[AWARE LOGO APPEARS HERE]
FOR IMMEDIATE RELEASE
Contact:
Keith Farris
Aware, Inc.
781-276-4000
AWARE, INC. REPORTS SECOND QUARTER 2007
FINANCIAL RESULTS
BEDFORD, MASS. - JULY 31, 2007 - Aware, Inc. (NASDAQ: AWRE), a leading supplier
of broadband technology and biometrics software, today reported financial
results for its second quarter ended June 30, 2007.
Revenues for the second quarter of 2007 were $6.4 million, an increase of 34%
compared to $4.8 million in the same quarter last year. For the six months ended
June 30, 2007, revenues increased 12% to $12.2 million, compared to $10.9
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 2007 was $1.0 million, or $0.04 per
share, which included $0.3 million of stock-based compensation charges in
accordance with the provisions of FAS 123(R). This compared to a GAAP net loss
of $1.2 million, or $0.05 per share, for the same period a year ago. GAAP net
loss for the six months ended June 30, 2007 was $1.1 million, or
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AWARE, INC. O 40 MIDDLESEX TURNPIKE O BEDFORD, MA USA 01730-1432
TEL: (781) 276-4000 O FAX: (781) 276-4001 O E-MAIL: AWARE@AWARE.COM
AWARE, INC. REPORTS 2007 SECOND QUARTER FINANCIAL RESULTS PAGE 2
$0.04 per share, compared to a net loss of $0.7 million, or $0.03 per share, for
the same period a year ago.
Non-GAAP net loss for the second quarter of 2007, excluding the effect of
stock-based compensation, was $0.7 million, or $0.03 per share. For the six
months ended June 30, 2007, the company had a non-GAAP net loss, excluding the
effect of stock-based compensation, of $0.6 million, or $0.02 per share.
Michael Tzannes, Aware's chief executive officer, said, "Our revenues in the
first half of 2006 reflect a healthy mix of DSL test and diagnostics, biometrics
and DSL licensing sales. We are pleased with the progress we have made in
gaining exposure to a growing DSL test and diagnostics infrastructure and
excited about the future this product line holds. In DSL licensing, we are
confident in our ability to increase market share and add new customers based
upon recent industry events including consolidation in the semiconductor segment
and the emergence of a new VDSL standard. In biometrics, we are pleased with our
revenue growth and broad exposure to the industry through our expansive OEM
customer base. Each of our product lines has gained important traction this year
and each of the markets we are addressing is vibrant and growing."
Note: Aware's conference call will be broadcast live over the Internet today,
July 31, 2007 at 5:00 p.m. Eastern Time. To listen to the call, please go to
www.aware.com/ir. The conference call may also be heard by calling (719)
457-2692 and referencing the confirmation number 3910483. A replay of the call
will be archived on our website after the call.
ABOUT AWARE
Aware is a leading technology supplier for the telecommunications industries.
For more than ten years, Aware has pioneered innovations at telecommunications
standards-setting organizations and continues to develop and market DSL silicon
intellectual property and test and diagnostics products. Its StratiPHY(tm) IP
product line supports DSL standards, including ADSL2+ and VDSL2, and has been
broadly licensed to leading semiconductor companies. Telecom equipment vendors
and phone companies use Aware's DSL test and diagnostics modules and Dr. DSL(R)
software to help provision DSL circuits globally. Aware is also a veteran of the
biometrics industry, providing biometric and imaging software components used in
government systems worldwide since 1992. Aware's interoperable,
standard-compliant, field-proven imaging products are used in a number of
applications, from border management to criminal justice to medical imaging.
Aware is a publicly held company (NASDAQ: AWRE) based in Bedford, Massachusetts.
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 and
biometrics markets. Aware wishes to caution you that there are factors that
could cause actual results to differ materially from the results indicated by
such statements. The DSL 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, 2006 and other reports and
filings made with the Securities and Exchange Commission.
AWARE, STRATIPHY, AND DR. DSL ARE TRADEMARKS OR REGISTERED
TRADEMARKS OF AWARE, INC.
