8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): March 1, 2022

AWARE, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	000-21129	04-2911026
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

40 Middlesex Turnpike, Bedford, MA, 01730

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (781) 276-4000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	AWRE	The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On March 1, 2022, we entered into a lease agreement with 76/80 BURLINGTON GROUP LLC (the “Lease”). Pursuant to the Lease, we leased approximately 20,730 rentable square feet at 76 Blanchard Road in Burlington, Massachusetts (the “Premise”) for a term of ten years and six months, which we intend to use as our principal executive offices. The term of the Lease commences on the date that the landlord notifies us that the planned construction on the Premise is substantially complete. The Lease provides for an aggregate of $8.2 million of rent due over the term of the Lease, and we have an option to renew the Lease for up to two additional terms of five years each.

The foregoing summary of the Lease does not purport to be complete and is qualified in its entirety by reference to the Lease, which we intend to file as an exhibit to our annual report on Form 10-K for the year ended December 31, 2021.

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On March 1, 2022, we issued a press release reporting our results of operations and financial condition as of and for the quarter and year ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in Item 2.02 of this report and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On March 1, 2022, the Compensation Committee of our board of directors (the “Compensation Committee”) approved the Aware, Inc. 2022 Executive Bonus Plan (the “Plan”) and established performance criteria and target bonuses thereunder.

Pursuant to the Plan, each of Robert A. Eckel, our Chief Executive Officer and President, Robert M. Mungovan, our Chief Commercial Officer, Mohamed Lazzouni, our Chief Technical Officer, and David B. Barcelo, our Chief Financial Officer (the “Participants”), will be eligible to receive bonuses based upon the achievement of certain financial and operational goals, in each case as determined by the Compensation Committee. Seventy (70) percent of each Participant’s bonus is tied to the achievement of financial goals that are common to all Participants and thirty (30) percent of each Participant’s bonus is tied to the achievement of individualized operational goals.

Mr. Eckel’s target bonus under the Plan is $154,000; Mr. Mungovan’s target bonus is $141,625, Mr. Lazzouni’s target bonus is $143,000 and Mr. Barcelo’s target bonus is $103,000.

The financial goals under the Plan are tied to achievement by Aware, Inc. (the “Company”) of revenue and operating cash flow targets (the “2022 Financial Goals”) determined by the Compensation Committee. Each of the participants will receive a payment equal to 50% of his respective target bonus if their 2022 Financial Goals are met at the 85% level and a payment equal to 100% of his respective target bonuses if their 2022 Financial Goals are met at the 100% or greater level, with the bonus to be paid for performance falling between 85% and 100% of the 2022 Financial Goals to be calculated by linear interpolation.

- 2 -

The amount of the bonus earned by a Participant will depend upon the Company’s actual 2022 revenue and operating cash flow, as compared to the 2022 Financial Goals. The components of Mr. Eckel’s, Mr. Lazzouni’s and Mr. Barcelo’s 2022 Financial Goal are weighted as 50% revenue and 50% operating cash flow. The components of Robert Mungovan’s 2022 Financial Goals will be weighted at 85% revenue and 15% operating cash flow.

Operational goals are specific to each Participant. If our 2022 revenue does not equal at least 85% of the revenue goal included in the 2022 Financial Goals, the bonuses payable with respect to operational goals will be capped at a maximum payment of 75% of the portion of the target bonus tied to achievement of operational goals.

Robert Eckel (Operational goal bonus eligibility up to $46,300)

• Lead business transformation and position the Company for scale and growth, working to secure the organization’s reputation and visibility as an Authentication Platform and SaaS provider driving shareholder value through new partners, customers and active IR and PR – 50%

• Execute business growth through corporate development and optimized investments, as well as front end of the business investment to drive growth through innovative business models designed to fully use the Company’s portfolio to achieve a compelling value proposition, repeatable business, and sustainable competitive differentiation in the market increasing our shareholder value – 50%

Robert Mungovan (Operational goal bonus eligibility up to $42,488)

