Aware Inc 10-Q for FY2025 Q1
Aware Inc (AWRE)
About this 10-Q
Aware Inc filed this 10-Q on May 2, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.61M
- down 18.4% from $4.42M a year earlier
- Net loss
- $1.6M
- compared with a net loss of $982K a year earlier
- Diluted EPS
- -$0.08
- compared with -$0.05 a year earlier
3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the transition period from _________ to _________
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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.:
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Emerging growth company |
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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 28, 2025 was
AWARE, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2025
TABLE OF CONTENTS
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PART I |
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Item 1. |
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Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 |
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and March 31, 2024 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 4. |
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PART II |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 6. |
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2
PART 1. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
AWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
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March 31, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable, net |
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Unbilled receivables, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Right of use asset |
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Other long-term assets |
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Total assets |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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Accrued expenses |
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Current portion of operating lease liabilities |
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Deferred revenue |
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Total current liabilities |
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Long-term deferred revenue |
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Long-term operating lease liabilities |
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Total long-term liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of the consolidated financial statements.
3
AWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHNSIVE LOSS
(in thousands, except per share data)
(unaudited)
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Three Months Ended |
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2025 |
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2024 |
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Revenue: |
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Software licenses |
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$ |
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Software maintenance |
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Services and other |
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Total revenue |
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Costs and expenses: |
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Cost of revenue |
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Research and development |
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Selling and marketing |
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General and administrative |
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Total costs and expenses |
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Operating loss |
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Interest income |
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Loss before provision for income taxes |
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Provision for income taxes |
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— |
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Net loss |
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$ |
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Other comprehensive income (loss), net of tax: |
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Unrealized gain (loss) on available-for-sale securities |
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Comprehensive loss |
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Net loss per share – basic |
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Net loss per share – diluted |
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Weighted-average shares – basic |
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Weighted-average shares – diluted |
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The accompanying notes are an integral part of the consolidated financial statements.
4
AWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Three Months Ended |
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2025 |
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2024 |
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Cash flows from operating activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash |
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Depreciation and amortization |
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Stock-based compensation |
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Allowance for credit losses |
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Non-cash lease expense |
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Changes in assets and liabilities: |
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Accounts receivable |
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Unbilled receivables |
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Prepaid expenses and other current assets |
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Accounts payable |
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Accrued expenses |
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Deferred revenue |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Purchase of marketable securities |
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Sale of marketable securities |
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Net cash (used in) provided by investing activities |
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Cash flows from financing activities: |
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Repurchase of common stock |
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Net cash used in financing activities |
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(Decrease) increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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Supplemental disclosure: Cash paid for income taxes |
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$ |
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$ |
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The accompanying notes are an integral part of the consolidated financial statements.
5
AWARE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
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For the Three Months Ended |
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March 31, 2025 |
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Accumulated Other |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Income (Loss) |
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Equity |
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Balance at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of unrestricted stock |
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— |
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— |
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Stock-based compensation expense |
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— |
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Repurchase of common stock |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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For the Three Months Ended |
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March 31, 2024 |
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Accumulated Other |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Comprehensive Income (Loss) |
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Equity |
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Balance at December 31, 2023 |
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$ |
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$ |
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Issuance of unrestricted stock |
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Stock-based compensation expense |
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Other comprehensive loss |
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Net loss |
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Balance at March 31, 2024 |
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$ |
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The accompanying notes are an integral part of the consolidated financial statements.
6
AWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 – Description of the Company and Basis of Presentation
Description of the Company
We are a leading biometric authentication company focused on helping organizations verify and secure identities through advanced biometric technologies. Our software is designed to meet the increasing need for secure, user-friendly authentication solutions across both government and commercial sectors. Built on diverse, global data sets, our algorithms can be adapted to meet a wide range of security requirements. We support identity-related functions, such as enrollment, identification, and authentication, using various unique and hard to replicate biometric modalities, including fingerprints, facial recognition, iris scans, and voice analysis
We have beefn a trusted provider of biometric technology since 1993. Our comprehensive portfolio of biometric solutions is based on innovative, robust products designed explicitly for ease of integration, including customer-managed and integration ready biometric frameworks, platforms, software development kits (“SDKs”) and services. Principal government applications of biometrics systems include border control, visa applicant screening, law enforcement, national defense, intelligence, secure credentialing, access control, and background checks. Principal commercial applications include mobile enrollment, user authentication, and secure transaction enablement.
