Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Keith Farris
Aware, Inc.
781-276-4000
AWARE, INC. REPORTS 2006 SECOND QUARTER
FINANCIAL RESULTS
BEDFORD, MASS. - AUGUST 3, 2006 - Aware, Inc. (NASDAQ: AWRE), a worldwide leader
and innovator of broadband intellectual property, today reported financial
results for its second quarter ended June 30, 2006.
Revenues for the second quarter of 2006 increased 79% to $4.8 million, from $2.7
million in the same quarter last year. For the six months ended June 30, 2006,
revenues increased 58% to $10.9 million, compared to $6.9 million in the same
period a year ago.
The Company reports its net income and basic and diluted net income per share in
accordance with U.S. generally accepted accounting principles (GAAP), and
additionally, on a non-GAAP basis. Non-GAAP net income, where applicable,
excludes the effect of stock-based compensation expense. The company uses the
non-GAAP information internally to evaluate its operating performance and
believes these non-GAAP measures are useful to investors as they provide
additional insight into the underlying operating results. However, non-GAAP
measures are not stated in accordance with, should not be considered in
isolation from, and are not a substitute for, GAAP measures. A reconciliation of
GAAP to non-GAAP results has been provided in the attached financial tables.
GAAP net loss for the second quarter of 2006 was $1.2 million, or $0.05 per
share, which included $0.7 million of stock-based compensation charges, as this
was the Company's second quarter subject to the provisions of FAS 123(R). This
compared to a GAAP net loss of $1.5 million, or $0.07 per share, for the same
period a year ago. GAAP net loss for the six months ended June 30, 2006 was $0.7
million or $0.03 per share, compared to a net loss of $1.8 million,
- --------------------------------------------------------------------------------
Aware, Inc. * 40 Middlesex Turnpike * Bedford, MA USA 01730-1432
Tel: (781) 276-4000 * Fax: (781) 276-4001 * E-mail: aware@aware.com
Aware, Inc. Reports 2006 Second Quarter Financial Results Page 2
or $0.08 per share, for the same period a year ago. GAAP results prior to 2006
do not include a charge for stock-based compensation.
Non-GAAP net loss for the second quarter of 2006, excluding the effect of
stock-based compensation, was $0.5 million, or $0.02 per share. For the six
months ended June 30, 2006, the company had a non-GAAP net income, excluding the
effect of stock-based compensation, of $0.6 million, or $0.02 per share.
Michael Tzannes, Chief Executive Officer, said:
"Our DSL licensing revenues and biometrics software revenues are on track for
solid growth this year. In DSL, this growth is coming from the transition to
higher speed ADSL2+ and VDSL2 networks, which is well underway around the world.
IPTV and triple-play services have emerged as important DSL industry drivers. In
biometrics, we are benefiting from our broad-based exposure to the use of AFIS
and related client systems and to new biometric opportunities in border control
and secure credential applications. Our DSL test and diagnostics products are
well poised to capitalize on the transition to higher speed technologies for the
delivery of new services. Our technology and products have positioned us for
growth in the ADSL2+/VDSL2 and biometrics markets and we are confident that we
will grow revenues going forward."
Note: Aware's conference call will be broadcast live over the Internet today,
August 3, 2006 at 5:00 p.m. Eastern Time. To listen to the call, please go to
WWW.AWARE.COM, and click on "Investor Relations." The conference call may also
be heard by calling (719) 457-2637 and referencing the confirmation number
6366485. A replay of the call will be archived on our website after the call.
ABOUT AWARE
Aware, Inc. designs, develops, licenses and markets DSL technologies that enable
broadband communications over existing telephone networks. Its solutions,
including splitterless G.lite, full-rate ADSL, ADSL2, ADSL2+, VDSL2, Bonded
ADSL2+, Dr. DSL(R), StratiPHY(TM), StratiPHY-Bonded(TM), StratiPHY2+(TM),
StratiPHY3(TM) and G.SHDSL, address central office as well as customer premise
requirements. Aware is also a leading provider of standards-based biometric
transaction and image compression software toolkits. More information can be
found at HTTP://WWW.AWARE.COM.
SAFE HARBOR WARNING
Portions of this release contain forward-looking statements regarding future
events and are subject to risks and uncertainties, such as estimates or
projections of future revenue and earnings and the growth of the DSL market.
Aware wishes to caution you that there are factors that could cause actual
results to differ materially from the results indicated by such statements.
