GRAPHIC

Exhibit 99.1


FOR IMMEDIATE RELEASE

Contact:
Rick Moberg
Aware, Inc.
781-276-4000
 

Aware, Inc. Reports Fourth Quarter and 2009
Financial Results


BEDFORD, MASS. – February 4, 2010 –
Aware, Inc. (NASDAQ: AWRE), a leading technology innovator and supplier to the telecommunications and biometrics industries, today reported financial results for its fourth quarter and year ended December 31, 2009.

Revenues for the fourth quarter of 2009 were $5.5 million, a decrease of 55% compared to $12.1 million in the same quarter last year.  Revenues for the fourth quarter of 2008 included an $8.5 million patent sale. For the year ended December 31, 2009, revenues decreased 28% to $22.0 million, compared to $30.5 million in 2008.

Net income for the fourth quarter of 2009, which included a $6.2 million gain on the sale of assets to Lantiq, was $5.8 million, or $0.29 per diluted share. These results compared to net income of $5.0 million, or $0.21 per diluted share, for the same period a year ago, which included the previously mentioned $8.5 million patent sale.

Net income for the year ended December 31, 2009 was $1.0 million, or $0.05 per share, compared to net income of $1.8 million, or $0.07 per share, for 2008.
 
 

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 Fourth Quarter and 2009 Financial Results 
Page 2
 
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.

Non-GAAP net income for the fourth quarter of 2009, excluding the effect of $0.3 million of stock-based compensation, was $6.1 million, or $0.31 per diluted share.  Non-GAAP net income for the year ended December 31, 2009, excluding the effect of $1.7 million of stock-based compensation, was $2.7 million, or $0.13 per diluted share.

Edmund Reiter, Aware’s president and chief executive officer, said, “In 2009, we were pleased to have successfully completed the sale of our licensing assets to Lantiq as well as to have successfully executed on our share count reduction program.  In 2010, we look forward to focusing our efforts on pursuing growth opportunities in the DSL test and Biometrics markets.”

Note:  Aware’s conference call will be broadcast live over the Internet today, February 4, 2010 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 719-325-2421 and referencing the confirmation number 7902246.  A replay of the call will be archived on our website after the call.
 
 
About Aware
Aware is a leading technology and supplier for the telecommunications and biometrics industries. Aware has pioneered innovations at telecommunications standards-setting organizations for DSL and networking. Telecom equipment vendors and phone companies use Aware's DSL test and diagnostics modules and Dr. DSL® software to provision and troubleshoot 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
 

 
Aware, Inc. Reports Fourth Quarter and 2009 Financial Results 
Page 3
 
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 test and diagnostics 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; current economic conditions, including the credit crisis affecting the financial markets; our intellectual property is subject to limited protection; our ability to obtain or enforce patents could be affected by new laws, regulations or rules; and our business may be affected by government regulations. DSL test and diagnostic factors include, but are not limited to: our DSL test and diagnostic businesses depend upon a limited number of customers; the success of our DSL test and diagnostics products businesses requires telephone companies to install DSL service in volume; our test and diagnostic hardware and software products could have quality problems; we depend on a single source contract manufacturer for the manufacture of our DSL hardware products; and we are dependent on single source suppliers for components in our DSL hardware products. 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, 2008 and other reports and filings made with the Securities and Exchange Commission.


Aware and Dr. DSL are trademarks or registered trademarks of Aware, Inc.
Any other trademarks appearing herein are the property of their respective owners.

 
Aware, Inc. Reports Fourth Quarter and 2009 Financial Results 
Page 4
 
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 (unaudited)


   
Three Months Ended
December 31,
   
Year Ended
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
Revenue:
                       
Product sales
  $ 4,044     $ 2,210     $ 15,376     $ 14,022  
Contract revenue
    887       9,346       4,611       14,658  
Royalties
    555       527       2,055       1,837  
Total revenue
    5,486       12,083       22,042       30,517  
                                 
Costs and expenses:
                               
Cost of product sales (1)
    475       613       2,887       2,589  
Cost of contract revenue (1)
    362       667       2,896       4,180  
Research and development (1)
    2,576       3,187       11,920       13,171  
Selling and marketing (1)
    1,190       1,443       4,707       4,739  
General and administrative (1)
    1,302       1,416       5,114       5,209  
Total costs and expenses
    5,905       7,326       27,524       29,888  
                                 
Income/(loss) from operations
    (419 )     4,757       (5,482 )     629  
Gain on sale of assets
    6,230       -       6,230       -  
Interest income
    21       222       238       1,163  
Income before provision for income taxes
    5,832        4,979        986       1,792  
Benefit from/(provision for) income taxes
    2       (1 )     (4 )     (16 )
Net income
  $ 5,834     $ 4,978     $ 982     $ 1,776  
                                 
Net income per share – basic
  $ 0.29     $ 0.21     $ 0.05     $ 0.08  
Net income per share – diluted
  $ 0.29     $ 0.21     $ 0.05     $ 0.07  
                                 
Weighted average shares – basic
    19,796       23,291       20,869       23,638  
Weighted average shares – diluted
    19,802       23,293       20,874       23,697  



    (1) The amounts in the tables above include stock-based compensation as follows (in thousands):


 
   
Three Months Ended
December 31,
   
Year Ended
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
Cost of product sales 
  $ 3     $ 3     $ 10     $ 11  
Cost of contract revenue
    9       29       114       135  
Research and development
    63       148       521       611  
Sales and marketing
    44       52       293       186  
General and administrative
    142       158       799       562  
Total stock-based compensation costs
  $ 261     $ 390     $ 1,737     $ 1,505  
 

 
Aware, Inc. Reports Fourth Quarter and 2009 Financial Results 
Page 5
 

AWARE, INC.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATION
(In thousands, except per share data)
 (unaudited)




   
Three Months Ended
December 31,
   
Year Ended
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
GAAP net income
  $ 5,834     $ 4,978     $ 982     $ 1,776  
Stock-based compensation
    261       390       1,737       1,505  
Non-GAAP net income
  $ 6,095     $ 5,368     $ 2,719     $ 3,281  



   
Three Months Ended
December 31,
   
Year Ended
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
GAAP net income per share
  $ 0.29     $ 0.21     $ 0.05     $ 0.07  
Stock-based compensation
    0.02       0.02       0.08       0.07  
Non-GAAP net income per share
  $ 0.31     $ 0.23     $ 0.13     $ 0.14  
 

 
Aware, Inc. Reports Fourth Quarter and 2009 Financial Results 
Page 6
 

AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)


   
December 31,
2009
   
December 31,
2008
 
ASSETS
           
     Cash and investments
  $ 39,669     $ 45,516  
     Accounts receivable, net
    3,565       2,211  
     Inventories, net
    1,113       1,656  
     Property and equipment, net
    6,744       7,463  
     Other assets, net
    363       700  
                 
     Total assets
  $ 51,454     $ 57,546  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
     Total current liabilities
  $ 2,501     $ 2,693  
                 
     Long-term deferred revenue
    593       330  
                 
     Total stockholders’ equity 
    48,360       54,523  
                 
     Total liabilities and stockholders’ equity
  $ 51,454     $ 57,546  


 
###
 

The following information was filed by Aware Inc (AWRE) on Thursday, February 4, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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