Our products provide interoperable, standards-compliant, field-proven biometric functionality and are used to capture, verify, format, compress and decompress biometric images as well as aggregate, analyze, process, match and transport those images and templates within biometric systems. For large deployments, we may provide project management and software engineering services. We sell our biometrics software products and services globally through a multifaceted distribution strategy using systems integrators, original equipment manufacturers (“OEMs”), value added resellers (“VARs”), partners, and directly to select end user customers.
Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and notes necessary for a complete presentation of our financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. We filed audited financial statements which included all information and notes necessary for such presentation for the two years ended December 31, 2024 in conjunction with our 2024 Annual Report on Form 10-K. This Form 10-Q should be read in conjunction with that Form 10-K.
The accompanying unaudited consolidated balance sheets, statements of operations and comprehensive loss, statements of cash flows, and statements of stockholders’ equity reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of financial position at March 31, 2025, and of operations and cash flows for the interim periods ended March 31, 2025 and 2024.
7
The results of operations for the interim periods ended March 31, 2025 are not necessarily indicative of the results to be expected for the year.
Principles of Consolidation
The consolidated financial statements include the accounts of Aware, Inc. and its subsidiaries, Aware Security Corporation and Fortr3ss, Inc. Intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Estimates used in these financial statements include but are not limited to, revenue recognition, goodwill and long-lived asset impairment, stock based compensation, income taxes, and allowance for credit losses.
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”). This ASU wasa effective for our fiscal year ending on December 31, 2024 and interim periods beginning in fiscal 2025, with early adoption permitted. The Company adopted this standard as of January 1, 2024 and the adoption did not have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU will be effective for our fiscal year ending on December 31, 2025, with early adoption permitted. We are assessing the impact of the standard on our consolidated financial statements.
Note 2 – Revenue Recognition
We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, we apply the following five step model:
1. Identify the contract with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligations in the contract; and
5. Recognize revenue when (or as) each performance obligation is satisfied.
We categorize revenue as software licenses, software maintenance, or services and other. Revenue from software licenses is recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. We recognize software maintenance revenue over time on a straight-line basis over the contract period. Services revenue is recognized over time as the services are delivered using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted), provided all other revenue recognition criteria are met. Other revenue includes hardware sales that may be included in a software license, is recognized at a point in time upon delivery provided all other revenue recognition criteria are met.
8
In addition to selling software licenses, software maintenance and software services on a standalone basis, a significant portion of our contracts include multiple performance obligations, which require an allocation of the transaction price to each distinct performance obligation based on a relative standalone selling price (“SSP”) basis. The SSP is the price at which we would sell a promised good or service separately to a customer. The best estimate of SSP is the observable price of a good or service when we sell that good or service separately. A contractually stated price or a list price for a good or service may be the SSP of that good or service. We use a range of selling prices to estimate SSP when we sell each of the goods and services separately and need to determine whether there is a discount that needs to be allocated based on the relative SSP of the various goods and services within multiple performance obligation arrangements. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we typically determine the SSP using an adjusted market assessment approach using information that may include market conditions and other observable inputs. We typically have more than one SSP for individual goods and services due to the stratification of those goods and services by customer. In these instances, we may use information such as the nature of the customer and distribution channel in determining the SSP.
When software licenses and significant customization engineering services are sold together, they are accounted for as a combined performance obligation, as the software licenses are generally highly dependent on, and interrelated with, the associated customization services and therefore are not distinct performance obligations. Revenue for the combined performance obligation is recognized over time as the services are delivered using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted).
When subscription-based software is sold, the subscription-based software and software maintenance are generally considered distinct performance obligations. The transaction price is allocated to subscription-based software and the software maintenance based on the relative SSP of each performance obligation. We sell subscription-based software for a fixed fee and/or a usage-based royalty fee, sometimes subject to a minimum guarantee. When the amount is in the form of a fixed fee, including the guaranteed minimum in subscription-based royalties, revenue is allocated to the subscription-based software and recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. Revenue allocated to the software maintenance is recognized over the contract term on a straight-line basis. Any subscription-based software fees earned not subject to the guaranteed minimum or earned in excess of the minimum amount are recognized as revenue when the subsequent usage occurs.
Our contracts can include variable fees, such as the option to purchase additional usage of a previously delivered software license. We may also provide pricing concessions to clients, a business practice that also gives rise to variable fees in contracts. We include variable fees in the determination of total transaction price if it is not probable that a future significant reversal of revenue will occur. We use the expected value or most likely value amount, whichever is more appropriate for specific circumstances, to estimate variable consideration, and the estimates are based on the level of historical price concessions offered to clients.
