Aware, Inc. Reports 2004 Second Quarter Financial Results

BEDFORD, MA - August 3 2004 - Aware, Inc. (NASDAQ: AWRE), a worldwide leader and innovator of broadband intellectual property, today reported financial results for its second quarter ended June 30, 2004.

Revenues for the second quarter of 2004 were $3.7 million compared to $2.8 million for the same period last year. Net loss for the second quarter of 2004 was $0.8 million, or $0.04 per diluted share, compared to a net loss of $1.8 million, or $0.08 per diluted share, for the year-ago period.

For the six months ended June 30, 2004, revenues were $7.3 million compared to $4.8 million in the same period last year. Net loss for the six months ended June 30, 2004 was $2.0 million or $0.09 per diluted share, compared to a net loss of $4.8 million, or $0.21 per diluted share, for the year-ago period.

Michael Tzannes, chief executive officer, said: "The drive to new ADSL2+ standards, based upon higher performance technology, continues to gain momentum. This is driven in large part by the desire of phone companies to deliver video services over next generation networks that utilize ADSL2+. Aware's StratiPHY technology is a market leader in performance and interoperability, and positions us to benefit as ADSL2 and ADSL2+ services deploy around the world

Financial Tables
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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+, Dr. DSL®, StratiPHY2+™, 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 about Aware can be found at http://www.aware.com.

Note: Aware's conference call will be broadcast live over the Internet today, August 3, 2004 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) 981-5581 and referencing the confirmation number 613981. A replay of the call will be archived on our website after the call.

Safe Harbor Warning
Portions of this release contain forward-looking statements regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings and the growth of the DSL market. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements. These factors include, but are not limited to: we have a unique business model, our quarterly results are difficult to predict, we depend on a limited number of licensees, we derive a significant amount of revenue from one customer, we depend on equipment companies to incorporate our technology into their products, we face intense competition from other DSL vendors, DSL technology competes with other technologies for broadband access, and our business is subject to rapid technological change. We refer you to the documents Aware files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2004 and other reports and filings made with the Securities and Exchange Commission.