Earnings Per Share."
SFAS No. 128 establishes standards for computing and presenting earnings
per share and applies to entities with publicly held common stock or
potential common stock. Prior to December 1997, the Company computed
earnings per share in accordance with APB Opinion No. 15, "Earnings per
Share." The adoption of SFAS No. 128 had no effect on previously reported
net loss per share for quarter ended March 31, 1997.
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D) TREASURY STOCK
During the first quarter of 1998, the Board of Directors elected to cancel
the Preferred Series D stock that was held in Treasury Stock. This
cancellation was effected because all outstanding shares of the Company's
convertible preferred stock were converted to common stock upon the
completion of the Company's initial public offering in 1996, and the
Company anticipates no further transactions in this class of stock.
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ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained in the following Management's Discussion and
Analysis of Financial Condition and Results of Operations, including statements
regarding the anticipated development and expansion of the Company's business,
the intent, belief or current expectations of the Company, its directors or its
officers, primarily with respect to the future operating performance of the
Company, and other statements contained herein regarding matters that are not
historical facts, are "forward-looking" statements. These forward-looking
statements represent the Company's present expectations or beliefs concerning
future events, however the Company cautions that such statements are qualified
by important factors. Such factors, which include, but are not limited to, the
risk factors identified below, could cause actual results to differ materially
from those indicated in Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
Product Revenue. Product revenue consists primarily of revenue from the
sale of Asymmetric Digital Subscriber Line ("ADSL") modems, transceiver modules,
and development systems. Product revenue increased by 319.3% from $103,790 in
the first quarter of 1997 to $435,175 in the current year quarter. Product
revenue as a percentage of total revenue was 21.7% in the first quarter of 1998
as compared to 5.8% in the corresponding quarter of 1997. The dollar increase,
as well as the increase as a percentage of total revenue, is primarily due to
two reasons. The Company shipped transceiver modules and development systems in
the first quarter of 1998, and such products were not available in the first
quarter of 1997. Secondly, there was greater demand for the Company's x200
Access Routers for trial purposes in the current year quarter.
License and Royalty Revenue. License and royalty revenue consists primarily
of revenue from the sale of intellectual property, such as hardware and software
technology licenses, compression software licenses, and royalties from the sale
of chipsets by customers who have licensed the Company's technology. As such
revenue has only a nominal cost of sale associated with it, the Company does not
report a separate cost of license and royalty revenue line in its Statements of
Operations.
License and royalty revenue decreased by 41.3% from $1,310,984 in the first
quarter of 1997 to $769,464 in the current year quarter. License and royalty
revenue as a percentage of total revenue was 38.4% in the first quarter of 1998
as compared to 72.8% in the corresponding quarter of 1997. The dollar decrease,
as well as the decrease as a percentage of total revenue, is primarily due to a
significant ADSL license sale to U.S. Robotics Access Corp. (now 3Com Corp.) in
the first quarter of 1997. There was not a telecom technology licensing sale of
this magnitude in the current year quarter. Lower telecommunications licensing
revenue was partially offset by higher chipset royalties and revenue from the
sale of compression software licenses in the current year quarter.
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Research and Development Revenue. Research and development revenue consists
primarily of revenue from commercial contract engineering and development, and
government research contracts. Research and development revenue increased by
106.9% from $386,311 in the first quarter of 1997 to $799,377 in the current
year quarter. Research and development revenue as a percentage of total revenue
was 39.9% in the first quarter of 1998 as compared to 21.4% in the corresponding
quarter of 1997. The dollar increase, as well as the increase as a percentage of
total revenue, is primarily due to an increase in commercial engineering
projects, which was partially offset by a modest decrease in U.S. government
research projects. The increase in commercial engineering project revenue is
primarily driven by telecommunication customers, who have engaged the Company to
jointly develop products using the Company's technology and software.
Cost of Product Revenue. Cost of product revenue consisted primarily of:
(i) direct material, direct labor, and overhead costs to produce the Company's
products, (ii) cost of goods for purchases of finished inventory from third
party suppliers, and (iii) provisions for excess and obsolete inventory.
