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):     February 10, 2015

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:

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

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

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

☐ 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 February 10, 2015, 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 and year ended December 31, 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 February 10, 2015.

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: February 10, 2015	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 February 10, 2015.

- 3 -

EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

Contact:

Rick Moberg

Aware, Inc.

781-276-4000

Aware, Inc. Reports Fourth Quarter and 2014
Financial Results

BEDFORD, MASS. – February 10, 2015 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its fourth quarter and year ended December 31, 2014.

Revenue for the fourth quarter of 2014 was $4.3 million, a decrease of 24% compared to $5.6 million in the same quarter last year. Operating income in the fourth quarter of 2014 was $0.2 million compared to $0.8 million in the fourth quarter of 2013. Lower revenue and operating income in the fourth quarter of this year versus last year was primarily due to lower hardware sales.

Net income in the fourth quarter of 2014 was $0.2 million, or $0.01 per diluted share, which compares to $1.6 million, or $0.07 per diluted share, in the same period a year ago.  Net income in the year ago quarter included $1.1 million, or $0.05 per diluted share, of income from discontinued operations.

For the year ended December 31, 2014, revenue increased 23% to $23.7 million, compared to $19.4 million in the same period a year ago.  Operating income for 2014 was $7.1 million compared to $5.3 million in 2013. Higher operating income in 2014 was primarily due to: i) a $0.4 million increase in operating income before patent related income; and ii) a $1.4 million increase in income from patent related activities.  The $0.4 million increase in operating income before patent related income was driven by higher hardware and services revenue in 2014.

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 Fourth Quarter and 2014 Financial Results Page 2

Net income for the year ended December 31, 2014 was $4.6 million, or $0.20 per diluted share. These results compared to net income of $2.6 million, or $0.11 per diluted share in 2013. Net income in 2013 included a $1.2 million loss, or $0.05 per diluted share, from discontinued operations.

Rick Moberg, Aware’s co-chief executive officer and chief financial officer, said “While financial results for the fourth quarter did not meet our expectations, results for the full year did.  Our biometrics business achieved its best year of financial and operational results since its inception more than 20 years ago.  We go into 2015 with the most complete product portfolio we’ve ever enjoyed, a strengthened engineering organization, an experienced sales staff, and a solid balance sheet.  We believe we have the products and people to continue our success in this industry.”

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 Fourth Quarter and 2014 Financial Results Page 3

AWARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 (unaudited)

	Three Months Ended December 31,					Year Ended December 31,
	2014		2013			2014			2013
Revenue:
Software licenses		$1,778		$1,382			$8,537			$8,241
Software maintenance		1,069		952			4,351			3,866
Services		1,242		1,068			5,173			3,148
Hardware		120		2,053			4,933			3,182
Royalties		100		182			726			920
Total revenue		4,309		5,637			23,720			19,357
Costs and expenses:
Cost of hardware		82		1,551			3,485			2,365
Cost of services		662		468			2,359			1,503
Research and development		1,445		1,043			5,505			4,085
Selling and marketing		928		879			3,741			3,344
General and administrative		949		942			3,668			3,522
Total costs and expenses		4,066		4,883			18,758			14,819
Patent related income		-		-			2,127			780
Operating income		243		754			7,089			5,318
Other income (expense)		-		(3	)		(59	)		23
Interest income		43		88			225			328
Income from continuing operations before income taxes		286		839			7,255			5,669
Provision for income taxes		47		314			2,672			1,917
Income from continuing operations		239		525			4,583			3,752
Income (loss) from discontinued operations, net of income taxes		-		1,060			-			(1,156	)
Net income		$239		$1,585			$4,583			$2,596
Basic net income per share:
Basic net income per share from continuing operations		$0.01		$0.02			$0.20			$0.17
Basic net income (loss) share from discontinued operations		-		0.05			-			(0.05	)
Basic net income per share		$0.01		$0.07			$0.20			$0.12
Diluted net income per share:
Diluted net income per share from continuing operations		$0.01		$0.02			$0.20			$0.16
Diluted net income (loss) per share from discontinued operations		-		0.05			-			(0.05	)
Diluted net income per share		$0.01		$0.07			$0.20			$0.11
Weighted-average shares – basic		22,806		22,572			22,703			22,543
Weighted-average shares - diluted		22,892		22,693			22,787			22,641

Aware, Inc. Reports Fourth Quarter and 2014 Financial Results Page 4

AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	December 31, 2014		December 31, 2013
ASSETS
Cash and investments		$45,413		$75,414
Accounts receivable, net		3,619		4,582
Inventories		2		1,601
Property and equipment, net		5,289		5,582
Deferred tax assets		972		1,145
Other assets, net		598		1,005
Total assets		$55,893		$89,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities		$3,430		$4,161
Long-term deferred revenue		74		18
Total stockholders’ equity		52,389		85,150
Total liabilities and stockholders’ equity		$55,893		$89,329

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

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