• Build the US Federal book of business securing new awards while improving recurring revenue along with brand awareness as a premier provider of web-based civil applicant background check systems – 50%

• Build the US Law Enforcement book of business scaling the ABIS and AFIX with new profitable deployments and increased recurring revenue – 45%

• Scale our LATAM Presence and advancement through the sales team and key partner management securing new awards and increased recurring revenue – 5%

Mohamed Lazzouni (Operational goal bonus eligibility up to $42,900)

• Create and build an authentication platform to support business growth and transformation. The platform should be designed to benefit customers with easy integration and faster time to market. It should be designed to support better margins through configuration rather than customization – 40%

• Develop and implement e-commerce provisioning and service capability enabling customer SaaS contracting and fulfillment with minimal sales or finance support driving growth through the portal – 40%

• In conjunction with the CEO, optimize corporate development investments and intellectual capital allocations and manage and leverage the integration of acquisitions and/or strategic partnership technology driving business growth and SaaS exploitation – 20%

David Barcelo (Operational goal bonus eligibility up to $30,900)

• Build and strengthen business cases to improve clarity and drive objectives of organic investment initiatives – 35%

• Drive the corporate development process and actions aligned with our growth and future direction – 35%

- 3 -

• Implement management system upgrades to enable autonomous processing of web sales transactions and digitize back-office processes to improve and further the scalability of contract execution and accounting – 30%

Bonus payments under the Plan, to the extent earned, will be paid approximately 45 days following the end of the 2022 fiscal year. All bonus payments are subject to statutory deductions and are taxable at the time of payment. In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment with us terminates during 2022 by reason of his total and permanent disability or death, the terminated Participant will receive a pro-rated bonus. If Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment with us is terminated by us without cause, the Compensation Committee may, in its discretion, award the terminated Participant a pro-rata bonus. In the event that Mr. Eckel’s, Mr. Mungovan’s, Mr. Lazzouni’s or Mr. Barcelo’s employment with us terminates for any other reason, including resignation and discharge for cause prior to the bonus payout date, all rights to a bonus will be forfeited. All payments under the Plan are subject to final approval by the Compensation Committee, which shall have the authority to change any amounts payable under the Plan.

ITEM 7.01. REGULATION FD DISCLOSURE.

On March 1, 2022 we posted an updated investor presentation to our website at https://www.aware.com/investor-relations/. A copy of the presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K.

The information contained in Item 2.02 of this report and Exhibit 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 8.01. OTHER EVENTS.

On March 1, 2022, our board of directors authorized a new stock repurchase program pursuant to which we may purchase up to $10.0 million worth of shares of our outstanding common stock. Share repurchases under the program will be made from time to time in the open market or in privately negotiated transactions pursuant to trading plans intended to comply with Rule 10b5-1 under the Exchange Act, which would permit repurchases to occur during periods when we might otherwise be precluded from making purchases under insider trading laws or company policy. The timing, pricing and sizes of these repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions. The stock repurchase program does not obligate us to repurchase any dollar amount or number of shares. The stock repurchase program terminates on December 31, 2023 and may be suspended or discontinued at any time.

ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS.

(d) Exhibits

Exhibit No.	Exhibit
99.1	Press Release dated March 1, 2022
99.2	Investor Presentation
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

- 4 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AWARE, INC.
Dated: March 1, 2022	By:	/s/ David B. Barcelo
		David B. Barcelo
		Chief Financial Officer

- 5 -

EX-99.1

Exhibit 99.1

Company Contact Gina Rodrigues Aware, Inc. 781-276-4000 grodrigues@aware.com Investor Contact Matt Glover and Sophie Pearson Gateway Group, Inc. 949-574-3860 AWRE@gatewayir.com

Aware Reports Fourth Quarter and Full Year 2021 Financial Results

Full Year 2021 Revenue Increased 49% Year-over-Year

Full Year 2021 Recurring Revenue Exceeded $9M

BEDFORD, MASS. – March 1, 2022 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software products, solutions and services, today reported financial results for the fourth quarter and fiscal year ended December 31, 2021.