Cost of product revenue as a percentage of product revenue was 86.7% in the
first quarter of 1998 as compared to 271.3% in the corresponding quarter of
1997. The cost of product revenue as a percentage of product revenue in both
periods primarily reflects high material, labor and fixed manufacturing costs
due to relatively low production volumes, and provisions for excess and obsolete
inventory of $75,000 in the first quarter of 1998 and $125,000 in the first
quarter of 1997. The provisions for obsolete inventory recorded in both periods
were primarily driven by the environment in which the Company operates. This
environment was and continues to be characterized by rapid technological
advances, evolving industry standards, changes in end-user requirements, and
frequent new product introductions. Consequently, the Company's products have
relatively short life cycles. Excluding obsolete inventory provisions, cost of
product revenue as a percentage of product revenue was 69% in the first quarter
of 1998 and 151% in the first quarter of 1997.
Research and Development Expense. Research and development expense consists
primarily of salaries for engineers, and expenses for consultants, recruiting,
supplies, equipment, depreciation and facilities. Research and development
expense increased by 53.3% from $1,432,779 in the first quarter of 1997 to
$2,196,431 in the current year quarter. The increase in research and development
expense is primarily due to increased spending on projects related to the
Company's x200 Access Router, full rate ADSL technology, DSL Lite technology,
and DWMT/SDSL technology. Spending related to these projects was partially
offset by no spending on the Company's Hybrid Fiber Coaxial (HFC) project, which
was temporarily suspended in the third quarter of 1997. The Company anticipates
that research and development spending will continue to grow in future periods.
Selling and Marketing Expense. Selling and marketing expense consists
primarily of salaries for sales and marketing personnel, travel, advertising and
promotion, recruiting, and facilities expense. Selling and marketing expense
increased 105.0% from $374,415 in the first quarter of 1997 to $767,607 in the
current year quarter. The increase is primarily due to: (i) the addition of
marketing, sales and support staff to sell the Company's products and
technology, and (ii) increased levels of advertising and promotion to create
awareness for the Company's products, including participation in industry
tradeshows. The Company anticipates that selling and marketing spending will
continue to grow in future periods.
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General and Administrative Expense. General and administrative expense
consists primarily of salaries for administrative personnel, facilities costs,
expenses related to being a public company, and professional services, such as
legal and audit expenses. General and administrative expense increased by 27.2%
from $436,920 in the first quarter of 1997 to $555,971 in the current year
quarter. The increase is primarily due to: (i) additions to the Company's
finance and information systems organizations to support organizational growth,
and (ii) investor relations and public company expenses.
Other income and expense. Other income increased from zero in the first
quarter of 1997 to $99,000 in the current year quarter. Other income in the
current period relates to rental income from a real estate lease. When the
Company completed the purchase of its headquarters building in 1997, the terms
of the purchase agreement required the Company to sublet 24,000 square feet to
the seller for a period of 18 months.
Interest Income. Interest income decreased 24.4% from $448,284 in the first
quarter of 1997 to $338,689 in the current year quarter, primarily as a result
of lower cash balances due to: (i) the purchase and renovation of the Company's
72,000 square foot headquarters building, (ii) the acquisition of computers,
software, furniture, and other equipment primarily used in research and
development activities, and (iii) the use of cash to fund operating losses.
Income Taxes. The Company has made no provision for income taxes as it has
a history of net losses, which has resulted in tax loss carryforwards. At
December 31, 1997, the Company had available federal net operating loss
carryforwards of approximately $16,586,000, which expire in 2003 through 2012,
and federal research and development credit carryforwards of approximately
$791,000, which expire in 2003 through 2012. At December 31, 1997, the Company
also had available state net operating loss carryforwards of approximately
$9,261,000, which expire in 1998 through 2002 and state research and development
and investment tax credit carryforwards of approximately $395,000, which expire
in 2006 through 2012. Of the total net operating loss carryforwards,
approximately $1,906,000 are attributable to the exercise of stock options and
the tax benefit from these losses, when utilized, will be credited to additional
paid-in capital.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had cash, cash equivalents and short-term
investments of $24,614,499, a decrease of $1,489,420 from December 31, 1997.
This decrease is primarily due to $1,752,588 of cash used in operations and
$269,138 of cash invested in property and equipment. These uses of cash was
partially offset by $532,306 of proceeds from the issuance of common stock under
the Company's stock option plans.
