Aware(AWRE) - 2023 Q2 - Quarterly Report

Financial Performance - Total revenue for Q2 2023 was $3,184,000, a decrease of 25% compared to $4,238,000 in Q2 2022[14] - Software licenses revenue decreased to $1,039,000 in Q2 2023 from $2,018,000 in Q2 2022, representing a decline of 48.5%[14] - Operating loss for Q2 2023 was $2,936,000, compared to an operating loss of $1,353,000 in Q2 2022, indicating a worsening of 117%[15] - Net loss for Q2 2023 was $2,652,000, compared to a net loss of $1,289,000 in Q2 2022, reflecting an increase of 106%[15] - Revenue for the three months ended June 30, 2023, was $2,064,000, a decrease from $2,274,000 in the same period of 2022[46] - Revenue for the six months ended June 30, 2023, was $4,118,000, compared to $4,310,000 for the same period in 2022[46] - The net loss for the three months ended June 30, 2023, was $2,652,000, compared to a net loss of $1,568,000 for the same period in 2022[25] Cash and Assets - Cash and cash equivalents decreased to $3,313,000 as of June 30, 2023, down from $11,749,000 at the end of 2022, a decline of 71.8%[9] - Total assets decreased to $47,672,000 as of June 30, 2023, from $51,192,000 at the end of 2022, a reduction of 6.5%[9] - Marketable securities increased to $21,700 thousand as of June 30, 2023, from $17,200 thousand as of December 31, 2022[62] - The total assets measured at fair value on a recurring basis were $27,103 thousand as of June 30, 2023[63] - The balance of note receivable increased from $2.601 million as of December 31, 2022, to $2.663 million as of June 30, 2023[71] Expenses - Research and development expenses for Q2 2023 were $2,265,000, slightly up from $2,229,000 in Q2 2022, an increase of 1.6%[15] - Selling and marketing expenses increased to $1,956,000 in Q2 2023 from $1,412,000 in Q2 2022, a rise of 38.5%[15] - Stock-based compensation expense for the six months ended June 30, 2023, was $738 thousand, compared to $808 thousand for the same period in 2022[81] - The company reported stock-based compensation expense of $403,000 for the three months ended June 30, 2023[25] Liabilities and Equity - Total current liabilities increased to $6,627,000 as of June 30, 2023, compared to $5,802,000 at the end of 2022, an increase of 14.2%[10] - Stockholders' equity decreased to $36,442,000 as of June 30, 2023, down from $40,209,000 at the end of 2022, a decline of 9.4%[11] - As of June 30, 2023, total stockholders' equity was $38,767,000, a decrease from $40,209,000 at December 31, 2022[25] Revenue Recognition and Future Expectations - The company expects to recognize revenue from its SaaS offerings in future periods, with revenue recognized ratably over the subscription period[43] - Subscription-based contracts revenue for the six months ended June 30, 2023, was $1,885 thousand, up 10% from $1,715 thousand in the same period of 2022[49] - Deferred revenue as of June 30, 2023, was $4,359 thousand, an increase from $3,533 thousand as of June 30, 2022[56] - The company expects to recognize approximately 85% of the remaining deferred revenue over the next 12 months, with the remainder recognized thereafter[58] Acquisitions and Investments - FortressID was acquired for a total purchase price of $3.4 million, consisting of $2.5 million in cash and contingent payments valued at $0.9 million[68] - No revenue targets were achieved in 2022, resulting in a maximum contingent acquisition payment of $2.0 million as of June 30, 2023[68] - The investment in Note Receivable with Omlis Limited had a carrying value of $2,700 thousand as of June 30, 2023[66] - The company reported unrealized losses of $149 thousand on marketable securities as of June 30, 2023[67] Tax and Amortization - The company recorded no income tax benefits for net operating losses or research and development tax credits for the three and six months ended June 30, 2023[87] - A refundable federal tax credit of approximately $1.4 million is expected from the carryback of estimated losses reported on the 2020 tax return[88] - The company expects to record amortization expenses of $207 thousand for the remainder of 2023 and $415 thousand for 2024[74] - Interest income earned from the note receivable was $62 thousand for the six months ended June 30, 2023, compared to $38 thousand for the same period in 2022[78]