Aware Inc. (AWRE, Financial) filed Quarterly Report for the period ended 2010-09-30.
Aware Inc. has a market cap of $55.3 million; its shares were traded at around $2.81 with a P/E ratio of 12.6 and P/S ratio of 2.6. AWRE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Product sales increased 8% from $4.7 million in the third quarter of 2009 to $5.0 million in the current year quarter. As a percentage of total revenue, product sales increased from 75% in the third quarter of 2009 to 82% in the current year quarter. The dollar increase in product sales was primarily due to a $0.7 million increase in revenue from the sale of test and diagnostics hardware and a $0.4 million increase in revenue from the sale of test and diagnostics software. Revenue increases from test and diagnostics product sales were partially offset by $0.7 million less revenue from the sale of biometrics software. The $0.7 million increase in revenue from the sale of test and diagnostic hardware was mainly attributable to a large hardware sale to an OEM customer that is deploying test equipment into a major service provider. The $0.4 million increase in revenue from the sale of test and diagnostic software was mainly attributable to revenue from our LDP (Line Diagnostics Platform) software, which was partially offset by lower sales of our Dr. DSL software. The $0.7 million decrease in revenue from the sale of biometrics software was primarily due to the absence of any large sales transaction in the current quarter as compared to several large transactions in the year ago quarter.
For the nine months ended September 30, 2010, product sales increased 20% from $11.3 million in 2009 to $13.6 million in 2010. As a percentage of total revenue, product sales increased from 68% in the first nine months of 2009 to 81% in the corresponding period of 2010. The dollar increase in product sales was primarily due to a $1.5 million increase in revenue from the sale of test and diagnostics hardware, and a $0.7 million increase in revenue from the sale of biometrics software. The $1.5 million increase in revenue from the sale of test and diagnostic products was mainly attributable to a large hardware sale to an OEM customer that is deploying test equipment into a major service provider. The $0.7 million increase in revenue from the sale of biometrics software was primarily due to stronger 2010 sales after a weak first half of 2009.
General and administrative expense increased 19% from $1.4 million in the third quarter of 2009 to $1.7 million in the current year quarter. As a percentage of total revenue, general and administrative expense increased from 22% in the third quarter of 2009 to 27% in the current year quarter. The dollar increase in general and administrative expense was mainly attributable to higher spending on: i) stock-based compensation of $0.2 million, ii) professional fees related to our proposed spin-off of our patent licensing operations of $0.2 million, and ii) legal fees related to patent filings of $0.1 million. These expense increases were partially offset by $0.2 million of other spending reductions.
At September 30, 2010, we had cash and cash equivalents of $39.0 million, which represented a decrease of $628,000 from December 31, 2009. The decrease in cash was primarily due to: i) $208,000 of cash used by operations; ii) $101,000 of cash used to purchase capital equipment; iii) $60,000 of cash used to purchase other assets; iv) $161,000 of cash used to pay withholding taxes for employees who surrendered shares of common stock in connection with an employee option exchange program; and v) $100,000 of transaction expenses paid in the first quarter of 2010 that related to the 2009 sale of assets to Lantiq.
We used $208,000 of cash in operations in the first nine months of 2010. This cash usage was primarily the result of a net loss of $50,000 and $1.715 million of cash used to fund working capital items, which was partially offset by non-cash items related to depreciation and amortization of $388,000, and stock-based compensation expense of $1.169 million. The $50,000 net loss in the nine months ended September 30, 2010 includes $425,000 of proceeds from a legal settlement with a former customer.
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Aware Inc. has a market cap of $55.3 million; its shares were traded at around $2.81 with a P/E ratio of 12.6 and P/S ratio of 2.6. AWRE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Summary of Financial Results. Net income in accordance with generally accepted accounting principles (“GAAP”) for the three months ended September 30, 2010 was $76,000, or $0.00 per share, which compares to a GAAP net loss of $1.1 million, or minus $0.06 per share, for the three months ended September 30, 2009. Our GAAP net loss for the nine months ended September 30, 2010 was $50,000, or $0.00 per share, which compares to a GAAP net loss of $4.9 million, or minus $0.23 per share, for the nine months ended September 30, 2009.Product sales increased 8% from $4.7 million in the third quarter of 2009 to $5.0 million in the current year quarter. As a percentage of total revenue, product sales increased from 75% in the third quarter of 2009 to 82% in the current year quarter. The dollar increase in product sales was primarily due to a $0.7 million increase in revenue from the sale of test and diagnostics hardware and a $0.4 million increase in revenue from the sale of test and diagnostics software. Revenue increases from test and diagnostics product sales were partially offset by $0.7 million less revenue from the sale of biometrics software. The $0.7 million increase in revenue from the sale of test and diagnostic hardware was mainly attributable to a large hardware sale to an OEM customer that is deploying test equipment into a major service provider. The $0.4 million increase in revenue from the sale of test and diagnostic software was mainly attributable to revenue from our LDP (Line Diagnostics Platform) software, which was partially offset by lower sales of our Dr. DSL software. The $0.7 million decrease in revenue from the sale of biometrics software was primarily due to the absence of any large sales transaction in the current quarter as compared to several large transactions in the year ago quarter.
For the nine months ended September 30, 2010, product sales increased 20% from $11.3 million in 2009 to $13.6 million in 2010. As a percentage of total revenue, product sales increased from 68% in the first nine months of 2009 to 81% in the corresponding period of 2010. The dollar increase in product sales was primarily due to a $1.5 million increase in revenue from the sale of test and diagnostics hardware, and a $0.7 million increase in revenue from the sale of biometrics software. The $1.5 million increase in revenue from the sale of test and diagnostic products was mainly attributable to a large hardware sale to an OEM customer that is deploying test equipment into a major service provider. The $0.7 million increase in revenue from the sale of biometrics software was primarily due to stronger 2010 sales after a weak first half of 2009.
General and administrative expense increased 19% from $1.4 million in the third quarter of 2009 to $1.7 million in the current year quarter. As a percentage of total revenue, general and administrative expense increased from 22% in the third quarter of 2009 to 27% in the current year quarter. The dollar increase in general and administrative expense was mainly attributable to higher spending on: i) stock-based compensation of $0.2 million, ii) professional fees related to our proposed spin-off of our patent licensing operations of $0.2 million, and ii) legal fees related to patent filings of $0.1 million. These expense increases were partially offset by $0.2 million of other spending reductions.
At September 30, 2010, we had cash and cash equivalents of $39.0 million, which represented a decrease of $628,000 from December 31, 2009. The decrease in cash was primarily due to: i) $208,000 of cash used by operations; ii) $101,000 of cash used to purchase capital equipment; iii) $60,000 of cash used to purchase other assets; iv) $161,000 of cash used to pay withholding taxes for employees who surrendered shares of common stock in connection with an employee option exchange program; and v) $100,000 of transaction expenses paid in the first quarter of 2010 that related to the 2009 sale of assets to Lantiq.
We used $208,000 of cash in operations in the first nine months of 2010. This cash usage was primarily the result of a net loss of $50,000 and $1.715 million of cash used to fund working capital items, which was partially offset by non-cash items related to depreciation and amortization of $388,000, and stock-based compensation expense of $1.169 million. The $50,000 net loss in the nine months ended September 30, 2010 includes $425,000 of proceeds from a legal settlement with a former customer.
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