Company: AWRE
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038714
Chunk: 18

Company: AWARE INC /MA/
Filing Date: 2025-03-13
Form: 10-K
Item: Item 1A
Chunk 18
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Our operating results may fluctuate significantly from period-to-period and are difficult to predict.

Individual orders can represent a meaningful percentage of our revenues and operating results in any single period and the timing of the receipt of those orders is difficult to predict. The failure to close an order or the deferral or cancellation of an order can result in revenue and net income shortfalls for that quarter. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed. As a result, we may not be able to sufficiently reduce our costs in any quarter to adequately compensate for an unexpected near-term shortfall in revenues, and even a small shortfall could disproportionately and adversely affect our financial results for that quarter. 

Our financial results may be negatively affected by a number of factors as well, including the following: 

•any lack or reduction of government funding and the political, budgetary and purchasing constraints of government customers who purchase products and services directly or indirectly from us; 

•the terms of customer contracts that affect the timing of revenue recognition; 

•the size and timing of our receipt of customer orders; 

•significant fluctuations in demand for our products and services; 

•any loss of a key customer or one of its key customers;

•new competitors entering our markets, or the introduction of enhanced solutions from new or existing competitors; 

•competitive pressures on selling prices;

•any cancellations, or delays of orders or contract amendments by government customers;

•higher than expected costs, asset write-offs, and other one-time financial charges; and

•general economic trends and other factors.

•write-offs of investments in private companies; 

As a result of these factors, we believe that period-to-period comparisons of our revenue levels and operating results are not necessarily meaningful.  You should not rely on our quarterly or annual revenue and operating results to predict our future performance.

We derive a significant portion of our revenue directly or indirectly from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities. 

We derive a significant portion of our revenue directly or indirectly from federal, international, state and local governments. We believe that the success and growth of our business will continue to depend on government customers purchasing our products and services either directly from us or indirectly through our channel partners. 

8

Changes in government contracting policies or government budgetary constraints may adversely affect our financial performance. Among the factors that could adversely affect our business are: 

•the impact of actions, such