Aware, Inc.
AWARE INC /MA/ (Form: 8-K, Received: 10/24/2017 16:11:54)

 

 

 

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): October 24, 2017

 

AWARE, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts 000-21129 04-2911026
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  

 

 

 

 

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On October 24, 2017, 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 September 30, 2017.

 

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 October 24, 2017.

 

 

 

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: October 24, 2017 By: /s/ Kevin T. Russell
    Kevin T. Russell
    Chief Executive Officer and President
    General Counsel

 

- 2  -

 

 

EXHIBIT INDEX

 

 

Number   Description
99.1   Press release issued by Aware, Inc. on October 24, 2017.

 

- 3  -

 

Exhibit 99.1

   

 

FOR IMMEDIATE RELEASE

 

Contact:

Kevin Russell

Aware, Inc.
781-276-4000

 

Aware, Inc. Reports Third Quarter 2017

Financial Results

 

BEDFORD, MASS. – October 24, 2017 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its third quarter ended September 30, 2017.

 

Revenue for the third quarter of 2017 and 2016 was $5.9 million for both periods. Operating income in the third quarter of 2017 was $1.7 million compared to $2.3 million in the third quarter of 2016. The decrease in operating income was primarily due to: i) higher research and development expenses; and ii) lower patent related income from an unaffiliated third party.

 

Net income in the third quarter of 2017 was $1.2 million, or $0.06 per diluted share, which compares to $1.6 million, or $0.07 per diluted share, in the same period a year ago.

 

Revenue for the first nine months of 2017 was $13.0 million, a decrease of 26% compared to $17.6 million in the same nine month period last year. Operating income for the first nine months of 2017 was $2.3 million compared to $5.3 million in the same period last year. The decrease in revenue and operating income were primarily due to: i) a large biometrics software license sale to a U.S. government military customer in the second quarter of 2016 whereas there was no sale of that size in the first nine months of 2017, ii) higher imaging software revenue during the first nine months of 2016 from revenue amortization of a 2015 medical imaging software sale that was only partially offset by a large software license sale to a medical imaging customer in the first nine months of 2017, iii) no hardware sales in the first nine months of 2017; and iv) higher research and development expenses. The resulting decline in operating income was partially offset by: i) higher patent related income from an unaffiliated third party, ii) lower cost of software licenses; and iii) lower cost of hardware sales.

 

 

 

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 Third Quarter 2017 Financial Results Page 2

 

Net income for the first nine months of 2017 was $1.9 million, or $0.08 per diluted share, which compares to $3.6 million, or $0.16 per diluted share, in the same period a year ago.

 

Kevin Russell, Aware’s chief executive officer and president, said “The financial performance of our business was stronger then in the second quarter. Revenue and operating income were lifted by a large license sale to a medical imaging customer as well as continued business from significant government customers. We continue to make investments in our commercial/mobile business as evidenced by the introduction last week of our Knomi™ mobile authentication framework. Knomi utilizes face, voice, and keystroke dynamics to enable multi factor biometric authentication from mobile phones. Our ongoing strategy is to serve as the high quality, expert technical provider of biometric software solutions and services into the government and commercial/mobile markets.”

 

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, iris and voice capture, sample quality assurance, data compliance, capture hardware peripheral abstraction, centralized data processing and workflow, subsystem connectivity, and biometric matching algorithms. The products apply biometrics to enable identity-centric security solutions for applications including banking and payments, 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) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) hardware revenue is likely to decline in future periods; vi) we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) our intellectual property is subject to limited protection; xi) we may be sued by third parties for alleged infringement of their proprietary rights; xii) we must attract and retain key personnel; xiii) we rely on single sources of supply for certain components used in our hardware products; xiv) our business may be affected by government regulations and adverse economic conditions; xv) we may make acquisitions that could adversely affect our results, and xvi) we may have additional tax liabilities.

 

 

 

 

Aware, Inc. Reports Third Quarter 2017 Financial Results Page 3

 

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, 2016 and other reports and filings made with the Securities and Exchange Commission.

 

Aware is a registered trademark of Aware, Inc. Any other trademarks appearing herein are the property of their respective owners.

 

 

 

 

Aware, Inc. Reports Third Quarter 2017 Financial Results Page 4

 

AWARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(unaudited)

 

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2017     2016     2017     2016  
Revenue:                        
Software licenses   $ 4,433     $ 4,136     $ 8,332     $ 12,257  
Software maintenance     1,088       1,288       3,623       3,750  
Services     343       426       924       1,061  
Hardware     -       -       -       317  
Royalties     41       49       118       252  
Total revenue     5,905       5,899       12,997       17,637  
                                 
Costs and expenses:                                
Cost of software licenses     27       -       274       1,101  
Cost of services     178       146       499       517  
Cost of hardware     -       -       -       234  
Research and development     2,151       1,752       5,884       5,204  
Selling and marketing     1,054       1,069       3,020       3,100  
General and administrative     849       857       2,454       2,452  
Total costs and expenses     4,259       3,824       12,131       12,608  
                                 
Patent related income     19       238       1,422       238  
                                 
Operating income     1,665       2,313       2,288       5,267  
Other income     -       -       36       -  
Interest income     109       76       281       215  
Income before provision for income taxes     1,774       2,389       2,605       5,482  
Provision for income taxes     545       816       742       1,839  
Net income   $ 1,229     $ 1,573     $ 1,863     $ 3,643  
                                 
Net income per share – basic   $ 0.06     $ 0.07     $ 0.09     $ 0.16  
Net income per share – diluted   $ 0.06     $ 0.07     $ 0.08     $ 0.16  
                                 
Weighted-average shares – basic     21,679       22,847       21,900       22,934  
Weighted-average shares - diluted     21,758       22,939       21,967       22,996  

 

 

 

 

 

Aware, Inc. Reports Third Quarter 2017 Financial Results Page 5

 

A WARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

  

   

September 30,

2017

   

December 31,

2016

 
ASSETS                
Cash and investments   $ 49,125     $ 52,864  
Accounts receivable, net     5,616       3,016  
Property and equipment, net     4,385       4,634  
Deferred tax assets     5,648       1,078  
All other assets, net     360       392  
                 
Total assets   $ 65,134     $ 61,984  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Accounts payable and accrued expenses   $ 1,816     $ 1,210  
Deferred revenue     2,729       2,933  
Total stockholders’ equity     60,589       57,841  
                 
Total liabilities and stockholders’ equity   $ 65,134     $ 61,984  

 

###

 

 

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

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