----

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| Massachusetts                        | 04-2911026                                |
|--------------------------------------|-------------------------------------------|
| (State      or Other Jurisdiction of | (I.R.S.      Employer Identification No.) |
| Incorporation      or Organization)  |                                      |

| Class                                        | Number of Shares  Outstanding |
|----------------------------------------------|-------------------------------|
| Common      Stock, par value $0.01 per share | 19,782,128      shares        |

----

----

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|          |                                                                                                               | Page   |
|---------------|--------------------------------------------------------------------------------------------------------------------|--------|
| PART      I   | FINANCIAL      INFORMATION                                                                                         |   |
|          |                                                                                                               |   |
| Item      1.  | Unaudited      Consolidated Financial Statements                                                                   |   |
|          |                                                                                                               |   |
|          | Consolidated      Balance Sheets as of  June 30, 2009 and December 31,      2008                         | 3      |
|          |                                                                                                               |   |
|          | Consolidated      Statements of Operations for the Three and Six Months Ended June 30, 2009      and June 30, 2008 | 4      |
|          |                                                                                                               |   |
|          | Consolidated      Statements of Cash Flows for the Three and Six Months Ended June 30, 2009      and June 30, 2008 | 5      |
|          |                                                                                                               |   |
|          | Notes      to Consolidated Financial Statements                                                                    | 6      |
|          |                                                                                                               |   |
| Item      2.  | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations              | 11     |
|          |                                                                                                               |   |
| Item      3.  | Quantitative      and Qualitative Disclosures about Market Risk                                                    | 17     |
|          |                                                                                                               |   |
| Item      4.  | Controls      and Procedures                                                                                       | 17     |
|          |                                                                                                               |   |
| PART      II  | OTHER      INFORMATION                                                                                             |   |
|          |                                                                                                               |   |
| Item      1.  | Legal      Proceedings                                                                                             | 18     |
|          |                                                                                                               |   |
| Item      1A. | Risk      Factors                                                                                                  | 18     |
|          |                                                                                                               |   |
| Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds                                                   | 29     |
|          |                                                                                                               |   |
| Item      4.  | Submission      of Matters to a Vote of Security Holders                                                           | 30     |
|          |                                                                                                               |   |
| Item      6.  | Exhibits                                                                                                           | 31     |
|          |                                                                                                               |   |
|          | Signatures                                                                                                         | 31     |

----

|                                                                                                                                                                    |   | June      30,2009 |    |   | December      31,2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|--------|
| ASSETS                                                                                                                                                                  |   |              |    |   |                  |   |
| Current      assets:                                                                                                                                                    |   |              |    |   |                  |   |
| Cash      and cash equivalents                                                                                                                                          |   | $                 | 31,860  |   |                  | $      | 45,516 |   |
| Accounts      receivable, net                                                                                                                                           |   |              | 4,635   |   |                  |   | 2,211 |   |
| Inventories                                                                                                                                                             |   |              | 1,128   |   |                  |   | 1,656 |   |
| Prepaid      expenses and other current assets                                                                                                                          |   |              | 839     |   |                  |   | 598 |   |
| Total      current assets                                                                                                                                               |   |              | 38,462  |   |                  |   | 49,981 |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| Property      and equipment, net                                                                                                                                        |   |              | 7,165   |   |                  |   | 7,463 |   |
| Other      assets, net                                                                                                                                                  |   |              | 68      |   |                  |   | 102 |   |
| Total      assets                                                                                                                                                       |   | $                 | 45,695  |   |                  | $      | 57,546 |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                         |   |              |    |   |                  |   |   |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| Current      liabilities:                                                                                                                                               |   |              |    |   |                  |   |   |   |
| Accounts      payable                                                                                                                                                   |   | $                 | 535     |   |                  | $      | 466 |   |
| Accrued      expenses                                                                                                                                                   |   |              | 129     |   |                  |   | 241 |   |
| Accrued      compensation                                                                                                                                               |   |              | 1,276   |   |                  |   | 1,480 |   |
| Accrued      professional                                                                                                                                               |   |              | 198     |   |                  |   | 167 |   |
| Deferred      revenue                                                                                                                                                   |   |              | 569     |   |                  |   | 339 |   |
| Total      current liabilities                                                                                                                                          |   |              | 2,707   |   |                  |   | 2,693 |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| Long-term      deferred revenue                                                                                                                                         |   |              | 330     |   |                  |   | 330 |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| Stockholders’      equity:                                                                                                                                        |   |              |    |   |                  |   |   |   |
| Preferred      stock, $1.00 par value; 1,000,000 shares authorized, none      outstanding                                                                               |   |              | -       |   |                  |   | - |   |
| Common      stock, $.01 par value; 70,000,000 shares authorized; issued and      outstanding 19,782,128 as of June 30, 2009 and 23,281,204 as of      December 31, 2008 |   |              | 198     |   |                  |   | 233 |   |
| Additional      paid-in capital                                                                                                                                         |   |              | 75,030  |   |                  |   | 83,143 |   |
| Accumulated      deficit                                                                                                                                                |   |              | (32,570 | )      |                  |   | (28,853 | ) |
| Total      stockholders’ equity                                                                                                                                   |   |              | 42,658  |   |                  |   | 54,523 |   |
|                                                                                                                                                                    |   |              |    |   |                  |   |   |   |
| Total      liabilities and stockholders’ equity                                                                                                                   |   | $                 | 45,695  |   |                  | $      | 57,546 |   |

