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Aware, Inc. Reports Second Quarter 2013 Financial Results

BEDFORD, Mass., July 23, 2013 /PRNewswire/ -- Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services and DSL service assurance software products, today reported financial results for its second quarter ended June 30, 2013. 

Revenue for the second quarter of 2013 was $4.9 million, an increase of 19% compared to $4.1 million in the same quarter last year. Net income for the second quarter of 2013 was $307,000, or $0.01 per diluted share, which compares to net income of $54.9 million, or $2.49 per diluted share, for the same period a year ago. Net income in the second quarter of 2012 included a gain on the sale of patent assets of $71.2 million.  Operating income before patent related income in the second quarter of 2013 was $283,000 compared to $119,000 in the second quarter of 2012.

For the six months ended June 30, 2013, revenue increased 17% to $10.5 million, compared to $9.0 million in the same period a year ago.  Net income for the six months ended June 30, 2013 was $2.2 million, or $0.10 per diluted share. These results compared to net income of $56.0 million, or $2.60 per diluted share, for the same period a year ago. Year-to-date net income in 2012 also included the aforementioned $71.2 million gain on the sale of patent assets.  Operating income before patent related income for the first six months of 2013 was $2.3 million compared to $1.2 million for the same period a year ago.

The improvement in operating income before patent related income in the three and six month periods this year compared to the corresponding periods last year was primarily due to increased profitability in our biometrics business and lower general and administrative expenses.

Rick Moberg, Aware's co-chief executive officer and chief financial officer, said, "We are pleased to report this is our eight consecutive profitable quarter on an operating and net income basis. We look forward to continuing to build our software and services business in upcoming quarters."

About Aware
Aware is a leading software and technology supplier for the biometrics, telecommunications, 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's DSL Service Assurance Group offers test and diagnostics software products that enable broadband service providers to manage their DSL networks. 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.

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 service assurance 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.

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. DSL service assurance factors include, but are not limited to: our DSL service assurance product line depends upon a limited number of customers; our DSL service assurance software products face intense competition; and our DSL service assurance software products could have quality problems. 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
June 30,Six Months Ended
June 30,2013201220132012Revenue:Software licenses$1,562$1,843$5,370$4,683Software maintenance1,1239292,1641,810Services7596831,2351,376Hardware sales1,129-1,129-Royalties2776245681,115Total revenue4,8504,07910,4668,984Costs and expenses:Cost of hardware sales 813-813-Cost of services 359361581717Research and development1,4951,5293,0522,965Selling and marketing9729952,0672,074General and administrative9281,0751,6592,061Total costs and expenses4,5673,9608,1727,817Operating income before patent related income2831192,2941,167Gain on sale of patent assets-71,226-71,226Income from patent arrangement--780-Operating income after patent related income28371,3453,07472,393Other income-58-85Interest income784016192Income from continuing operations before income taxes36171,4433,23572,570Provision for income taxes5416,6671,07116,670Income from continuing operations 30754,7762,16455,900Income from discontinued operations, net of income taxes -150-144Net income $307$54,926$2,164$56,044Basic net income per share:Basic net income per share from continuing operations$0.01$2.51$0.10$2.63Basic net income per share from discontinued operations0. net income per share$0.01$2.52$0.10$2.64Diluted net income per share:Diluted net income per share from continuing operations$0.01$2.48$0.10$2.59Diluted net income per share from discontinued operations0. net income per share$0.01$2.49$0.10$2.60Weighted-average shares – basic22,51721,75722,51421,241Weighted-average shares - diluted22,68722,09922,62521,583Comprehensive income:Net income  $307$54,926$2,164$56,044Other comprehensive income:Unrealized gains (losses) on available for sale securities (38)(39)2020Comprehensive income $269$54,887$2,184$56,064AWARE, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(unaudited)June 30,2013December 31,2012 

ASSETSCash and investments$77,775$73,084Accounts receivable, net3,7364,578Property and equipment, net5,7975,904Deferred tax assets1,5011,760Other assets, net567528Total assets$89,376$85,854 


LIABILITIES AND STOCKHOLDERS' EQUITYTotal current liabilities$4,335$3,639Long-term deferred revenue200319Total stockholders' equity84,84181,896Total liabilities and stockholders' equity$89,376$85,854 

SOURCE Aware, Inc.
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