Aware, Inc. Reports Second Quarter 2007 Financial Results

BEDFORD, MASS. – July 31, 2007 – Aware, Inc., a leading supplier of broadband technology and biometrics software, today reported financial results for its second quarter ended June 30, 2007.

Revenues for the second quarter of 2007 were $6.4 million, an increase of 34% compared to $4.8 million in the same quarter last year. For the six months ended June 30, 2007, revenues increased 12% to $12.2 million, compared to $10.9 million in the same period a year ago.

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 loss for the second quarter of 2007 was $1.0 million, or $0.04 per share, which included $0.3 million of stock-based compensation charges in accordance with the provisions of FAS 123(R). This compared to a GAAP net loss of $1.2 million, or $0.05 per share, for the same period a year ago. GAAP net loss for the six months ended June 30, 2007 was $1.1 million, or $0.04 per share, compared to a net loss of $0.7 million, or $0.03 per share, for the same period a year ago.

Non-GAAP net loss for the second quarter of 2007, excluding the effect of stock-based compensation, was $0.7 million, or $0.03 per share. For the six months ended June 30, 2007, the company had a non-GAAP net loss, excluding the effect of stock-based compensation, of $0.6 million, or $0.02 per share.

Michael Tzannes, Aware’s chief executive officer, said, “Our revenues in the first half of 2006 reflect a healthy mix of DSL test and diagnostics, biometrics and DSL licensing sales. We are pleased with the progress we have made in gaining exposure to a growing DSL test and diagnostics infrastructure and excited about the future this product line holds. In DSL licensing, we are confident in our ability to increase market share and add new customers based upon recent industry events including consolidation in the semiconductor segment and the emergence of a new VDSL standard. In biometrics, we are pleased with our revenue growth and broad exposure to the industry through our expansive OEM customer base. Each of our product lines has gained important traction this year and each of the markets we are addressing is vibrant and growing.”

Note: Aware’s conference call will be broadcast live over the Internet today, July 31, 2007 at 5:00 p.m. Eastern Time. To listen to the call, please go to www.aware.com/ir. The conference call may also be heard by calling (719) 457-2692 and referencing the confirmation number 3910483. A replay of the call will be archived on our website after the call.

About Aware
Aware is a leading technology supplier for the telecommunications industries. For more than ten years, Aware has pioneered innovations at telecommunications standards-setting organizations and continues to develop and market DSL silicon intellectual property and test and diagnostics products. Its StratiPHY™ IP product line supports DSL standards, including ADSL2+ and VDSL2, and has been broadly licensed to leading semiconductor companies. Telecom equipment vendors and phone companies use Aware's DSL test and diagnostics modules and Dr. DSL® software to help provision DSL circuits globally. Aware is also a veteran of the biometrics industry, providing biometric and imaging software components used in government systems worldwide since 1992. Aware's interoperable, standard-compliant, field-proven imaging products are used in a number of applications, from border management to criminal justice to medical imaging. Aware is a publicly held company (NASDAQ: AWRE) based in Bedford, Massachusetts. www.aware.com