----

|                                        |   | Three      Months Ended |   |   | Six      Months Ended |   |
|---------------------------------------------|--------|-------------------------|--------|--------|-----------------------|--------|
|                                        |   | June      30,           |   |   | June      30,         |   |
|                                        |   | 2009                    |   |   | 2008                  |   |   | 2009 |   |   | 2008 |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |
| Revenue:                                    |   |                    |   |   |                  |   |   |   |   |   |   |   |
| Product      sales                          |   | $                       | 3,852  |   |                  | $      | 3,948 |   |   | $ | 6,671 |   |   | $ | 7,872 |   |
| Contract      revenue                       |   |                    | 1,442  |   |                  |   | 1,776 |   |   |   | 2,719 |   |   |   | 3,298 |   |
| Royalties                                   |   |                    | 470    |   |                  |   | 443 |   |   |   | 947 |   |   |   | 874 |   |
| Total      revenue                          |   |                    | 5,764  |   |                  |   | 6,167 |   |   |   | 10,337 |   |   |   | 12,044 |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Costs      and expenses:                    |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of product sales                  |   |                    | 1,043  |   |                  |   | 624 |   |   |   | 1,556 |   |   |   | 1,448 |   |
| Cost      of contract revenue               |   |                    | 909    |   |                  |   | 1,129 |   |   |   | 1,817 |   |   |   | 2,148 |   |
| Research      and development               |   |                    | 3,058  |   |                  |   | 3,511 |   |   |   | 6,170 |   |   |   | 7,039 |   |
| Selling      and marketing                  |   |                    | 1,184  |   |                  |   | 1,186 |   |   |   | 2,265 |   |   |   | 2,155 |   |
| General      and administrative             |   |                    | 1,216  |   |                  |   | 1,285 |   |   |   | 2,429 |   |   |   | 2,478 |   |
| Total      costs and expenses               |   |                    | 7,410  |   |                  |   | 7,735 |   |   |   | 14,237 |   |   |   | 15,268 |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from operations                   |   |                    | (1,646 | )      |                  |   | (1,568 | ) |   |   | (3,900 | ) |   |   | (3,224 | ) |
| Interest      income                        |   |                    | 61     |   |                  |   | 315 |   |   |   | 186 |   |   |   | 698 |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Loss      before provision for income taxes |   |                    | (1,585 | )      |                  |   | (1,253 | ) |   |   | (3,714 | ) |   |   | (2,526 | ) |
| Provision      for income taxes             |   |                    | 1      |   |                  |   | 4 |   |   |   | 4 |   |   |   | 13 |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                               |   | $                       | (1,586 | )      |                  | $      | (1,257 | ) |   | $ | (3,718 | ) |   | $ | (2,539 | ) |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share – basic       |   | $                       | (0.08  | )      |                  | $      | (0.05 | ) |   | $ | (0.17 | ) |   | $ | (0.11 | ) |
| Net      loss per share – diluted     |   | $                       | (0.08  | )      |                  | $      | (0.05 | ) |   | $ | (0.17 | ) |   | $ | (0.11 | ) |
|                                        |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares – basic  |   |                    | 20,666 |   |                  |   | 23,869 |   |   |   | 21,974 |   |   |   | 23,875 |   |
| Weighted      average shares - diluted      |   |                    | 20,666 |   |                  |   | 23,869 |   |   |   | 21,974 |   |   |   | 23,875 |   |