Full Year & Fourth Quarter 2021 Operational Highlights

• Full year 2021 revenue increased 49% over full year 2020 revenue.

• Recorded an all-time high of 42 million transactions protected by Knomi^™ in 2021, a 345% year-over-year increase.

• Tripled subscription revenue year-over-year, driving a 46% year-over-year increase in recurring revenue, demonstrating and confirming the company’s growth strategy.

• Acquired Fortress Identity, a cloud-native pioneering provider of digital ID verification and biometric authentication, expanding the company’s offerings around identity proofing to directly address financial compliance requirements and enable organizations to mitigate risk and curtail increasing fraud.

• Selected by leading Turkish bank Garanti BBVA to incorporate Aware’s award-winning Knomi into the bank’s mobile app, enabling secure, remote customer onboarding and document verification capabilities.

• Announced that Thomas County, GA sheriff’s office installed AwareABIS, accelerating the agency’s criminal identification process.

• Showcased leading biometric and identity authentication solutions at Mobile World Congress Los Angeles and Connect:ID Conference, demonstrating Aware’s leadership within the biometrics industry and increasing the company’s brand awareness.

Fourth Quarter 2021 Financial Results

Revenue for the fourth quarter of 2021 was $4.0 million, compared to $4.2 million in the third quarter of 2021 and $3.4 million in the same year-ago period. The year-over-year increase in revenue was primarily the result of higher subscription-based revenue as well as higher maintenance revenue.

Net loss in the fourth quarter of 2021 totaled $1.3 million, or $(0.06) per diluted share, which compares to net loss of $1.6 million, or $(0.07) per diluted share, in the third quarter of 2021 and net loss of $1.6 million, or $(0.08) per diluted share, in the same year-ago period.

Page 2 of 5

Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the fourth quarter of 2021 was $0.9 million, compared to adjusted EBITDA loss of $1.0 million in the third quarter of 2021 and adjusted EBITDA loss of $1.4 million in the same year-ago period. The year-over-year improvement in adjusted EBITDA was primarily the result of higher revenues.

Cash and cash equivalents totaled $30.0 million as of December 31, 2021, compared to $38.6 million as of December 31, 2020.

Full Year 2021 Financial Results

Revenue for the full year ended December 31, 2021 was $16.9 million, compared to $11.3 million for the year ended December 31, 2020. The increase in revenue was primarily due to an increase in subscription-based revenue.

Net loss for the full year ended December 31, 2021 totaled $5.8 million, or $(0.27) per diluted share, compared to a net loss of $7.6 million or $(0.35) per diluted share, in the same year-ago period.

Adjusted EBITDA loss for the full year ended December 31, 2021 was $3.8 million compared to adjusted EBITDA loss of $8.0 million in the same year-ago period. The year-over-year improvement in adjusted EBITDA was primarily the result of higher revenues.

Management Commentary

“Our results for 2021 reflect the early success of our growth strategy and transformation into a subscription-based SaaS platform company,” said Robert Eckel, Aware’s Chief Executive Officer. “Financially, we achieved several milestones in 2021, including delivering the highest revenue in more than five years and generating robust growth in recurring revenue. Operationally, we expanded our sales pipeline by adding new partnerships across multiple industry verticals and geographies. And, our recent acquisition of Fortress Identity further accelerates the development and market adoption of our SaaS solutions.

“In 2022, our focus remains on executing our growth strategy as we advance our SaaS offerings and continue to evaluate strategic initiatives. We have the industry expertise and leading-edge authentication solutions to capitalize on the growing adoption of biometrics. We believe our strong operational momentum has us well-positioned to continue growing our topline revenue at a rate exceeding the biometric market CAGR of about 15% ”.