The amount of consideration is typically not adjusted for a significant financing component if the time between payment and the transfer of the related good or service is one year or less under the
Also, as we expand our Software as a Service ("SaaS") offerings, including AwareID, revenue from SaaS contracts will be recognized ratably over the subscription period. For the three months ended March 31, 2025 and 2024 we generated $
Cost of revenue associated with each category of revenue, may include internal engineering labor, third-party contractors, software license fees, and hardware costs.
9
Disaggregation of Revenues
We organize ourselves into a single segment that reports to the Chief Executive Officer, who is our CODM. We conduct our operations in the United States and sell our products and services to domestic and international customers.
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
United States |
|
$ |
|
|
$ |
|
||
United Kingdom |
|
|
|
|
|
|
||
Turkey |
|
|
|
|
|
|
||
Rest of World |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Revenue by timing of transfer of goods or services was (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Goods or services transferred at a point in time |
|
$ |
|
|
$ |
|
||
Goods or services transferred over time |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Revenue by contract type was (in thousands):
|
|
|
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
License and service contracts |
|
$ |
|
|
$ |
|
||
Subscription-based contracts |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Revenue from subscription-based contracts include revenue that may be recognized at a point in time or over time and be part of a fixed fee and or minimum guarantee as well as fees earned and allocated to software maintenance.
Contract Balances
When the timing of our delivery of goods or services is different from the timing of payments made by customers, we recognize either a contract asset (performance precedes customer billing) or a contract liability (customer payment precedes performance). Customers that prepay are represented by the deferred revenue below until the performance obligation is satisfied.
Our contract assets consist of unbilled receivables. Our contract liabilities consist of deferred (unearned) revenue, which is generally related to software maintenance contracts. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue.
10
The following tables present changes in our contract assets and liabilities during the three months ended March 31, 2025 and 2024 (in thousands):
|
|
Balance at |
|
|
Revenue |
|
|
Billings |
|
|
Balance at |
|
||||
Three months ended March 31, 2025 |
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|
|
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|
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|
||||
Contract assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unbilled receivables |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
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|
||||
Three months ended March 31, 2024 |
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|
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|
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|
||||
Contract assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unbilled receivables |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Balance at |
|
|
Billings |
|
|
Revenue |
|
|
Balance at |
|
||||
Three months ended March 31, 2025 |
|
|
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|
|
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|
||||
Contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
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|
|
||||
Three months ended March 31, 2024 |
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|
||||
Contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred revenue |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Remaining Performance Obligations
Remaining performance obligations represent the transaction prices from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately
Note 3 – Fair Value Measurements
The FASB Codification defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy under the FASB Codification are: Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable.
Cash and cash equivalents, which primarily include money market mutual funds were $
11
2024, respectively.
|
|
Fair Value Measurement at March 31, 2025 Using: |
|
|||||||||||||
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
|
|
(Level 1) |
|
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(Level 2) |
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(Level 3) |
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|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (included in |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
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|
||||
|
|
Fair Value Measurement at December 31, |
|
|||||||||||||
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
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|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (included in |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Our investments in marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive loss in stockholders' equity.
Marketable securities by security type consisted of the following (in thousands):
|
|
March 31, 2025: |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
U.S. Treasury notes and bonds |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
December 31, 2024: |
|
|||||||||||||
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
||||
U.S. Treasury notes and bonds |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Note 4 – Intangible Assets
12
Intangible assets and their estimated useful lives as of March 31, 2025 are as follows (dollars in thousands):
|
|
Useful Life |
|
Gross |
|
|
Accumulated |
|
|
Net Book |
|
|||
Customer relationships |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Developed technology |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Trade name / trademarks |
|
|
|
|
|
|
( |
) |
|
|
|
|||
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
During each of the three months ended March 31, 2025 and 2024, we recorded $
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
Note 5 – Computation of Earnings per Share
Basic earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income or loss by the weighted average number of common shares outstanding plus additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the purposes of this calculation, stock options are considered common stock equivalents in periods in which they have a dilutive effect. Stock options that are anti-dilutive are excluded from the calculation. All outstanding common stock equivalents were not included in the per share calculation for diluted earnings per share where we had a net loss, and the effect of their inclusion would be anti-dilutive.
Note 6 – Equity and Stock-based compensation
The following table presents stock-based compensation expenses included in our unaudited consolidated statements of operations and comprehensive loss (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of services and other revenue |
|
$ |
— |
|
|
$ |
|
|
Research and development |
|
|
|
|
|
|
||
Selling and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Stock-based compensation expense |
|
$ |
|
|
$ |
|
||
Stock Options - On January 17, 2024, our stockholders approved the Aware Inc. 2023 Equity and Incentive Plan (the “2023 Plan”). Following approval of the 2023 Plan, we ceased making awards under our previous 2001 Nonqualified Stock Plan (as amended, the “2001 Plan”).