Cash used in operations was primarily related to: (i) the funding of operating
losses, (ii) the increase of accounts receivable due to the achievement of
several contract milestones late in the quarter, and (iii) the reduction of
accounts payable and accrued expenses balances. Property and equipment spending
was primarily related to the renovation of the building, and purchases of
computers, software, furniture and other equipment used principally in research
and development activities.
While there can be no assurance that the Company will not require additional
financing, or that such financing will be available to the Company, the Company
believes that its financial resources are adequate to meet its liquidity
requirements over the next twelve months.
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RISK FACTORS
The Company believes that the occurrence of any one or some combination of the
following risk factors could have a material adverse effect on the Company's
business, financial condition and results of operations.
History of Operating Losses
The Company has incurred operating losses in every fiscal year since
inception. Substantial additional research and development expenses to enhance
the Company's technology and products will be required before market acceptance
can be determined. Also, the Company anticipates that substantial selling and
marketing expenses will be required to establish sales channels for the
Company's technology and products. There can be no assurance that the Company
will achieve profitable operations in any future period.
Dependence on Acceptance of DSL Technology
The Company's future success is substantially dependent upon whether
Digital Subscriber Line ("DSL") technology gains widespread commercial
acceptance by the telephone companies ("telcos") and end users of telco
services. Telcos continue to evaluate DSL technology, and there can be no
assurance that the telcos will pursue the deployment of such technology. The
Company believes that volume deployment of DSL technology and equipment will not
commence before the end of 1998, if at all.
Reliance on Telcos; Dependence on a Limited Number of Customers
Even if telcos adopt policies favoring full-scale implementation of DSL
technology, there can be no assurance that sales of the Company's DSL technology
and products will become significant. The Company's customers, including
semiconductor manufacturers and OEMs, are relatively few in number and have
significantly greater resources than that of the Company. The Company has
limited ability to influence or control decisions made by these customers. There
can be no assurance that these customers will not use their size and bargaining
power to demand unfavorable terms and conditions (including price), seek
alternative suppliers, or undertake internal development of products comparable
to those of the Company's.
Substantial Dependence on Semiconductor Partners
In the first quarter of 1998, the Company and its initial semiconductor
partner, Analog Devices, Inc. ("ADI") amended the chipset development and
license agreement between the companies. Under the terms of the amended
agreement, the Company's relationship with ADI was changed from exclusive to
non-exclusive. In exchange, ADI received greater access to the Company's
technology and software, including limited access to source code for the purpose
of supporting its customers. Also under the amended agreement, Aware provides
ADI with technology and software for splitterless DSL Lite in exchange for
license fees, development fees and royalties.
Also in the first quarter of 1998, the Company announced a relationship
with Lucent Technologies, Inc. ("Lucent") to develop integrated chipset
solutions for the personal computer OEM market based on the Company's technology
and software. The inability or refusal of ADI, Lucent or other companies to
manufacture, market and sell chipsets in substantial quantities would prevent
the adoption of the Company's technology and would have a material adverse
effect on the Company's business. There can be no assurance that the Company's
relationships with these companies will be successful or, in the event that
these
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relationships are not successful, that the Company would be able to find
substitute chipset manufacturers without significant delays.
Proprietary Technology; Risk of Third Party Claims of Infringement
The Company's ability to compete effectively will depend to a significant
extent on its ability to protect its proprietary information and to operate
without infringing the intellectual property rights of others. Despite the
precautions the Company has taken to protect its intellectual property, there
can be no assurance that such steps will be adequate to prevent the
misappropriation of its technology. In addition, third parties may assert
exclusive patent, copyright and other intellectual property rights to
technologies that are important to the Company. There can be no assurance that
other third parties will not assert such claims against the Company in the
future.
Rapid Technological Change; Dependence on New Technology and Products
The markets for the Company's technology and products are characterized by
rapid technological advances, evolving industry standards, changes in end-user
requirements, frequent new product introductions, and evolving telco offerings.
The Company's business will be materially adversely affected if technologies or
standards on which Company's products are based become obsolete, or if the
Company is unable to develop and introduce new technology and products in a
timely manner in response to changing market conditions. In such an environment,
product cycles tend to be short, and therefore, the Company may need to
write-off excess and obsolete inventory from time-to-time. For the year ended
1997 and the first quarter of 1998, the Company recorded provisions for excess
and obsolete inventory of $275,000 and $75,000, respectively.