About Aware

Aware, a global leader in productized biometrics software products, solutions, and services, provides critical biometric functionality to collect, manage, process, and match biometric images and data for identification and authentication. With their decades-long experience, Aware is a market leader in liveness detection and multi-modal fusion to protect client and business processes through fingerprint, face, iris, and voice matching algorithms, mobile biometric capture and authentication software, a biometric workflow and middleware platform, and a fully scalable ABIS. Aware’s device-agnostic, integration-ready, and customer-managed products enable ease-of-use for enterprises to empower individuals to own their identities. Aware serves customers across a multitude of industries, including financial services, enterprise security, healthcare, human resources, citizen ID, border management, law enforcement, defense, and intelligence. Aware is a publicly held company (Nasdaq: AWRE) based in Bedford, Massachusetts. To learn more, visit https://www.aware.com or follow Aware on Twitter @AwareBiometrics.

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, earnings and non-recurring charges, the impact of acquisitions and the growth of the biometrics markets. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements.

Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) the biometrics market may not experience significant growth or our products may not achieve broad acceptance; vi)

Aware, Inc. | www.aware.com | 1.781.276.4000 © 2020 Aware, Inc.

Page 3 of 5

we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) we rely on third party software to develop and provide our solutions and significant defects in third party software could harm our business; xi) part of our future business is dependent on market demand for, and acceptance of, the cloud-based model for the use of software: xii) our operational systems and networks and products may be subject to an increasing risk of continually evolving cybersecurity or other technological risks which could result in the disclosure of company or customer confidential information, damage to our reputation, additional costs, regulatory penalties and financial losses; xiii) our intellectual property is subject to limited protection; xiv) we may be sued by third parties for alleged infringement of their proprietary rights; xv) we must attract and retain key personnel; xvii) our business may be affected by government regulations and adverse economic conditions; xviii) we may make acquisitions that could adversely affect our results, xix) we may have additional tax liabilities; and xx) we believe the effects caused by the COVID-19 pandemic will likely have an adverse impact on our revenue over the next several quarters.

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 annual report on Form 10-K for the fiscal year ended December 31, 2020 and other reports and filings made with the Securities and Exchange Commission.

AWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2021			2020			2021			2020
Revenue:
Software licenses	$	1,686		$	1,862		$	7,973		$	5,038
Software maintenance		1,848			1,319			6,679			5,429
Services and other		462			245			2,202			842
Total revenue		3,996			3,426			16,854			11,309
Costs and expenses:
Cost of services		276			327			1,209			810
Research and development		2,192			2,066			9,259			9,093
Selling and marketing		1,540			1,640			6,324			5,411
General and administrative		1,512			1,249			6,159			5,419
Total costs and expenses		5,520			5,282			22,951			20,733
Operating loss		(1,524	)		(1,856	)		(6,097	)		(9,424	)
Interest income		1			2			4			176
Loss before benefit from income taxes		(1,523	)		(1,854	)		(6,093	)		(9,248	)
Benefit from income taxes		(269	)		(218	)		(269	)		(1,634	)
Net loss	($	1,254	)	($	1,636	)	($	5,824	)	($	7,614	)
Net loss per share – basic	($	0.06	)	($	0.08	)	($	0.27	)	($	0.35	)
Net loss per share – diluted	($	0.06	)	($	0.08	)	($	0.27	)	($	0.35	)
Weighted-average shares – basic		21,578			21,424			21,525			21,473
Weighted-average shares – diluted		21,578			21,424			21,525			21,473

Aware, Inc. | www.aware.com | 1.781.276.4000 © 2020 Aware, Inc.

Page 4 of 5

AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	December 31, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	29,963	$	38,565
Accounts and unbilled receivables, net		6,850		4,514
Tax receivable		1,411		—
Property and equipment, net		3,216		3,701
Goodwill and intangible assets, net		6,342		2,868
Long-term tax receivable		—		1,398
Other assets, net		591		582
Total assets	$	48,373	$	51,628
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	2,192	$	2,025
Deferred revenue		3,740		3,933
Contingent acquisition payment		919		—
Total stockholders’ equity		41,522		45,670
Total liabilities and stockholders’ equity	$	48,373	$	51,628

Aware, Inc. | www.aware.com | 1.781.276.4000 © 2020 Aware, Inc.

