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Aware, Inc. Reports Third Quarter 2013 Financial Results



           Aware, Inc. Reports Third Quarter 2013 Financial Results

PR Newswire

BEDFORD, Mass., Oct. 28, 2013

BEDFORD, Mass., Oct. 28, 2013 /PRNewswire/ -- Aware, Inc. (NASDAQ: AWRE), a
leading supplier of biometrics software and services, today reported financial
results for its third quarter ended September 30, 2013. 

Revenue for the third quarter of 2013 was $4.5 million, a decrease of 15%
compared to $5.3 million in the same quarter last year. The net loss for the
third quarter of 2013 was $1.2 million, or $0.05 per diluted share, which
compares to net income of $10.3 million, or $0.46 per diluted share, for the
same period a year ago. Net income in the third quarter of 2012 included a
gain on the sale of patent assets of $15.2 million.  Operating income before
patent related income in the third quarter of 2013 was a loss of $2.2 million
compared to income of $1.4 million in the third quarter of 2012.

For the nine months ended September 30, 2013, revenue increased 5% to $14.9
million, compared to $14.2 million in the same period a year ago.  Net income
for the nine months ended September 30, 2013 was $1.0 million, or $0.04 per
diluted share. These results compared to net income of $66.3 million, or $3.03
per diluted share, for the same period a year ago. Year-to-date net income in
2012 included an $86.4 million gain on the sale of patent assets.  Operating
income before patent related income for the first nine months of 2013 was
$134,000 compared to $2.6 million for the same period a year ago.

Financial results for the three and nine month periods ended September 30,
2013 were materially affected by the Company's decision to shut down its DSL
service assurance business.  This decision limited our ability to record
revenue from our DSL service assurance business in the quarter.  We also
incurred $2.8 million of costs to shutdown the business. Notwithstanding the
impact on the quarter and year-to-date periods, we believe this action was
necessary in light of the lack of historical profitability and the future
outlook for this business.

Our biometrics business was and is unaffected by this decision and continues
to perform well. We encourage you to read our third quarter Form 10-Q for more
details on the financial performance of our company.

Rick Moberg, Aware's co-chief executive officer and chief financial officer,
said, "While shutting down the DSL service assurance business was not an easy
decision, we believe this action was in the best interests of the Company and
its shareholders.  We are excited to move forward focused on growing our
profitable biometrics business."

About Aware
Aware is a leading software and technology supplier for the biometrics and
healthcare industries. Aware's biometrics software products and services are
provided to solution vendors and system integrators for use by government
agencies towards applications including border management, secure credentials,
law enforcement, and national defense. Aware also provides standards-based
medical imaging software products to the healthcare industry.  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 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.

General factors include, but are not limited to: our quarterly results are
unpredictable and may fluctuate significantly; our business is subject to
rapid technological change; we face intense competition from a wide range of
competitors; our intellectual property is subject to limited protection; our
business may be affected by our use of open source software; our business may
be affected by government regulations; adverse economic conditions; and our
ability to obtain or enforce patents could be affected by new laws,
regulations or rules. Biometric factors include, but are not limited to:
market acceptance of our biometric technologies and products; changes in
contracting practices of government or law enforcement agencies; the failure
of the biometrics market to experience continued growth; announcements or
introductions of new technologies or products by our competitors; failures or
problems in our biometric software products; delays in the adoption of new
industry biometric standards; growth of proprietary biometric systems which do
not conform to industry standards; our ability to sell services contracts in a
manner that is consistent with our business model; our ability to deliver
services contract milestones; and our dependence on third party contractors
and consultants to deliver certain services contract milestones.

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, 2012 and other reports and filings made with the Securities and Exchange
Commission.

Aware is a trademark or registered trademark of Aware, Inc.
Any other trademarks appearing herein are the property of their respective
owners.

 

AWARE, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
                                         Three Months Ended  Nine Months Ended
                                         September 30,       September 30,
                                         2013       2012     2013      2012
Revenue:
    Software licenses                    $2,334     $3,387   $7,704    $8,070
    Software maintenance                 1,023      661      3,187     2,471
    Services                             943        724      2,179     2,100
    Hardware sales                       -          -        1,129     -
    Royalties                            170        484      737       1,599
           Total revenue                 4,470      5,256    14,936    14,240
Costs and expenses:
    Cost of hardware sales               -          -        813       -
    Cost of services                     494        421      1,075     1,138
    Research and development             1,452      1,466    4,504     4,431
    Selling and marketing                931        1,069    2,998     3,143
    General and administrative           922        854      2,580     2,915
    Exit costs                           2,832      -        2,832     -
       Total costs and expenses          6,631      3,810    14,802    11,627
Operating income (loss) before patent    (2,161)    1,446    134       2,613
related income
Gain on sale of patent assets            -          15,167   -         86,394
Income from patent arrangement           -          -        780       -
Operating income (loss) after patent     (2,161)    16,613   914       89,007
related income
Other income                             27         -        27        85
Interest income                          80         45       239       137
Income (loss) from continuing            (2,054)    16,658   1,180     89,229
operations before income taxes
Provision for (benefit from) income      (901)      6,578    169       23,248
taxes
Income (loss) from continuing            (1,153)    10,080   1,011     65,981
operations
Income from discontinued operations,     -          217      -         360
net of income taxes
Net income (loss)                        ($1,153)   $10,297  $1,011    $66,341
Basic net income (loss) per share:
   Basic net income (loss) per share     ($0.05)    $0.45    $0.04     $3.05
from continuing operations
   Basic net income per share from       0.00       0.01     0.00      0.02
discontinued operations
Basic net income (loss) per share        ($0.05)    $0.46    $0.04     $3.07
Diluted net income (loss) per share:
   Diluted net income (loss) per share   ($0.05)    $0.45    $0.04     $3.01
from continuing operations
   Diluted net income per share from     0.00       0.01     0.00      0.02
discontinued operations
Diluted net income (loss) per share      ($0.05)    $0.46    $0.04     $3.03
Weighted-average shares – basic          22,571     22,339   22,533    21,609
Weighted-average shares - diluted        22,571     22,501   22,623    21,888
Comprehensive income (loss):
   Net income (loss)                     ($1,153)   $10,297  $1,011    $66,341
   Other comprehensive income:
      Unrealized gains (losses) on       (26)       (4)      (6)       16
available for sale securities
Comprehensive income (loss)              ($1,179)   $10,293  $1,005    $66,357

 

AWARE, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
                                                 September 30,  December 31,

                                                 2013           2012
 

ASSETS
     Cash and investments                        $78,380        $73,084
     Accounts receivable, net                    2,754          4,578
     Property and equipment, net                 5,644          5,904
     Deferred tax assets                         1,575          1,760
     Other assets, net                           1,294          528
     Total assets                                $89,647        $85,854
 

 

LIABILITIES AND STOCKHOLDERS' EQUITY
     Total current liabilities                   $6,350         $3,639
     Long-term deferred revenue                  40             319
     Total stockholders' equity                  83,257         81,896
     Total liabilities and stockholders' equity  $89,647        $85,854

 

SOURCE Aware, Inc.

Website: http://www.aware.com
Contact: Rick Moberg, Aware, Inc., 781-276-4000
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