Competition
The markets for the Company's technology and products are intensely
competitive and the Company expects competition to increase in the immediate
future. Many of the Company's competitors and potential competitors have
significantly greater financial, technological, manufacturing, marketing and
personnel resources than the Company. There can be no assurance that the Company
will be able to compete successfully or that competition will not adversely
affect the Company's business.
Manufacturing
The Company has limited experience in manufacturing or in supervising the
manufacture of its products, including its ADSL modems, modules, and development
systems. In 1997, the Company entered into an agreement with a third party
contract manufacturer to supply substantially all finished goods products to the
Company. There can be no assurance that the Company's relationship with its
contract manufacturer will be successful or, in the event that the relationship
is not successful, that the Company would be able to find a substitute contract
manufacturer without significant delays. Furthermore, there can be no assurance
that the Company or its contract manufacturer will not encounter significant
difficulties in manufacturing or controlling the quality of its products, or
that its products will be reliable in the field.
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Dependence on Hiring and Retaining Personnel
The Company believes that its future success will depend significantly on
its ability to attract, motivate and retain additional highly skilled technical,
managerial and marketing personnel. During 1997 and the first three months of
1998, the Company experienced difficulty in hiring the additional engineers it
had contemplated in its business plans. Competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
attracting, assimilating and retaining the personnel required to grow and
operate profitably.
Year 2000
The Company is in the process of assessing the impact of the transition to
the year 2000 on its computer and software applications. The Company does not
believe that any material year 2000 issues exist with software contained within
its product offerings. The Company is in the process of attempting to obtain
confirmation from vendors of certain purchased software that current releases or
upgrades, if installed, will not have any material year 2000 issues. To the
extent necessary to address material year 2000 issues, the Company plans to
obtain current releases or upgrades from software vendors prior to the end of
1998. Failure to obtain and implement such releases or upgrades, or the failure
of such software vendors to have eliminated year 2000 issues, could materially
and adversely affect the Company.
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PART II. OTHER INFORMATION
ITEM 1:
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or to which any of its properties are subject which, either individually
or in the aggregate, are expected by the Company to have a material adverse
effect in its business, financial position or results of operations.
ITEM 2:
CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) Use of Proceeds
The Company sold 3,910,000 shares of the Company's Common Stock, par value
$.01 per share, on August 14, 1996 and September 9, 1996, pursuant to a
Registration Statement on Form S-1 ( File No. 333-06807), which was declared
effective by the Securities and Exchange Commission on August 8, 1996 (the
"Effective Date"). The managing underwriters of the offering were BancAmerica
Robertson Stephens and Furman Selz LLC. The aggregate gross proceeds of the
offering were $39,100,000. The Company's total expenses in connection with the
offering were $3,937,000, of which $2,737,000 was for underwriting discounts and
commissions and $1,200,000 was for other expenses paid to persons other than
directors or officers of the Company, persons owning more than 10 percent of any
class of equity securities of the Company, or affiliates of the Company
(collectively, "Affiliates"). The Company's net proceeds from the offering were
$35,163,000. From the Effective Date through March 31, 1998, the Company used a
portion of the net proceeds as follows: (i) approximately $11,670,000 to
purchase and renovate a commercial office building, which the Company now uses
as its headquarters, and to acquire computers, software and other equipment and
(ii) approximately $4,355,000 for working capital. None of these payments were
made to Affiliates. As of March 31, 1998 the Company had approximately
$19,138,000 of proceeds remaining from the offering, and pending use of the
proceeds, the Company intends to invest such proceeds primarily in short-term,
interest-bearing, investment-grade securities, including money market
instruments.
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PART II. OTHER INFORMATION
ITEM 6:
EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 10.1* - Employment agreement of James C. Bender, dated October
27,1994, as amended on December 20, 1996 and April 23,
1998
Exhibit 11.1* - Computation of Net Loss per Share
(b) REPORTS ON 8-K
None.
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* filed herewith
SIGNATURES
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.
AWARE, INC.
Date: May 11, 1998 By: /s/ Michael A. Tzannes
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Michael A. Tzannes, Chief Executive
Officer and President
Date: May 11, 1998 By: /s/ Richard P. Moberg
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Richard P. Moberg, Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
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