Page 5 of 5

Non-GAAP Measures

We define adjusted EBITDA as U.S. GAAP net loss plus depreciation of fixed assets and amortization of intangible assets, stock-based compensation expenses, other (expense) income, net, and income tax provision. We discuss adjusted EBITDA in our quarterly earnings releases and certain other communications. We use adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, and evaluating short-term and long-term operating trends in our operations. We believe that the adjusted EBITDA financial measure assists in providing an enhanced understanding of our underlying operational measures to manage the business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that adjusted EBITDA is useful to investors as a tool to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the financial adjustments described above in arriving at adjusted EBITDA and investors should not infer from our presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring. The following table includes the reconciliations of our U.S. GAAP net loss the most directly comparable U.S. GAAP financial measure, to our adjusted EBITDA for the three months and full year ended December 31, 2021 and 2020 and three months ended September 30, 2021.

AWARE, INC.

RECONCILIATON OF ADJUSTED EBITDA TO NET LOSS

(In thousands)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2021			2020			2021			2020
Net loss	($	1,254	)	($	1,636	)	($	5,824	)	($	7,614	)
Depreciation and Amortization		168			160			688			561
Stock based compensation		490			281			1,567			838
Interest Income		(1	)		(2	)		(4	)		(176	)
Benefit from income taxes		(269	)		(218	)		(269	)		(1,634	)
Adjusted EBITDA	($	866	)	($	1,415	)	($	3,842	)	($	8,025	)

	Three Months Ended
	December 31,			September 30,
	2021			2021
Net loss	($	1,254	)	($	1,579	)
Depreciation and Amortization		168			171
Stock based compensation		490			441
Interest Income		(1	)		(1	)
Benefit for income taxes		(269	)		—
Adjusted EBIDTA	($	866	)	($	968	)

###

Aware is a registered trademark of Aware, Inc.

Aware, Inc. | www.aware.com | 1.781.276.4000 © 2020 Aware, Inc.

EX-99.2

Own Your Identity™ (NASDAQ: AWRE) www.aware.com Exhibit 99.2

Safe Harbor Statement 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, earnings and non-recurring charges, and the growth of the biometrics markets. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements. Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) the biometrics market may not experience significant growth or our products may not achieve broad acceptance; vi) we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) we rely on third party software to develop and provide our solutions and significant defects in third party software could harm our business; xi) part of our future business is dependent on market demand for, and acceptance of, the cloud-based model for the use of software: xii) our operational systems and networks and products may be subject to an increasing risk of continually evolving cybersecurity or other technological risks which could result in the disclosure of company or customer confidential information, damage to our reputation, additional costs, regulatory penalties and financial losses; xiii) our intellectual property is subject to limited protection; xiv) we may be sued by third parties for alleged infringement of their proprietary rights; xv) we must attract and retain key personnel; xvi) we rely on single sources of supply for certain components used in our hardware products; xvii) our business may be affected by government regulations and adverse economic conditions; xviii) we may make acquisitions that could adversely affect our results, xix) we may have additional tax liabilities; and xx) we believe the effects caused by the COVID-19 pandemic will likely have an adverse impact on our revenue over the next several quarters. 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 annual report on Form 10-K for the fiscal year ended December 31, 2019 and other reports and filings made with the Securities and Exchange Commission.

We apply proven and trusted adaptive authentication to solve everyday business challenges with biometrics.

Key Investment Highlights Proven Track Record new leadership team of industry experts World Renowned Customers Rapidly expanding financial services + loyal government customers $30M Cash investing in growth Mobile Biometric Leadership in a fast-growing market Growing SaaS Business high retention rates with significant upside Market Trend Alignment Increased demand for remote and contactless security offerings worldwide

Company Snapshot TRUSTED BY: $30M in cash and cash equivalents $0 debt $71M Market Capitalization (As of Feb. 22, 2022) 38% Insider Ownership 84 Patents REVENUE BY GEOGRAPHY: North America 60% Rest of World 5% Latin America 15% Europe 20% 4 Industry-leading technology platforms 20+ Countries 100+ Commercial Leaders 80+ Government Agencies 20+ Industry Partners 75+ Years of collective Industry-Expert Leadership