----

|                                                                                                |   | Six      Months Ended |    |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
|                                                                                                |   | June      30,         |    |
|                                                                                                |   | 2009                  |    |   | 2008 |   |
|                                                                                                |   |                  |    |   |   |   |
| Cash      flows from operating activities:                                                          |   |                  |    |   |   |   |
| Net      loss                                                                                       |   | $                     | (3,718  | ) |   | $ | (2,539 | ) |
| Adjustments      to reconcile net loss to net cash provided      by (used in) operating activities: |   |                  |    |   |   |   |   |   |
| Depreciation      and amortization                                                                  |   |                  | 448     |   |   |   | 457 |   |
| Stock      based compensation                                                                       |   |                  | 800     |   |   |   | 718 |   |
| Provision      for doubtful accounts                                                                |   |                  | -       |   |   |   | (19 | ) |
| Increase      (decrease) from changes in assets and liabilities:                                    |   |                  |    |   |   |   |   |   |
| Accounts      receivable                                                                            |   |                  | (2,424  | ) |   |   | 1,986 |   |
| Inventories                                                                                         |   |                  | 528     |   |   |   | (646 | ) |
| Prepaid      expenses                                                                               |   |                  | (241    | ) |   |   | 135 |   |
| Accounts      payable                                                                               |   |                  | 69      |   |   |   | 15 |   |
| Accrued      expenses                                                                               |   |                  | (285    | ) |   |   | 22 |   |
| Deferred      revenue                                                                               |   |                  | 230     |   |   |   | (94 | ) |
| Net      cash provided by (used in) operating activities                                            |   |                  | (4,593  | ) |   |   | 35 |   |
|                                                                                                |   |                  |    |   |   |   |   |   |
| Cash      flows from investing activities:                                                          |   |                  |    |   |   |   |   |   |
| Purchases      of property and equipment                                                            |   |                  | (116    | ) |   |   | (274 | ) |
| Sales      of investments                                                                           |   |                  | -       |   |   |   | 38,743 |   |
| Purchases      of investments                                                                       |   |                  | -       |   |   |   | (2,000 | ) |
| Net      cash provided by (used in) investing activities                                            |   |                  | (116    | ) |   |   | 36,469 |   |
|                                                                                                |   |                  |    |   |   |   |   |   |
| Cash      flows from financing activities:                                                          |   |                  |    |   |   |   |   |   |
| Proceeds      from issuance of common stock                                                         |   |                  | 3       |   |   |   | 337 |   |
| Repurchase      of common stock                                                                     |   |                  | (8,950  | ) |   |   | (782 | ) |
| Net      cash used in financing activities                                                          |   |                  | (8,947  | ) |   |   | (445 | ) |
|                                                                                                |   |                  |    |   |   |   |   |   |
| Increase      (decrease) in cash and cash equivalents                                               |   |                  | (13,656 | ) |   |   | 36,059 |   |
| Cash      and cash equivalents, beginning of period                                                 |   |                  | 45,516  |   |   |   | 1,806 |   |
|                                                                                                |   |                  |    |   |   |   |   |   |
| Cash      and cash equivalents, end of period                                                       |   | $                     | 31,860  |   |   | $ | 37,865 |   |

