Aware, Inc. Reports 2004 Third Quarter Financial Results.BEDFORD, Mass. -- Aware, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AWRE AWRE Atomic Weapons Research Establishment AWRE Australian Workshop on Requirements Engineering AWRE Automatic Write Reallocation Enable ), a worldwide leader and innovator of broadband intellectual property, today reported financial results for its third quarter ended September 30, 2004. Revenues for the third quarter of 2004 were $4.6 million compared to $3.1 million for the same period last year. Net income for the third quarter of 2004 was $0.2 million, or $0.01 per share, compared to a net loss of $1.7 million, or $0.08 per share, for the year-ago period. For the nine months ended September 30, 2004, revenues were $11.9 million compared to $7.8 million in the same period last year. Net loss for the nine months ended September 30, 2004 was $1.8 million or $0.08 per share, compared to a net loss of $6.6 million, or $0.29 per share, for the year-ago period. Michael Tzannes, chief executive officer, said: "Aware's business is headed in the right direction. Our licensing products, which are centered around our StratiPHY(TM) intellectual property platform, are capitalizing on the transition to new ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line 2 and ADSL2+ standards by the ADSL industry. VDSL See DSL. VDSL - Very high bit-rate Digital Subscriber Line 2 is emerging as an exciting new ultra high-speed technology with opportunities for Aware and for the industry. Our test and diagnostics products are positioned to address the challenges that service providers encounter as they offer new broadband services See broadband and broadband service provider. including video. Our biometrics The biological identification of a person. Examples are face, iris and retinal patterns, hand geometry and voice. Increasingly built into laptop computers, fingerprint readers have become popular as a secure method for identification. software products are serving a growing biometrics industry and our JPEG JPEG in full Joint Photographic Experts Group Standard computer file format for storing graphic images in a compressed form for general use. JPEG images are compressed using a mathematical algorithm. 2000 products are addressing opportunities in the medical and digital imaging markets. " Mr. Tzannes continued: "Our financial performance this quarter confirms that we are on the right track. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we can continue on this path and bring more successful days to Aware and our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. ." Note: Aware's conference call will be broadcast live over the Internet today, November 4, 2004 at 5:00 p.m. Eastern Time. To listen to the call, please go to www.aware.com, and click on "Investor Relations Investor relations The process by which the corporation communicates with its investors. ." The conference call may also be heard by calling (719) 457-2729 and referencing the confirmation number 873352. A replay of the call will be archived on our website after the call. About Aware Aware, Inc. designs, develops, licenses and markets DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary technologies that enable broadband communications over existing telephone networks. Its solutions, including splitterless G.lite, full-rate ADSL Refers to the standard ADSL technology in contrast to the slower-speed G.lite version. See DSL. , ADSL2, ADSL2+, Dr. DSL(R), StratiPHY2+(TM), and G.SHDSL A DSL technology from the ITU (G.991.2) that provides symmetric transmission from 192 Kbps to 2.3 Mbps using a single copper pair, depending on distance from the central office (from 20,000 ft. to 6,500 ft.). With two wire pairs, 384 Kbps to 4.6 Mbps can be achieved. G. , address central office as well as customer premise requirements. Aware is also a leading provider of standards-based biometric transaction and image compression Noun 1. image compression - the compression of graphics for storage or transmission compression - encoding information while reducing the bandwidth or bits required software toolkits. More information about Aware can be found at http://www.aware.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Warning Portions of this release contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 market. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements. These 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 one customer, 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 See broadband and wireless broadband. , 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 quarterly report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2004 and other reports and filings made with the Securities and Exchange Commission.
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- -----------------
2004 2003 2004 2003
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Revenue:
Product sales $977 $1,431 $3,228 $2,727
Contract revenue 2,556 691 5,625 2,213
Royalties 1,028 933 3,035 2,879
------- -------- -------- --------
Total revenue 4,561 3,055 11,888 7,819
Costs and expenses:
Cost of product sales 198 293 730 629
Cost of contract revenue 676 447 1,996 998
Research and development 2,511 2,962 7,685 9,513
Selling and marketing 521 637 1,792 1,837
General and administrative 634 598 1,857 1,857
------- -------- -------- --------
Total costs and expenses 4,540 4,937 14,060 14,834
Net income (loss) from operations 21 (1,882) (2,172) (7,015)
Interest income 143 136 381 463
------- -------- -------- --------
Net income (loss) before provision
for income taxes 164 (1,746) (1,791) (6,552)
Provision for income taxes - - - -
------- -------- -------- --------
Net income (loss) $164 ($1,746) ($1,791) ($6,552)
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Net income (loss) per share - basic $0.01 ($0.08) ($0.08) ($0.29)
Net income (loss) per share -
diluted $0.01 ($0.08) ($0.08) ($0.29)
Weighted average shares - basic 22,784 22,718 22,767 22,707
Weighted average shares - diluted 22,837 22,718 22,767 22,707
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2004 2003
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ASSETS
Cash and investments $36,940 $38,964
Accounts receivable, net 3,851 2,449
Property and equipment, net 8,327 8,921
Other assets, net 518 690
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Total assets $49,636 $51,024
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LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $1,692 $1,384
Total stockholders' equity 47,944 49,640
-------------- ------------
Total liabilities and stockholders'
equity $49,636 $51,024
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