We apply proven and trusted adaptive authentication to solve everyday business challenges with biometrics. ENROLLING Register biometric identities into your secure database ENABLING Manage the lifecycle of secure identities and transactions via optimized biometric interchanges IDENTIFYING Utilize your biometric database to accurately identify individuals AUTHENTICATING Provide frictionless, passwordless access to accounts and venues

A Growing Need for Authentication COMMERCIAL GOVERNMENT WHY BIOMETRICS? Our offerings address the growing challenges that government and commercial enterprises face in knowing and authenticating and securing constituencies and clients, improving peace of mind for stakeholders at all levels. Spoofing & Synthetic identity fraud Synthetic ID Fraud accounts for 10 to 15 percent of charge-offs in a typical unsecured lending portfolio1 The largest synthetic ID ring to date resulted in $200M in losses for banks1 Growing Online Demand 50% surge in remote banking transactions KYC verification for next-generation healthcare management systems Impostor Scams $15B in attempted fraudulent identity tax refund claims2 Government impostor scams resulted in a $667M loss2 National Security Border management and contactless travel surging 350K daily biometric transactions at DHS3 1 McKinsey & Company: Fighting Back Against Synthetic Identity Fraud. 2 Mobile and Online Banking Security During Covid-19: What You Need to Know. 3 Treasury Inspector General For Tax Administration 4 United States Department of Homeland Security

Compelling Market Profile Addressable Market 1 Biometric System Market by Authentication Type (Single-Factor: Fingerprint, Iris, Palm Print, Face, Voice; Multi-Factor), Offering (Hardware, Software), Functionality (Contact, Contactless, Combined), End User, and Region - Global Forecast to 2024 2 Global Biometrics Market 2019-2023 Border Defense, Civil Service Law Enforcement Banking, Payment Services, Retail $2.3B 2025 2020 $4.2B $4.2B PRIMARY SEGMENTS CAGR = 13%1 $11B in 2020 $68.6B Use of biometric technology in enterprises Demand for touchless biometric systems Software expected to be fastest-growing market for biometric systems $20B in 2025

Transforming For Growth Products streamlining to create focused business offerings SaaS introducing revolutionary  offerings Partners rapid market share growth with broader distribution 1 2 3

Focused Offerings Knomi™ Mobile Authentication using liveness detection, document verification, and biometric face and voice matching iBeta Level 1 and Level 2 compliant – the most prestigious industry designation AwareID™ Next generation adaptive authentication platform for onboarding and authentication Functional software-as-a-service offerings based on proven and trusted technology BioSP™ Workstation-based market-leading solution for browser-based biometric enrollment, data and workflow management Utilized by large employers for enrollment at scale AwareABIS™ Enterprise-scale identification & deduplication system for civil & criminal applications Fingerprint and Face Based-Search National ID Border Management BIOMETRIC FRAMEWORK BIOMETRIC SaaS MIDDLEWARE BIOMETRIC ID SYSTEM Enabling international biometric search services Authenticating offenders in Arkansas Securing high-value assets in North America 1 Identification & deduplication in Georgia $ Onboarding banking customers in LATAM

Aware is leading the convergence of Identity, Biometrics, AI and Cybersecurity via an adaptive competitive methodology which senses and responds to changing market needs from emerging or unexpected new challenges Customer-managed and integration-ready implementations Only provider that combines liveness and authentication, multi-modal automated biometric identification system, and integration-ready middleware Why We Are Chosen Distinguished From Its Competitors

Aware Biometrics Services - ABS™  Enrollment Services*  Enrollment Proctored and un-proctored Authentication Services* Individual Authentication TECHNOLOGY PROVIDED BY AWARE AND DELIVERED AS A SOLUTION BY OTHERS Core Services Trusted Registration Service  * Liveness is part of services as needed, but may be a separate service Our SaaS Transformation 2 WE ARE SCALED Capable of delivering solutions at any scale, whether its for local law enforcement agencies or the largest financial institutions CONSUMPTION ORIENTED Consumption-based services drive sustained growth across multiple verticals BRAND RECOGNITION Aware is recognized as the go-to partner for the largest and most trusted enterprises and agencies around the globe SaaS Offerings On-demand services Annuity business model Identity Proofing Online capture & enrollment AI based Anti-spoofing Scalable Multi-Modal search Role-based access rights Cloud-based, secure & flexible Turnkey Capability Rich Administrative features Core Services

