10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024



☐			Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________

Commission file number 000-21129

AWARE, INC.

(Exact Name of Registrant as Specified in Its Charter)


Massachusetts		04-2911026
(State or Other Jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or Organization)

76 Blanchard Road in Burlington, Massachusetts, 01803

(Address of Principal Executive Offices)

(Zip Code)

(781) 276-4000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	AWRE	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

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 ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of April 24, 2024 was 21,085,234.

AWARE, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2024

TABLE OF CONTENTS


		Page

PART I	FINANCIAL INFORMATION	3

Item 1.	Unaudited Consolidated Financial Statements	3
	Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	3
	Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and March 31, 2023	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and March 31, 2023	5
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and March 31, 2023	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 4.	Controls and Procedures	20

PART II	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6.	Exhibits	23
	Signatures	24

PART 1. FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS

AWARE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


	March 31, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	14,315		$	10,002
Marketable securities		14,214			20,913
Accounts receivable, net		3,756			2,454
Unbilled receivables, net		1,568			1,401
Prepaid expenses and other current assets		986			1,054
Total current assets		34,839			35,824

Property and equipment, net		543			579
Intangible assets, net		2,288			2,391
Goodwill		3,120			3,120
Right of use asset		4,188			4,260
Other long-term assets		122			122
Total assets	$	45,100		$	46,296

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	791		$	280
Accrued expenses		1,031			1,706
Current portion of operating lease liabilities		642			637
Deferred revenue		4,941			4,926
Total current liabilities		7,405			7,549

Long-term deferred revenue		492			611
Long-term operating lease liabilities		3,779			3,838
Total long-term liabilities		4,271			4,449
Stockholders’ equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized, none outstanding		—			—
Common stock, $.01 par value; 70,000,000 shares authorized; issued and outstanding of 21,085,234 as of March 31, 2024 and 21,017,892 as of December 31, 2023		212			210
Additional paid-in capital		99,567			99,405
Accumulated deficit		(66,494	)		(65,512	)
Accumulated other comprehensive income		139			195
Total stockholders’ equity		33,424			34,298

Total liabilities and stockholders’ equity	$	45,100		$	46,296

The accompanying notes are an integral part of the consolidated financial statements.

AWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHNSIVE LOSS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2024			2023
Revenue:
Software licenses	$	2,147		$	2,105
Software maintenance		2,160			1,835
Services and other		114			365
Total revenue		4,421			4,305

Costs and expenses:
Cost of services and other revenue		276			298
Research and development		2,182			2,381
Selling and marketing		1,891			1,991
General and administrative		1,334			1,504
Total costs and expenses		5,683			6,174
Operating loss		(1,262	)		(1,869	)
Interest income		280			301
Net loss	$	(982	)	$	(1,568	)

Net loss per share – basic	$	(0.05	)	$	(0.07	)
Net loss per share – diluted	$	(0.05	)	$	(0.07	)
Weighted-average shares – basic		21,085			21,033
Weighted-average shares – diluted		21,085			21,033

Other comprehensive income, net of tax:
Unrealized (loss) gain on available-for-sale securities		(56	)		147
Comprehensive loss	$	(1,038	)	$	(1,421	)

The accompanying notes are an integral part of the consolidated financial statements.

AWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(982	)	$	(1,568	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		139			149
Stock-based compensation		164			335
Interest on note receivable		—			(31	)
Non-cash lease expense		17			173
Changes in assets and liabilities:
Accounts receivable		(1,302	)		417
Unbilled receivables		(167	)		(325	)
Prepaid expenses and other current assets		(12	)		(181	)
Accounts payable		511			(15	)
Accrued expenses		(675	)		(502	)
Deferred revenue		(104	)		63
Net cash used in operating activities		(2,411	)		(1,485	)

Cash flows from investing activities:
Purchases of property and equipment		—			(16	)
Purchase of marketable securities		—			(2,752	)
Sale of marketable securities		6,724			1,250
Net cash provided by (used in) investing activities		6,724			(1,518	)

Cash flows from financing activities:
Payments made for taxes of employees who surrendered shares related to unrestricted stock		—			(15	)
Repurchase of common stock		—			(341	)
Net cash used in financing activities		—			(356	)

Increase (decrease) in cash and cash equivalents		4,313			(3,359	)
Cash and cash equivalents, beginning of period		10,002			11,749
Cash and cash equivalents, end of period	$	14,315		$	8,390

Supplemental disclosure: Cash paid for income taxes	$	—		$	—

The accompanying notes are an integral part of the consolidated financial statements.

AWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	For the Three Months Ended
	March 31, 2024
					Additional									Total
	Common Stock				Paid-In			Accumulated			Accumulated Other			Stockholders’
	Shares		Amount		Capital			Deficit			Comprehensive Income (Loss)			Equity

Balance at December 31, 2023		21,018	$	210	$	99,405		$	(65,512	)	$	195		$	34,298

Issuance of unrestricted stock		67		2		(2	)		—			—			—
Stock-based compensation expense		—		—		164			—			—			164
Repurchase of common stock		—		—		—			—			—			—
Other comprehensive loss												(56	)
Net loss		—		—		—			(982	)		—			(982	)

Balance at March 31, 2024		21,085	$	212	$	99,567		$	(66,494	)	$	139		$	33,424


	For the Three Months Ended
	March 31, 2023
							Additional									Total
	Common Stock						Paid-In			Accumulated			Accumulated Other			Stockholders’
	Shares			Amount			Capital			Deficit			Comprehensive Income (Loss)			Equity
Balance at December 31, 2022		21,093		$	211		$	98,306		$	(58,198	)	$	(110	)	$	40,209

Issuance of unrestricted stock		62			1			(1	)		—			—			—
Shares surrendered by employees to pay taxes related to unrestricted stock		(9	)		—			(15	)		—			—			(15	)
Repurchase of common stock		(191	)		(2	)		(339	)		—			—			(341	)
Stock-based compensation expense		—			—			335			—			—			335
Other comprehensive income		—			—			—			—			147			147
Net loss		—			—

SEC Form 10-Q filed by Aware Inc.