Also on January 17, 2024, our stockholders approved a stock option exchange program (the “Exchange Offer”) pursuant to which eligible employees, primarily consisting of our executive officers and senior management, were able to exchange certain stock options (the “Eligible Options”) for replacement stock options with modified terms (the “New Options”) as described below. We commenced the Exchange Offer on January 19, 2024.
13
The Exchange Offer expired on February 20, 2024. Pursuant to the Exchange Offer,
The exercise price per share of the New Options granted pursuant to the Exchange Offer was $
There was
During the three months ended March 31, 2025, the Company granted stock options to purchase an aggregate of
The stock options granting during the three months ended March 31, 2025 included
Restricted Stock Units - The 2023 Plan permits us to grant restricted stock units to our directors, officers, and employees. Upon vesting, each restricted stock unit entitles the recipient to receive a number of shares of common stock as set forth in the relevant restricted stock unit agreement. Stock-based compensation expense for restricted stock units is determined based on the fair market value of our stock on the date of grant, provided the number of shares in the grant is fixed on the grant date.
We granted
During the three months ended March 31, 2024, we granted
14
officers, and employees. Of these,
Share Purchases - On March 1, 2022, our Board of Directors authorized a new stock repurchase program pursuant to which we may purchase up to $
Note 7 – Income Taxes
During the three months ended March 31, 2025 and 2024, we recorded an income tax provision of $
We have evaluated the positive and negative evidence bearing upon our ability to realize our deferred tax assets, which primarily consist of net operating loss carryforwards and research and development tax credits. We considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and we have concluded that it is more likely than not that we will not realize the benefits of our deferred tax assets. As a result, as of March 31, 2025 and December 31, 2024, we have a full valuation recorded against our net deferred tax assets.
15
ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995
Some of the information in this Quarterly Report on Form 10-Q contains forward‑looking statements that involve substantial risks and uncertainties. You can identify these statements by forward‑looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “continue” and similar words. You should read statements that contain these words carefully because they: (1) discuss our future expectations; (2) contain projections of our future operating results or financial condition; or (3) state other “forward‑looking” information. However, we may not be able to predict future events accurately. The risk factors listed in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, as well as any cautionary language in this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward‑looking statements. You should be aware that the occurrence of any of the events described in these risk factors and elsewhere in this Quarterly Report on Form 10-Q could materially and adversely affect our business.
Summary of Operations
We are primarily engaged in the development and sale of biometrics products, solutions and services. Our software products are used in government and commercial systems and applications and fulfill a broad range of functions critical to secure biometric enrollment, authentication, identification and transactions. Principal government applications of biometrics systems include border control, visa applicant screening, law enforcement, national defense, intelligence, secure credentialing, access control, and background checks. Principal commercial applications include: i) user enrollment and authentication used for login to mobile devices, computers, networks, and software programs; ii) user authentication for financial transactions and purchases (online and in-person); iii) physical access control to buildings; and iv) identity proofing of prospective employees and customers. We sell our biometrics software products and services globally through a multifaceted distribution strategy using systems integrators, OEMs, VARs, partners, and directly to end user customers. We also derive a portion of our revenue from the sale of imaging software licenses to OEMs and systems integrators that incorporate our software into medical imaging products and medical systems.
On October 30, 2024, we announced that Robert Eckel, our Chief Executive Officer and a member of our Board of Directors, would resign from these positions effective December 31, 2024. Following this announcement, we retained an executive search firm and conducted an extensive search for his successor. As a result of that process, on February 3, 2025, Ajay Amlani was appointed Chief Executive Officer and a member of our Board of Directors.
Summary of Financial Results
We use revenue and results of operations to summarize financial results as we believe these measurements are the most meaningful way to understand our operating performance.
Revenue and operating loss for the three months ended March 31, 2025 were $3.6 million and $1.9 million, respectively. These results compared to revenue of $4.4 million and operating loss of $1.3 million for the three months ended March 31, 2024. The decrease in revenue and operating loss in the current three month period was primarily due to a $0.8 million decrease in software license revenue. The impact of the decrease in revenue on our operating loss was partially offset by $0.2 million decrease in operating expenses resulting from temporary cost reductions related to reduced headcount in the first quarter of 2025.
These and all other financial results are discussed in more detail in the results of operations section that follows.
Results of Operations
Software licenses. Software licenses consist of revenue from the sale of biometrics and imaging software products. Sales of software products depend on our ability to win proposals to supply software for biometrics systems projects either directly to end user customers or indirectly through channel partners.