CUSTOMERS AROUND THE WORLD ARE USING AND ADOPTING AWARE PRODUCTS FOR DAY-TO-DAY AUTHENTICATION Annual Recurring Revenue Recurring Growth

CUSTOMER CASE STUDY: Latin American Banks THE CHALLENGE Onboarding new customers is critical to bank’s revenue growth, but onboarding is when banks are most vulnerable to fraud. Insiders and fraudsters impersonate existing identities and create synthetic identities to gain access to customer accounts.  THE SOLUTION Aware implemented an early version of SaaS for liveness detection with Knomi’s face and voice modalities for several of Latin America’s largest banks. Adding voice matching and liveness detection makes the task of spoofing exponentially more complicated. THE RESULTS 70 million+ transactions protected by Knomi worldwide

Financial Services Payment Processing Retail Government Healthcare Personal Security Data/Network Security Shared Economy Consumer Services INITIAL MARKET FOCUS EMERGING MARKET POTENTIALS Leveraging Technology and Partnerships to Penetrate New Growth Markets 3 Markets are at different levels of adoption and acceptance

PARTNER CASE STUDY: Intercede THE CHALLENGE 81% of data breaches are caused by weak or stolen passwords1 and the average cost of a single breach is $4m2. Stronger methods of authentication exist but high costs, complexity of integration and the need for compliance with identity standards such as FIPS 201, can make them difficult to deploy. THE SOLUTION MyID® is a credential management system that provides integration, policy control and leverages Aware’s biometric software to ensure that strong authentication credentials are delivered to known individuals, fully compliant with identity policies and best security practice, providing effective protection against the number 1 form of data breach. THE RESULTS The strongest authentication, deployed simply, securely and at scale. 1 Verizon, Data Breach Investigations Report, 2019 2 Ponemon Institute, Cost of Data Breach Study, 2018

Financial Foundation For Growth Total Revenue $16.9M 2021 Total Assets $48M As of Dec. 31, 2021 Cash & Cash Equivalents $30M As of Dec. 31, 2021 Total Debt $0 2021 Tangible Book Value/Share $1.63 2021

Management Team MORE THAN 75 YEARS OF BIOMETRIC EXPERTISE Bob Eckel Chief Executive Officer & President Rob Mungovan Chief Commercial Officer Mohamed Lazzouni, Ph.D. Chief Technology Officer Dave Barcelo Chief Financial Officer 20 + years with

Contact Us Aware 40 Middlesex Turnpike Bedford, Massachusetts 01730 Tel: (781) 276-4000 Email: ir@aware.com Gateway Investor Relations Tel: (949) 574-3860 Email: AWRE@gatewayir.com

Appendix

Acquisition of Fortress Identity December 22, 2021 The acquisition is immediately accretive, strengthening our position in our core markets in Latin America and Europe and expanding our suite of offerings to include each link in the identity value chain The FortressID™ platform from Fortress Identity uses biometric multi-factor authentication to combine onboarding validation and due diligence for compliance and risk management. The SaaS platform acquisition enables our penetration into the most attractive markets in North America and other geographies.

XML

Document and Entity Information	Mar. 01, 2022
Cover [Abstract]
Entity Registrant Name	AWARE INC /MA/
Amendment Flag	false
Entity Central Index Key	0001015739
Document Type	8-K
Document Period End Date	Mar. 01, 2022
Entity Incorporation State Country Code	MA
Entity File Number	000-21129
Entity Tax Identification Number	04-2911026
Entity Address, Address Line One	40 Middlesex Turnpike
Entity Address, City or Town	Bedford
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01730
City Area Code	(781)
Local Phone Number	276-4000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $.01 per share
Trading Symbol	AWRE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false