----

| A)     | Basis      of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      accompanying unaudited consolidated balance sheet, statements of      operations, and statements of cash flows reflect all adjustments      (consisting only of normal recurring items) which are, in the opinion of      management, necessary for a fair presentation of financial position at      June 30, 2009, and of operations and cash flows for the interim periods      ended June 30, 2009 and 2008.  Certain reclassifications have      been made to the prior year financial statements to conform to the current      year presentation.                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      accompanying unaudited consolidated financial statements have been      prepared in accordance with the instructions for Form 10-Q and therefore      do not include all information and footnotes necessary for a complete      presentation of our financial position, results of operations and cash      flows, in conformity with generally accepted accounting      principles.  We filed audited financial statements which      included all information and footnotes necessary for such presentation for      the three years ended December 31, 2008 in conjunction with our 2008      Annual Report on Form 10-K.                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      results of operations for the interim period ended June 30, 2009 are not      necessarily indicative of the results to be expected for the year. We      evaluated subsequent events through July 31, 2009, the date of      financial statement issuance.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| B)     | Fair      Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      September 2006, the FASB issued SFAS No. 157 ("SFAS 157"), "Fair Value      Measurements".  SFAS 157 defines fair value, establishes a      framework for measuring fair value in accordance with accounting      principles generally accepted in the United States, and expands      disclosures about fair value measurements. We adopted the provisions of      SFAS 157 as of January 1, 2008, for our financial instruments. Although      the adoption of SFAS 157 did not materially impact our financial      condition, results of operations, or cash flow, we are now required to      provide additional disclosures as part of our financial      statements. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | SFAS      157 establishes a three-tier fair value hierarchy, which prioritizes the      inputs used in measuring fair value.  These tiers include: Level      1, defined as observable inputs such as quoted prices in active markets;      Level 2, defined as inputs other than quoted prices in active markets that      are either directly or indirectly observable; and Level 3, defined as      unobservable inputs in which little or no market data exists, therefore      requiring an entity to develop its own assumptions.                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | For      recognition purposes, on a recurring basis we are required to measure      available for sale investments at fair value.  We had no      available for sale investments as of June 30, 2009 or December 31,      2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Our      cash and cash equivalents, including money market securities, were $31.9      million and $45.5 million as of June 30, 2009 and December 31, 2008,      respectively. We classified our cash and cash equivalents within Level 1      of the fair value hierarchy because they are valued using quoted market      prices.                                                                                                                                                                                                                                                                                                                                                           |

----

| C)     | Inventory                                                                                                                                                                                                                                                                                                                                |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                     |
|   | Inventories      are stated at the lower of cost or net realizable value with cost being      determined by the first-in, first-out (“FIFO”)      method.  Inventory reserves are established for estimated excess      and obsolete inventory. Inventory consists primarily of the following (in      thousands): |

|   |                |   | June      30,2009 |   |   | December      31,2008 |   |
|--------|---------------------|--------|-------------------|--------|--------|-----------------------|--------|
|   | Raw      materials  |   | $                 | 1,127  |   |                  | $      | 1,650 |   |
|   | Finished      goods |   |              | 1      |   |                  |   | 6 |   |
|   | Total               |   | $                 | 1,128  |   |                  | $      | 1,656 |   |

