8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

___________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

___________

Date of Report (date of earliest event reported):     April 27, 2010    

AWARE, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	000-21129	04-2911026
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

40 Middlesex Turnpike, Bedford, MA, 01730

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (781) 276-4000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On April 27, 2010, Aware, Inc. issued the press release, attached to this Form 8-K as Exhibit 99.1, describing the results of operations and financial condition of the company as of and for the quarter ended March 31, 2010.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

No financial statements are required to be filed as part of this Report.  The following exhibits are filed as part of this report:

(d) EXHIBITS.

Number	Description
99.1	Press release issued by Aware, Inc. on April 27, 2010

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AWARE, INC.
Dated: April 27, 2010	By:	/s/ Edmund C. Reiter
		Edmund C. Reiter
		President and Chief Executive Officer

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EXHIBIT INDEX

Number	Description
99.1	Press release issued by Aware, Inc. on April 27, 2010

-3-

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Rick Moberg

Aware, Inc.

781-276-4000

Aware, Inc. Reports First Quarter 2010

Financial Results

BEDFORD, MASS. – April 27, 2010 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of broadband technology and biometrics software, today reported financial results for its first  quarter ended March 31, 2010.

Revenues for the first quarter of 2010 were $5.6 million, an increase of 23% compared to $4.6 million in the same quarter last year. Net income for the first quarter of 2010 was $22,000, or $0.00 per diluted share. These results compared to a net loss of $2.1 million, or $0.09 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 first quarter of 2010, excluding the effect of $345,000 of stock-based compensation, was $367,000, or $0.02 per diluted share.  These results compared to a non-GAAP net loss of $1.7 million, or $0.07 per diluted share, for the first quarter of 2009, excluding the effect of $391,000 of stock-based compensation.

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 First Quarter 2010 Financial Results Page 2

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Edmund Reiter, Aware’s president and chief executive officer, said, “Our results for the first quarter of 2010 are encouraging.  We showed positive financial results in our first full quarter following the sale of our licensing assets to Lantiq in November 2009.  This progress, coupled with healthy trends in our end markets, provides a solid basis for our growth strategy going forward.”

Note:  Aware’s conference call will be broadcast live over the Internet today, April 27, 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 719-325-4789 and referencing the confirmation number 4676288.  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

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 o r 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. Reports First Quarter 2010 Financial Results Page 3

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AWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 (unaudited)

	Three Months Ended March 31,
	2010		2009
Revenue:
Product sales	$	4,651	$	2,819
Contract revenue		209		1,277
Royalties		756		477
Total revenue		5,616		4,573
Costs and expenses:
Cost of product sales (1)		1,036		513
Cost of contract revenue (1)		72		908
Research and development (1)		2,035		3,111
Selling and marketing (1)		1,066		1,081
General and administrative (1)		1,402		1,213
Total costs and expenses		5,611		6,826
Income (loss) from operations		5		(2,253	)
Interest income		18		125
Income (loss) before provision for income taxes		23		(2,128	)
Provision for income taxes		1		3
Net income (loss)	$	22	$	(2,131	)
Net income (loss) per share – basic	$	0.00	$	(0.09	)
Net income (loss) per share – diluted	$	0.00	$	(0.09	)
Weighted average shares – basic		19,913		23,281
Weighted average shares – diluted		19,923		23,281

(1) Effective January 1, 2006 the Company adopted Statement of Financial Accounting Standard No. 123 (Revised), "Share-Based Payment" (FAS 123(R)). The amounts in the tables above include stock-based compensation as follows (in thousands):

	Three Months Ended March 31,
	2010		2009
Cost of product sales	$	2	$	3
Cost of contract revenue		6		32
Research and development		114		146
Sales and marketing		38		52
General and administrative		185		158
Total stock-based compensation costs	$	345	$	391

Aware, Inc. Reports First Quarter 2010 Financial Results Page 4

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AWARE, INC.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATION

(In thousands, except per share data)

 (unaudited)

	Three Months Ended March 31,
	2010		2009
GAAP net income (loss)	$	22	$	(2,131	)
Stock-based compensation		345		391
Non-GAAP net income (loss)	$	367	$	(1,740	)

	Three Months Ended March 31,
	2010		2009
GAAP diluted net income (loss) per share	$	0.00	$	(0.09	)
Stock-based compensation per share		0.02		0.02
Non-GAAP diluted net income (loss) per share	$	0.02	$	(0.07	)

Aware, Inc. Reports First Quarter 2010 Financial Results Page 5

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AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	March 31, 2010		December 31, 2009
ASSETS
Cash and investments	$	39,020	$	39,669
Accounts receivable, net		4,197		3,565
Inventories, net		1,090		1,113
Property and equipment, net		6,662		6,744
Other assets, net		537		363
Total assets	$	51,506	$	51,454
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities	$	2,356	$	2,501
Long-term deferred revenue		585		593
Total stockholders’ equity		48,565		48,360
Total liabilities and stockholders’ equity	$	51,506	$	51,454

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