16
Software license revenue decreased 39% from $2.1 million in the three months ended March 31, 2024 to $1.3 million for the three months ended March 31, 2025. As a percentage of total revenue, software license revenue decreased from 49% in the first quarter of 2024 to 36% in the current year quarter. The $0.8 million decrease in software license revenue was due primarily to a decrease in perpetual licenses sales of $0.3 million due to fewer one-time license deals in the current quarter and a $0.4 million decrease in license revenue related to subscription contracts as a result of timing of renewal of licenses.
Software license sales have historically fluctuated, and we expect software license revenue to continue to fluctuate since these sales are based on the timing of projects with our customers and partners.
Our market strategy is to continue to focus on our legacy government biometrics markets and expand into new commercial biometrics markets. We are unable to predict future revenue from commercial markets as these are emerging markets.
Software maintenance. Software maintenance consists of revenue from the sale of software maintenance contracts. Software maintenance contracts entitle customers to receive software support and software updates, if and when they become available, during the term of the contract.
Software maintenance revenue was $2.2 million in the three months ended March 31, 2025 and 2024. As a percentage of total revenue, software maintenance revenue increased from 49% in the first quarter of 2024 to 60% in the current year first quarter.
Services and other revenue. Services revenue consists of fees we charge to perform software development, integration, installation, and customization services. Similar to software license revenue, services revenue depends on our ability to win biometrics systems projects either directly with end user customers or in conjunction with channel partners. Other revenue consists of hardware fees that are included with some of our software licenses.
Services and other revenue was $0.1 million in the three months ended March 31, 2025 and 2024. As a percentage of total revenue, services and other revenue increased from 3% in the first quarter of 2024 to 4% in the current year quarter.
Services and other revenue fluctuate dependent on when we commence new projects and when we complete projects that were started in previous periods.
Cost of revenue. Cost of revenue consists primarily of engineering costs to perform customer services projects, amortization of intangible assets related to acquisitions, and other third-party costs that are included with some of our software licenses. Such costs primarily include: i) engineering salaries, stock-based compensation, fringe benefits, and facilities; ii) engineering consultants and contractors; iii) software license fees; and iv) hardware costs.
Cost of revenue decreased 11% from $0.3 million in the three months ended March 31, 2024 to $0.2 million the three months ended March 31, 2025. Cost revenue as a percentage of total revenue increased from 6% in the first quarter of 2024 to 7% in the current year first quarter.
For first quarter of 2025, cost of revenue of $0.2 million was composed of $0.1 million of engineering costs to perform customer services, $0.1 million of amortization of intangible assets, and $50 thousand for software license and hardware costs.
For first quarter of 2024, cost of revenue of $0.3 million was composed of $0.1 million of engineering costs to perform customer services, $0.1 million of amortization of intangible assets, and $67 thousand for software license and hardware costs.
Gross margins on revenue are a function of: i) the nature of the projects; ii) the level of engineering difficulty and labor hours required to complete project tasks; iii) how much we were able to charge; and iv) product mix. We expect that gross margins on services and other revenue will continue to fluctuate in future periods based on the nature, complexity, and pricing of future projects and product mix.
Research and development expense. Research and development expense consists of costs for: i) engineering personnel, including salaries, stock-based compensation, fringe benefits, and facilities; ii) engineering consultants and contractors, and iii) other engineering expenses such as supplies, equipment depreciation, dues
17
and memberships and travel. Engineering costs incurred to develop our technology and products are classified as research and development expense. As described in the cost of services section, engineering costs incurred to provide engineering services for customer projects are classified as cost of services and other revenue, and are not included in research and development expense.
The classification of total engineering costs to research and development expense and engineering costs to perform customer services included in cost of revenue was (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Research and development expense |
|
$ |
1,922 |
|
|
$ |
2,182 |
|
Engineering costs allocated to cost of revenue |
|
|
91 |
|
|
|
105 |
|
Total engineering costs |
|
$ |
2,013 |
|
|
$ |
2,287 |
|
Total engineering costs decreased 12% from $2.3 million in the three months ended March 31, 2024 to $2.0 million in the three months ended March 31, 2025. As a percentage of total revenue, total engineering costs increased from 52% in the three months ended March 31, 2024 to 56% in the same current year quarter.
The spending decreases for the three months ended March 31, 2025 compared to the same prior year period was primarily due to decreased headcount. While costs declined in the first quarter, we anticipate engineering expenses may increase during the remainder of 2025 as we ramp up investment to support strategic product development initiatives.
Selling and marketing expense. Selling and marketing expense primarily consists of costs for: i) sales and marketing personnel, including salaries, sales commissions, stock-based compensation, fringe benefits, travel, and facilities; and ii) advertising and promotion expenses.
