Aware, Inc. Reports Fourth Quarter and 2006 Financial Results

BEDFORD, Mass. - February 6, 2007 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of broadband technology and biometrics software, today reported financial results for its fourth quarter ended December 31, 2006.

Revenues for the fourth quarter of 2006 increased 76% to $6.4 million, from $3.7 million in the same quarter last year. For the twelve months ended December 31, 2006, revenues increased 54% to $24.1 million, compared to $15.7 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 income for the fourth quarter of 2006 was $0.9 million, or $0.04 per diluted share, which included $0.2 million of stock-based compensation charges, as this was the Company’s fourth quarter subject to 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 income for the twelve months ended December 31, 2006 was $1.0 million, or $0.04 per diluted share, compared to a net loss of $2.5 million, or $0.11 per share, for the same period a year ago. GAAP results prior to 2006 do not include a charge for stock-based compensation.

Non-GAAP net income for the fourth quarter of 2006, excluding the effect of stock-based compensation, was $1.1 million, or $0.04 per diluted share. For the twelve months ended December 31, 2006, the company had a non-GAAP net income, excluding the effect of stock-based compensation, of $3.0 million, or $0.12 per diluted share.

Michael Tzannes, Aware’s chief executive officer, said, “During 2006, we were successful on important fronts in all aspects of our business. The future of DSL is ADSL2+ and VDSL2 and we are actively participating in deployments and new product developments. For the DSL test and diagnostics market, we launched new hardware and software products that are gaining traction as phone companies turn their attention to service assurance and test infrastructure. In biometrics, we further improved the value proposition of our software products for criminal justice, border control, and secure credential applications. We are entering 2007 with a strong feeling of optimism about our position in the markets we are addressing.”

Note: Aware’s conference call will be broadcast live over the Internet today, February 6, 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) 457-2633 and referencing the confirmation number 8449736. A replay of the call will be archived on our website after the call.

Financial Tables

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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