AWARE, INC. REPORTS 2007 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,
----------------------------- -----------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenue:
Product sales ................................ $ 3,771 $ 1,519 $ 7,236 $ 3,237
Contract revenue ............................. 1,575 2,241 3,409 5,934
Royalties .................................... 1,083 1,030 1,584 1,754
------------ ------------ ------------ ------------
Total Revenue ............................ 6,429 4,790 12,229 10,925
Costs and expenses:
Cost of product sales (1) .................... 1,690 176 2,186 328
Cost of contract revenue (1) ................. 1,410 1,151 2,762 2,397
Research and development (1) ................. 2,867 3,129 5,655 5,919
Selling and marketing (1) .................... 999 920 1,872 1,734
General and administrative (1) ............... 927 1,083 1,811 2,087
------------ ------------ ------------ ------------
Total costs and expenses ................. 7,893 6,459 14,286 12,465
Net income (loss) from operations ................. (1,464) (1,669) (2,057) (1,540)
Interest income ................................... 503 459 1,008 852
------------ ------------ ------------ ------------
Net income (loss) before provision for income taxes (961) (1,210) (1,049) (688)
Provision for income taxes ........................ 7 - 17 -
------------ ------------ ------------ ------------
Net income (loss) ................................. ($ 968) ($ 1,210) ($ 1,066) ($ 688)
============ ============ ============ ============
Net income (loss) per share - basic ............... ($ 0.04) ($ 0.05) ($ 0.04) ($ 0.03)
Net income (loss) per share - diluted ............. ($ 0.04) ($ 0.05) ($ 0.04) ($ 0.03)
Weighted average shares - basic ................... 23,714,593 23,429,733 23,686,556 23,370,954
Weighted average shares - diluted ................. 23,714,593 23,429,733 23,686,556 23,370,954
(1) Effective January 1, 2006 the Company adopted Statement of Financial Accounting Standard No. 123
(Revised), "Share-Based Payment" (FAS 123(R)). The amounts in the tables above include stock-based
compensation as follows (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
2007 2006 2007 2006
------ ------ ------ ------
Cost of product sales .............. $ 2 $ 5 $ 4 $ 8
Cost of contract revenue ........... 43 21 79 85
Research and development ........... 99 396 184 545
Sales and marketing ................ 25 110 46 178
General and administrative ......... 83 213 174 426
------ ------ ------ ------
Total stock-based compensation costs $ 252 $ 745 $ 487 $1,242
------ ------ ------ ------
AWARE, INC. REPORTS 2007 SECOND QUARTER FINANCIAL RESULTS PAGE 4
AWARE, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2007 2006 2007 2006
------- ------- ------- -------
GAAP net income (loss) ...... ($ 968) ($ 1,210) ($ 1,066) ($ 688)
Stock-based compensation 252 745 487 1,242
------- ------- ------- -------
Non-GAAP net income (loss) .. ($ 716) ($ 465) ($ 579) $ 554
------- ------- ------- -------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2007 2006 2007 2006
------- ------- ------- -------
GAAP net income
(loss) per share ............($ 0.04) ($ 0.05) ($ 0.04) ($ 0.03)
Stock-based compensation . 0.01 0.03 0.02 0.05
------- ------- ------- -------
Non-GAAP net
income (loss) per share ....($ 0.03) ($ 0.02) ($ 0.02) $ 0.02
------- ------- ------- -------
AWARE, INC. REPORTS 2007 SECOND QUARTER FINANCIAL RESULTS PAGE 5
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2007 2006
------------ ------------
ASSETS
Cash and investments ..................... $ 39,188 $ 39,802
Accounts receivable, net ................. 4,866 4,738
Property and equipment, net .............. 8,076 8,123
Other assets, net ........................ 1,807 1,923
------------ ------------
Total assets ............................. $ 53,937 $ 54,586
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities ................ $ 2,510 $ 2,886
Long-term deferred revenue ............... 330 330
Total stockholders' equity ............... 51,097 51,370
------------ ------------
Total liabilities and stockholders' equity $ 53,937 $ 54,586
============ ============
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