Aware, Inc. Reports 2006 First Quarter Financial Results

BEDFORD, Mass. - May 4, 2006 –Aware, Inc. (NASDAQ: AWRE), a worldwide leader and innovator of broadband intellectual property, today reported financial results for its first quarter ended March 31, 2006.

Revenues for the first quarter of 2006 were $6.1 million compared to $4.2 million for the same period last year.

The company reports its net income and basic and diluted net income per share in accordance with U.S. generally accepted accounting principles (GAAP), and additionally, on a non-GAAP basis. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation expense. The company uses the non-GAAP information internally to evaluate its operating performance and believes these non-GAAP measures are useful to investors as they provide additional insight into the underlying operating results. However, non-GAAP measures are not stated in accordance with, should not be considered in isolation from, and are not a substitute for, GAAP measures. A reconciliation of GAAP to non-GAAP results has been provided in the attached financial tables.

GAAP net income for the first quarter of 2006 was $0.5 million, or $0.02 per share, which included $0.5 million of stock-based compensation charges, as this was the Company’s first quarter subject to the provisions of FAS 123(R). This compared to a GAAP net loss of $0.3 million, or $0.01 per share, for the year-ago period. GAAP results prior to 2006 do not include a charge for stock-based compensation.

Non-GAAP net income for the first quarter of 2006, excluding the effect of stock-based compensation, was $1.0 million, or $0.04 per share.

Michael Tzannes, Aware’s chief executive officer, said, “This quarter was a solid one from every perspective. Revenues were up because of the level of demand for our technology and products. New product developments are underway in all areas to continue to enhance the value we deliver to our customers. We have a clear leadership position in VDSL2 and are encouraged by the trend that has emerged to use VDSL2 for infrastructure upgrades involving fiber and DSL to delivery IPTV and triple play services. We are on track with our strategy to develop profitable product lines in DSL licensing, biometrics and DSL test and diagnostics. ”

Tzannes added, “From the conclusion of today’s conference call until Friday, May 5, 2006 at 5:00 p.m., we invite stakeholders to submit questions via email to investorquestions@aware.com. We will post questions and answers next week on our website.”

Note: Aware’s conference call will be broadcast live over the Internet today, May 4, 2006 at 5:00 p.m. Eastern Time. To listen to the call, please go to www.aware.com, and click on “Investor Relations.” The conference call may also be heard by calling (913) 312-1300 and referencing the confirmation number 2443711 (please note the dial-in number change from our previous announcement). A replay of the call will be archived on our website after the call.

About Aware
Aware, Inc. designs, develops, licenses and markets DSL technologies that enable broadband communications over existing telephone networks. Its solutions, including splitterless G.lite, full-rate ADSL, ADSL2, ADSL2+, VDSL2, Bonded ADSL2+, Dr. DSL®, StratiPHY™, StratiPHY-Bonded™, StratiPHY2+™, StratiPHY3™ and G.SHDSL, address central office as well as customer premise requirements. Aware is also a leading provider of standards-based biometric transaction and image compression software toolkits. More information can be found at http://www.aware.com.