Selling and marketing expense decreased 12% from $1.9 million in the three months ended March 31, 2024 to $1.7 million in the same three month period of 2025. As a percentage of total revenue, selling and marketing expense increased from 43% in the first quarter of 2024 to 46% in the corresponding period in 2025.
The spending decreases for the three months ended March 31, 2025, compared to the same prior year periods was primarily due to the departure of our chief revenue officer in 2024 who was not replaced until March 2025 and the departure of our chief product officer in 2024.
We expect selling and marketing expense to increase in future periods as we continue to invest in revenue-generating activities. This includes plans to backfill the chief product officer position and make additional hires across our sales organization to support pipeline growth and capitalize on market opportunities.
General and administrative expense. General and administrative expense consists primarily of costs for: i) officers, directors and administrative personnel, including salaries, bonuses, director compensation, stock-based compensation, fringe benefits, and facilities; ii) professional fees, including legal and audit fees; iii) public company expenses; and iv) other administrative expenses, such as insurance costs and bad debt provisions.
General and administrative expense increased 22% from $1.3 million for the three months ended March 31, 2024 to $1.6 million for the three months ended March 31, 2025. As a percentage of total revenue, general and administrative expense was 30% in the first quarter of 2024 and 45% in the corresponding period of 2025.
The expense increase for the three months ended March 31, 2025 compared to the same prior year period was primarily due to the impact of a $0.1 million signing bonus paid to Mr. Amlani in connection with his appointment as our chief executive officer and a $0.2 million increase in professional services related to strategic advisor hired as part of our chief executive officer transition. Fluctuations of general and administrative expenses are expected depending on specific activities in a period. We expect that general and administrative costs will decrease for the next few quarters now that we have completed our CEO transition.
Interest Income. Interest income was $0.3 million in the three months ended March 31, 2025 and 2024.
18
We expect interest income to decrease slightly over the remainder of 2025 due to a lower projected average cash balance.
Income taxes. Total income tax expense was $7 thousand and $0 for the three months ended March 31, 2025 and 2024, respectively. The income tax expense relates to limitations on the usage of net operating loss carryforwards generated in years beginning after December 31, 2017.
We are subject to income taxes in the United States, and we use estimates in determining our provisions for income taxes. We account for income taxes using the asset and liability method for accounting and reporting income taxes. Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.
We have evaluated the positive and negative evidence bearing upon our ability to realize our deferred tax assets, which primarily consist of net operating loss carryforwards and research and development tax credits. We considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and we have concluded that it is more likely than not that we will not realize the benefits of our deferred tax assets. As a result, as of March 31, 2025 and December 31, 2024, we recorded a full valuation allowance against our net deferred tax assets.
Liquidity and Capital Resources
At March 31, 2025, we had cash, cash equivalents and marketable securities of $24.8 million, which represented a decrease of $3.0 million from December 31, 2024. The decrease in cash, cash equivalents and marketable securities was primarily due to the impact of $2.9 million of cash used in operating activities.
Cash used in investing activities was $1.5 million in the first three months of 2025, which primarily consisted of $1.5 million of net sales of marketable securities and $45,000 thousand of purchase of fixed assets.
Cash used by financing activities was $53 thousand in the first three months of 2025, which consisted of cash used to repurchase shares of our common stock.
While we cannot assure you that we will not require additional financing, or that such financing will be available to us, we believe that our cash and cash equivalents will be sufficient to fund our operations for at least the next twelve months from the date of this filing and to meet our known long-term cash requirements. Whether these resources are adequate to meet our liquidity needs beyond that period will depend on our future growth, operating results, and the investments needed to support our operations. If we require additional capital resources, we may utilize available funds or seek external financing, which may not be available on terms we find attractive or at all.
To date, inflation has not had a material impact on our financial results. There can be no assurance, however, that inflation will not adversely affect our financial results in the future.
Recent Accounting Pronouncements
See Note 1 to our Consolidated Financial Statements in Item 1.
ITEM 4: Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
In December 2024, our Chief Executive Officer resigned, and our Chief Financial Officer assumed the role of Interim Chief Executive Officer while continuing to serve as Chief Financial Officer. In February 2025, we hired a new Chief Executive Officer, and the Interim Chief Executive Officer returned to his role as Chief Financial Officer. While these leadership transitions represent significant changes in our executive team, we
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have assessed their impact on our internal control over financial reporting and determined that these changes have not materially affected the design or operation of our internal controls.
We have updated our internal control documentation in light of these organizational changes. We will continue to monitor and update our internal control processes as necessary to ensure their effectiveness.
