Aware, Inc. Reports Second Quarter 2010 Financial Results
Revenues for the second quarter of 2010 were $5.0 million, a decrease of 14% compared to $5.8 million in the same quarter last year. The net loss for the second quarter of 2010 was $148,000, or $0.01 per diluted share. These results compared to a net loss of $1.6 million, or $0.08 per diluted share, for the same period a year ago.
For the six months ended June 30, 2010, revenues increased 2% to $10.6 million, compared to $10.3 million in the same period a year ago. The net loss for the six months ended June 30, 2010 was $126,000, or $0.01 per diluted share. These results compared to a net loss of $3.7 million, or $0.17 per diluted share, for 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.
Non-GAAP net income for the second quarter of 2010, excluding the effect of $203,000 of stock-based compensation, was $55,000, or $0.00 per diluted share. These results compared to a non-GAAP net loss of $1.2 million, or $0.06 per diluted share, for the second quarter of 2009, excluding the effect of $409,000 of stock-based compensation.
For the six months ended June 30, 2010, the company had non-GAAP net income, excluding the effect of $548,000 of stock-based compensation, of $422,000, or $0.02 per share. These results compared to a non-GAAP net loss of $2.9 million, or $0.13 per diluted share, for the six months ended June 30, 2009, excluding the effect of $800,000 of stock-based compensation.
Edmund Reiter, Aware's president and chief executive officer, said, "While we did not achieve the profitable financial performance we were aiming for in the second quarter, we had several positive developments in our Biometrics and T&D businesses. In our Biometrics business, we signed a multi-year contract with a U.S. Department of Defense customer covering the design and development of a handheld biometrics application. In our T&D business, we signed an agreement in April and another one in early July involving the license of our LDP software product. Both LDP agreements were with European service providers. These contracts did not contribute towards second quarter revenues, but represent important wins for the company and are cause for optimism going forward."
Note: Aware's conference call will be broadcast live over the Internet today, July 26, 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 719-457-2621 and referencing the confirmation number 5684541. 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 home networking. Telecom equipment vendors and phone companies use Aware's DSL test and diagnostics modules and Dr. DSL(R) 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
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, 2009 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.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) (unaudited)__
__ Three Months EndedJune 30,__ Six Months EndedJune 30,__
__ 2010__ 2009__ 2010__ 2009__
Revenue:
Product sales__ $3,911__ $3,852__ $8,562__ $6,671__
Contract revenue__ 346__ 1,442__ 555__ 2,719__
Royalties__ 714__ 470__ 1,470__ 947__
Total revenue__ 4,971__ 5,764__ 10,587__ 10,337__
Costs and expenses:
Cost of product sales (1)__ 840__ 1,043__ 1,877__ 1,556__
Cost of contract revenue (1)__ 74__ 909__ 145__ 1,817__
Research and development (1)__ 2,082__ 3,058__ 4,117__ 6,170__
Selling and marketing (1)__ 1,053__ 1,184__ 2,119__ 2,265__
General and administrative (1)__ 1,416__ 1,216__ 2,818__ 2,429__
Total costs and expenses__ 5,465__ 7,410__ 11,076__ 14,237__
Loss from operations__ (494)__ (1,646)__ (489)__ (3,900)__
Other income__ 325__ -__ 325__ -__
Interest income__ 21__ 61__ 39__ 186__
Loss before provision for income taxes__ (148)__ (1,585)__ (125)__ (3,714)__
Provision for income taxes__ -__ 1__ 1__ 4__
Net loss__ ($148)__ ($1,586)__ ($126)__ ($3,718)__
Net loss per share - basic__ ($0.01)__ ($0.08)__ ($0.01)__ ($0.17)__
Net loss per share - diluted__ ($0.01)__ ($0.08)__ ($0.01)__ ($0.17)__
Weighted average shares - basic__ 19,927__ 20,666__ 19,920__ 21,974__
Weighted average shares - diluted__ 19,927__ 20,666__ 19,920__ 21,974__
__(1) The amounts in the Consolidated Statements of Operations above include stock-based compensation as follows (in thousands):
__
__ Three Months EndedJune 30,__ Six Months EndedJune 30,__
__ 2010__ 2009__ 2010__ 2009__
Cost of product sales__ $ 3__ $ 3__ $ 5__ $ 5__
Cost of contract revenue__ 1__ 36__ 7__ 68__
Research and development__ 54__ 138__ 169__ 285__
Sales and marketing__ 13__ 57__ 51__ 109__
General and administrative__ 132__ 175__ 316__ 333__
Total stock-based compensation costs__ $203__ $409__ $548__ $800__
__
AWARE, INC.Non-GAAP Financial Measures and Reconciliation(In thousands, except per share data) (unaudited)__
__ Three Months EndedJune 30,__ Six Months EndedJune 30,__
__ 2010__ 2009__ 2010__ 2009__
GAAP net loss__ ($148)__ ($1,586)__ ($126)__ ($3,718)__
Stock-based compensation__ 203__ 409__ 548__ 800__
Non-GAAP net income (loss)__ $55__ ($1,177)__ $422__ ($2,918)__
__
__
__ Three Months EndedJune 30,__ Six Months EndedJune 30,__
__ 2010__ 2009__ 2010__ 2009__
GAAP net loss per share__ ($0.01)__ ($0.08)__ ($0.01)__ ($0.17)__
Stock-based compensation__ 0.01__ 0.02__ 0.03__ 0.04__
Non-GAAP net income (loss) per share__ $0.00__ ($0.06)__ $0.02__ ($0.13)__
__
AWARE, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(unaudited)__
__ June 30,2010__ December 31,2009__
ASSETS
Cash and investments__ $39,129__ $39,669__
Accounts receivable, net__ 4,533__ 3,565__
Inventories, net__ 1,334__ 1,113__
Property and equipment, net__ 6,555__ 6,744__
Other assets, net__ 366__ 363__
Total assets__ $51,917__ $51,454__
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities__ $2,758__ $2,501__
Long-term deferred revenue__ 536__ 593__
Total stockholders' equity__ 48,623__ 48,360__
Total liabilities and stockholders' equity__ $51,917__ $51,454__
SOURCE Aware, Inc.
Originally published by Aware, Inc..
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