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):     July 22, 2014

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 July 22, 2014, 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 June 30, 2014.

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 July 22, 2014.

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: July 22, 2014	By:	/s/Richard P. Moberg
		Richard P. Moberg
		co-Chief Executive Officer and co-President
		Chief Financial Officer

- 2 -

EXHIBIT INDEX

Number	Description
99.1	Press release issued by Aware, Inc. on July 22, 2014.

- 3 -

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Rick Moberg

Aware, Inc.

781-276-4000

Aware, Inc. Reports Second Quarter 2014

Financial Results

BEDFORD, MASS. – July 22, 2014 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its second quarter ended June 30, 2014.

Revenue for the second quarter of 2014 was $6.8 million, an increase of 53% compared to $4.4 million in the same quarter last year. Operating income before patent related income in the second quarter of 2014 was $1.4 million compared to $0.5 million in the second quarter of 2013. The increase in revenue and operating income was driven by higher sales of software licenses, software maintenance, services, and hardware.

Income from continuing operations in the second quarter of 2014 was $0.9 million compared to $0.5 million in the second quarter of 2013. Net income in the second quarter of 2014 was $0.9 million, or $0.04 per diluted share, which compares to net income of $0.3 million, or $0.01 per diluted share, in the same period a year ago. Net income in the year ago quarter included a $158,000 loss from discontinued operations.

For the six months ended June 30, 2014, revenue increased 42% to $13.4 million, compared to $9.4 million in the same period a year ago. Operating income before patent related income for the first six months of 2014 and 2013 was unchanged at $2.7 million.

Aware, Inc.  •  40 Middlesex Turnpike  •  Bedford, MA  USA  01730-1432

Tel: (781) 276-4000  •  Fax: (781) 276-4001  •  E-mail: IR@aware.com

Aware, Inc. Reports Second Quarter 2014 Financial Results Page  2

Net income for the six months ended June 30, 2014 was $1.7 million, or $0.08 per diluted share. These results compared to net income of $2.2 million, or $0.10 per diluted share, for the same period a year ago. Net income in the year ago six month period included $780,000 of income from a patent arrangement less a $273,000 loss from discontinued operations.

Rick Moberg, Aware’s co-chief executive officer and chief financial officer, said, “The second quarter was an eventful quarter for us in three respects. First, we were able to deliver solid operating earnings despite increased spending on new product development initiatives. Second, our engineering teams continued to make progress in the accuracy and scalability of our biometric matching technology which currently is offered through our NEXA product line. And thirdly, we announced that we were going to pay a $1.75 special cash dividend in July 2014. We hope to carry the momentum we saw in the first six months of 2014 into the second half of the year.”

About Aware

Aware is a leading provider of biometrics software products and development services to governments, system integrators, and solution providers globally. Our products include SDKs, software components, workstation applications, and a modular, centralized, service-oriented platform. They fulfill a broad range of functions critical to biometric authentication and search, including face, fingerprint, and iris autocapture, image quality assurance, data compliance, capture hardware peripheral abstraction, centralized data processing and workflow, subsystem connectivity, and biometric matching algorithms. The products are used to enable identity-centric security solutions with biometrics for applications including border management, credentialing and access control, intelligence and defense, and law enforcement. Aware is a publicly held company (Nasdaq: AWRE) based in Bedford, Massachusetts.

See Aware’s website for more information about our biometrics software products.

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 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.

Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) we derive a significant portion of our revenue from third party channel partners; iv) we face intense competition from other biometrics solution providers; v) our business is subject to rapid technological change; vi) our software products may have errors, defects or bugs which could harm our business; vii) our business may be adversely affected by our use of open source software; viii) our intellectual property is subject to limited protection; ix) we may be sued by third parties for alleged infringement of their proprietary rights; x) we must attract and retain key personnel; xi) we rely on single sources of supply for certain components used in our hardware products; xii) our business may be affected by government regulations and adverse economic conditions; and xiii) we may make acquisitions that could adversely affect our results.

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, 2013 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. Reports Second Quarter 2014 Financial Results Page  3

AWARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenue:
Software licenses	$	2,065		$	1,258		$	3,682		$	4,591
Software maintenance		1,152			1,034			2,197			1,981
Services		1,338			729			2,346			1,136
Hardware sales		2,048			1,129			4,681			1,129
Royalties		164			277			478			568
Total revenue		6,767			4,427			13,384			9,405
Costs and expenses:
Cost of hardware sales		1,411			813			3,313			813
Cost of services		618			344			1,082			541
Research and development		1,400			1,026			2,679			1,999
Selling and marketing		981			773			1,839			1,649
General and administrative		975			928			1,779			1,659
Total costs and expenses		5,385			3,884			10,692			6,661
Operating income before patent related income		1,382			543			2,692			2,744
Income from patent arrangement		-			-			-			780
Operating income after patent related income		1,382			543			2,692			3,524
Other expense		(59	)		-			(59	)		-
Interest income		52			78			139			160
Income from continuing operations before income taxes		1,375			621			2,772			3,684
Provision for income taxes		510			156			1,026			1,247
Income from continuing operations		865			465			1,746			2,437
Loss from discontinued operations, net of income taxes		-			(158	)		-			(273	)
Net income	$	865		$	307		$	1,746		$	2,164
Basic net income per share:
Basic net income per share from continuing operations	$	0.04		$	0.02		$	0.08		$	0.11
Basic net loss share from discontinued operations		0.00			(0.01	)		0.00			(0.01	)
Basic net income per share	$	0.04		$	0.01		$	0.08		$	0.10
Diluted net income per share:
Diluted net income per share from continuing operations	$	0.04		$	0.02		$	0.08		$	0.11
Diluted net loss per share from discontinued operations		0.00			(0.01	)		0.00			(0.01	)
Diluted net income per share	$	0.04		$	0.01		$	0.08		$	0.10
Weighted-average shares – basic		22,630			22,517			22,628			22,514
Weighted-average shares - diluted		22,837			22,687			22,769			22,625

Aware, Inc. Reports Second Quarter 2014 Financial Results Page  4

AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	June 30, 2014		December 31, 2013
ASSETS
Cash and investments	$	78,705	$	75,414
Accounts receivable, net		6,032		4,582
Inventories		63		1,601
Property and equipment, net		5,470		5,582
Deferred tax assets		948		1,145
Other assets, net		610		1,005
Total assets	$	91,828	$	89,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities, excluding dividends payable	$	3,765	$	4,161
Dividends payable		39,906		-
Long-term deferred revenue		18		18
Total stockholders’ equity		48,139		85,150
Total liabilities and stockholders’ equity	$	91,828	$	89,329

###

Aware, Inc. • 40 Middlesex Turnpike • Bedford, MA USA 01730-1432

Tel: (781) 276-4000 • Fax: (781) 276-4001 • E-mail: IR@aware.com