Except as described above, there were no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings
From time to time, we are involved in litigation incidental to the conduct of our business. We are not party to any lawsuit or proceeding that, in our opinion, is material to our business.
ITEM 1A: Risk Factors
Investing in our common stock involves a high degree of risk. Our Annual Report on Form 10-K for the year ended December 31, 2024 includes a detailed discussion of our risk factors under the heading “Part I, Item 1A—Risk Factors.” There have been no material changes from such risk factors during the three months ended March 31, 2025. You should consider carefully the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, and all other information contained in or incorporated by reference in this Quarterly Report on Form 10-Q before making an investment decision. If any of the risks discussed in the Annual Report on Form 10-K or herein actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of our common stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment.
ITEM 2: Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
On November 30, 2023, we announced that our Board of Directors had approved the extension of our previously announced 2022 Repurchase Plan through December 31, 2025. The 2022 Repurchase Plan authorizes the Company to repurchase of up to $10,000,000 of our common stock from time to time. During the three months ended March 31, 2025 we purchased 34,437 shares under this plan as follows.
Period |
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Total Number of Shares Purchased |
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|
Average Price Paid per Share |
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
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Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans of Programs |
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January 1, to 31, 2025 |
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- |
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$ |
— |
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- |
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$ |
7,975,073 |
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February 1 to 29, 2025 |
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- |
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|
$ |
— |
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|
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- |
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|
$ |
7,975,073 |
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March 1 to 31, 2025 |
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34,437 |
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|
$ |
1.53 |
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34,437 |
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|
$ |
7,922,316 |
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Total |
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34,437 |
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|
$ |
1.54 |
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34,437 |
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As of March 31, 2025 the remaining dollar value of shares that may be purchased under the plan is $7,922,316.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Mine Safety Disclosures
None.
ITEM 5: Other Information
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During the three months ended March 31, 2025, no director or officer of the Company
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ITEM 6: Exhibits
(a) Exhibits
Exhibit 3.1 |
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Exhibit 3.2 |
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Exhibit 10.1 |
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Exhibit 10.2 |
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Exhibit 10.3 |
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Employment Agreement dated as of March 5, 2025 by and between Aware, Inc. and Brian Krause |
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Exhibit 31.1 |
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Exhibit 31.2 |
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Exhibit 32.1 |
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Exhibit 101 |
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The following financial statements from Aware, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language), as follows: i) Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, ii) Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2025 and 2024 iii) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 iv) Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024, and v) Notes to Consolidated Financial Statements. |
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Exhibit 104 |
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Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline Document Set. |
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* Management contract or compensatory plan
23
SIGNATURES
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.
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AWARE, INC. |
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Date: |
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May 2, 2025 |
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By: |
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/s/ Ajay K. Amlani |
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Ajay K. Amlani |
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Chief Executive Officer & President |
Date: |
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May 2, 2025 |
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By: |
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/s/ David K. Traverse |
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David K. Traverse |
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Chief Financial Officer |
24
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of March 5, 2025 (the “Effective Date”), by and between Aware, Inc., a Massachusetts corporation with its principal offices located at 76 Blanchard Road, Burlington, Massachusetts 01803 (together with its successors and assigns, the "Company"), and Brian Krause (the "Executive").
WHEREAS, the Company desires to employ the Executive on the terms and conditions of this Agreement; and
WHEREAS, the Executive desires to become an employee of the Company on the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows:
2
3
4
5
6
7
8
Aware, Inc.
76 Blanchard Road
Burlington, Massachusetts 01803
Attention: Chief Executive Officer
Brian Krause
79 Hazelwood Drive
Pembroke, MA 02359
or to such other address as either party may from time to time provide to the other by notice as provided in this section.
9
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
EXECUTIVE |
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AWARE, INC. |
/s/ Brain Krause Brian Krause |
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By: /s/ Ajay Amlani Title: CEO
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11
Exhibit A
NONCOMPETE AGREEMENT
This NONCOMPETE AGREEMENT (the "AGREEMENT"), made as of the [ ] day of [ ], 202 , is entered into between Aware, Inc., a Massachusetts corporation with offices at 76 Blanchard Road, Burlington, Massachusetts 01803 (the "Company") and Brian Krause an individual residing at 79 Hazelwood Drive, Pembroke MA 02359 (the "Employee").
RECITALS:
A. The Company is willing to grant certain severance and other benefits to the Employee, under the circumstances specified in that certain Employment Agreement dated [ ], 2025 between the Company and the Employee (the “Employment Agreement”); and
B. As set forth in the Employment Agreement, the Employee's execution of this Agreement is a condition to his receipt of such benefits;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
12
"BUSINESS OF THE COMPANY" shall mean the development, manufacture, marketing and/or distribution of (A) biometric technologies or wavelet compression technologies or (B) any other products or services which the Company sells, has under development or which are subject to active planning at any time during the term of the Employee's employment with the Company.