These factors include, but are not limited to: we have a unique business model,
our quarterly results are difficult to predict, we depend on a limited number of
licensees, we derive a significant amount of revenue from a small number of
customers, we depend on equipment companies to incorporate our technology into
their products, we face intense competition from other DSL vendors, DSL
technology competes with other technologies for broadband access, and our
business is subject to rapid technological change. We refer you to the documents
Aware files from time to time with the Securities and Exchange Commission,
specifically the section titled Risk Factors in our annual report on Form 10-K
for the fiscal year ended December 31, 2005 and other reports and filings made
with the Securities and Exchange Commission.
DR. DSL, STRATIPHY, STRATIPHY2+, STRATIPHY3, AND STRATIPHY-BONDED ARE
TRADEMARKS OR REGISTERED TRADEMARKS OF AWARE, INC.
Aware, Inc. Reports 2006 Second Quarter Financial Results Page 3
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -----------------------------
2006 2005 2006 2005
-------------- ------------- ------------- ------------
Revenue:
Product sales...................... $1,519 $785 $3,237 $1,746
Contract revenue................... 2,241 978 5,934 3,141
Royalties.......................... 1,030 920 1,754 2,020
-------------- ------------- ------------- ------------
Total Revenue 4,790 2,683 10,925 6,907
Costs and expenses:
Cost of product sales (1).......... 176 62 328 122
Cost of contract revenue (1)....... 1,151 718 2,397 1,558
Research and development (1)....... 3,129 2,360 5,919 4,913
Selling and marketing (1).......... 920 709 1,734 1,343
General and administrative (1)..... 1,083 628 2,087 1,296
-------------- ------------- ------------- ------------
Total costs and expenses 6,459 4,477 12,465 9,232
Net income (loss) from operations....... (1,669) (1,794) (1,540) (2,325)
Interest income......................... 459 272 852 489
-------------- ------------- ------------- ------------
Net income (loss) before provision for
income taxes............................ (1,210) (1,522) (688) (1,836)
Provision for income taxes.............. - - - -
-------------- ------------- ------------- ------------
Net income (loss)....................... ($1,210) ($1,522) ($688) ($1,836)
============== ============= ============= ============
Net income (loss) per share - basic..... ($0.05) ($0.07) ($0.03) ($0.08)
Net income (loss) per share - diluted... ($0.05) ($0.07) ($0.03) ($0.08)
Weighted average shares - basic......... 23,430 23,019 23,371 22,982
Weighted average shares - diluted....... 23,430 23,019 23,371 22,982
(1) Effective January 1, 2006 the Company adopted Statement of Financial
Accounting Standard No. 123 (Revised), "Share-Based Payment" (SFAS
123(R)). Accordingly, for the six months ended June 30, 2006,
stock-based compensation was accounted for under SFAS 123(R) while, for
the six months ended June 30, 2005, stock-based compensation was
accounted for under APB No. 25 "Accounting for Stock Issued to
Employees." The amounts in the tables above include stock-based
compensation as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
2006 2005 2006 2005
------------- ------------ ------------- ------------
Cost of product sales................... $ 5 $ - $ 8 $ -
Cost of contract revenue................ 21 - 85 -
Research and development................ 396 - 545 -
Sales and marketing..................... 110 - 178 -
General and administrative.............. 213 - 426 -
------------- ------------ ------------- ------------
Total stock-based compensation costs.... $ 745 $ - $ 1,242 $ -
------------- ------------ ------------- ------------
Aware, Inc. Reports 2006 Second Quarter Financial Results Page 4
AWARE, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -------------------------------
2006 2005 2006 2005
-------------- --------------- ------------- --------------
GAAP net income......................... ($1,210) ($1,522) ($688) ($1,836)
Stock-based compensation........... 745 - 1,242 -
-------------- --------------- ------------- --------------
Non-GAAP net income..................... ($465) ($1,522) $554 ($1,836)
-------------- --------------- ------------- --------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -------------------------------
2006 2005 2006 2005
-------------- --------------- ------------- --------------
GAAP basic and diluted net income
per share............................... ($0.05) ($0.07) ($0.03) ($0.08)
Stock-based compensation........... 0.03 - 0.05 -
-------------- --------------- ------------- --------------
Non-GAAP basic and diluted net
income per share........................ ($0.02) ($0.07) $0.02 ($0.08)
-------------- --------------- ------------- --------------
Aware, Inc. Reports 2006 Second Quarter Financial Results Page 5
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2006 2005
---------------- ------------------
ASSETS
Cash and investments..................................................... $37,948 $36,763
Accounts receivable, net................................................. 3,994 3,749
Property and equipment, net.............................................. 8,018 8,075
Other assets, net........................................................ 1,207 1,154
---------------- ------------------
Total assets............................................................. $51,167 $49,741
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LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities................................................ $2,470 $2,238
Total stockholders' equity............................................... 48,697 47,503
---------------- ------------------
Total liabilities and stockholders' equity............................... $51,167 $49,741
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