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The Employee represents and warrants that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any other agreement by which he is bound.
The Employee understands that this Agreement does not constitute a contract of employment or give the Employee rights to employment or continued employment by the Company.
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement. In particular, this Agreement supersedes Section 10 of the Employee Agreement, but the rest of the Employee Agreement remains in full force and effect.
This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee.
This Agreement shall be construed, interpreted and enforced in accordance with the laws of The Commonwealth of Massachusetts, without regard to its choice of law principles. The Employee hereby consents to (a) service of process, and to be sued, in The Commonwealth of Massachusetts and (b) to the jurisdiction of the courts of The Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of Employee's obligations hereunder, and Employee expressly waives any and all objections he or she may have as to venue in any such courts.
. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by him.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
AWARE, INC.
By:
Name:
Title:
EMPLOYEE
NAME
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Exhibit B
GENERAL RELEASE AND WAIVER OF ALL CLAIMS
(INCLUDING OLDER WORKER BENEFITS PROTECTION ACT CLAIMS)
For good and valuable consideration, including without limitation the compensation and benefits set forth in the Employment Agreement dated [ ], 2025 (the “Agreement”) between the undersigned and Aware, Inc. (the “Company”), to which this General Release and Waiver of All Claims is attached, the terms of which Agreement shall survive this General Release and Waiver of Claims, the undersigned, on behalf of and for himself or herself and his or her heirs, administrators, executors, representatives, estates, attorneys, insurers, successors and assigns (hereafter referred to separately and collectively as the “Releasor”), hereby voluntarily releases and forever discharges the Company, and its subsidiaries (direct and indirect), affiliates, related companies, divisions, predecessor and successor companies, and each of its and their present, former, and future shareholders, officers, directors, employees, agents, representatives, attorneys, insurers and assigns (collectively as “Releasees”), jointly and individually, from any and all actions, causes of action, claims, suits, charges, complaints, contracts, covenants, agreements, promises, debts, accounts, damages, losses, sums of money, obligations, demands, and judgments all of any kind whatsoever, known or unknown, at law or in equity, in tort, contract, by statute, or on any other basis, for contractual, compensatory, punitive or other damages, expenses (including attorney’s fees and cost), reimbursements, or costs of any kind, which the undersigned employee ever had, now has, or may have, from the beginning of the world to the date of this Release, known or unknown, in law or equity, whether statutory or common law, whether federal, state, local or otherwise, including but not limited to any and all claims arising out of or in any way related to the undersigned’s engagement by the Company (including the hiring or termination of that engagement), or any related matters including, but not limited to claims, if any arising under the Age Discrimination in Employment Act of 1967, as amended by the Older Worker Benefits Protection Act; the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Family and Medical Leave Act of 1993, as amended; the Immigration Reform and Control Act of 1986; the Americans with Disabilities Act of 1990, as amended; the Employee Retirement Income Security Act (ERISA), as amended; the Massachusetts laws against discrimination and harassment (including Mass. Gen. L. c. 151B), protecting equal rights or concerning the payment of wages (including Mass. Gen. L. c. 149, section 148 et seq. and Mass. Gen. L. c. 151, section 1A, et seq.), and federal, state or local common law, laws, statutes, ordinances or regulations. Notwithstanding the foregoing, nothing contained in this General Release and Waiver of Claims shall be construed to bar any claim by the undersigned to enforce the terms of the Agreement.
Releasor represents and acknowledges the following:
16
Signed and sealed this ____ day of _____________, 20___.
Signed: __________________________
Name (print): ___________________________
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Ajay K. Amlani, Chief Executive Officer & President of Aware, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Aware, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 2, 2025 |
|
/s/ Ajay K. Amlani |
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|
Ajay K. Amlani |
|
|
Chief Executive Officer & President |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, David K Traverse, Chief Financial Officer of Aware, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Aware, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 2, 2025 |
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/s/ David K. Traverse |
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David K. Traverse |
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Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report on Form 10-Q of Aware, Inc. (the “Company”) for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned Chief Executive Officer and Chief Financial Officer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ Ajay K. Amlani |
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/s/ David K Traverse |
Chief Executive Officer & President |
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Chief Financial Officer |
Date: May 2, 2025 |
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Date: May 2, 2025 |
The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Form 10-Q or as a separate disclosure document of the Company or the certifying officers.