| D)     | Computation      of Earnings per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Basic earnings per share is      computed by dividing net income or loss by the weighted average number of      common shares outstanding.  Diluted earnings per share is      computed by dividing net income or loss by the weighted average number of      common shares outstanding plus additional common shares that would have      been outstanding if dilutive potential common shares had been      issued.  For the purposes of this calculation, stock options are      considered common stock equivalents in periods in which they have a      dilutive effect.  Stock options that are anti-dilutive are      excluded from the calculation. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Net      loss per share is calculated as follows (in thousands, except per share      data):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|   |                                              |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|--------|---------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|   |                                              |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|   |                                              |   |                                 |   |   |                               |   |   |   |   |   |   |   |
|   | Net      loss                                     |   | $                                    | (1,586 | )      |                               | $      | (1,257 | ) |   | $ | (3,718 | ) |   | $ | (2,539 | ) |
|   |                                              |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   | Weighted      average common shares outstanding   |   |                                 | 20,666 |   |                               |   | 23,869 |   |   |   | 21,974 |   |   |   | 23,875 |   |
|   | Additional      dilutive common stock equivalents |   |                                 | -      |   |                               |   | - |   |   |   | - |   |   |   | - |   |
|   | Diluted      shares outstanding                   |   |                                 | 20,666 |   |                               |   | 23,869 |   |   |   | 21,974 |   |   |   | 23,875 |   |
|   |                                              |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   | Net      loss per share – basic and diluted |   | $                                    | (0.08  | )      |                               | $      | (0.05 | ) |   | $ | (0.17 | ) |   | $ | (0.11 | ) |

|   | For      the three month periods ended June 30, 2009 and 2008 potential common      stock equivalents of 6,986 and 238,039, respectively, were not included in      the per share calculation for diluted EPS, because we had a net loss and      the effect of their inclusion would be anti-dilutive. For the six month      period ended June 30, 2009 and 2008 potential common stock equivalents of      3,377 and 448,568, respectively, were not included in the per share      calculation for diluted EPS, because we had net losses and the effect of      their inclusion would beanti-dilutive. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | For      the three month periods ended June 30, 2009 and 2008, options to purchase      7,564,743 and 4,455,998 shares of common stock, respectively, were      outstanding, but were not included in the computation of diluted EPS      because the options’ exercise prices were greater than the average market      price of the common stock and thus would be anti-dilutive.  For      the six month periods ended June 30, 2009 and 2008, options to purchase      7,564,743 and 3,932,798 shares of common stock, respectively, were      outstanding, but were not included in the computation of diluted EPS      because the options’ exercise prices were greater than the average market      price of the common stock and thus would be  anti-dilutive. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| E)     | Stock-Based      Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      following table presents stock-based employee compensation expenses      included in the Company’s unaudited consolidated statements of operations      (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                                  |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|---------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|                                  |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|                                  |   |                                 |   |   |                               |   |   |   |   |   |   |   |
| Cost      of product sales            |   | $                                    | 3      |   |                               | $      | 3 |   |   | $ | 5 |   |   | $ | 6 |   |
| Cost      of contract revenue         |   |                                 | 36     |   |                               |   | 26 |   |   |   | 68 |   |   |   | 60 |   |
| Research      and development         |   |                                 | 138    |   |                               |   | 160 |   |   |   | 285 |   |   |   | 327 |   |
| Selling      and marketing            |   |                                 | 57     |   |                               |   | 50 |   |   |   | 109 |   |   |   | 81 |   |
| General      and administrative       |   |                                 | 175    |   |                               |   | 154 |   |   |   | 333 |   |   |   | 244 |   |
| Stock-based      compensation expense |   | $                                    | 409    |   |                               | $      | 393 |   |   | $ | 800 |   |   | $ | 718 |   |

|   | The      Company estimates the fair value of stock options using the Black-Scholes      valuation model. This valuation model takes into account the exercise      price of the award, as well as a variety of significant assumptions. These      assumptions used to estimate the fair value of stock options include the      expected term, the expected volatility of the Company’s stock over the      expected term, the risk-free interest rate over the expected term, and the      Company’s expected annual dividend yield. The Company believes that the      valuation technique and the approach utilized to develop the underlying      assumptions are appropriate in      calculating the fair values of the Company’s stock options granted in the      three and six months ended June 30, 2009 and June 30, 2008. Estimates of      fair value are not intended to predict actual future events or the value      ultimately realized by persons who receive equity  awards. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| F)     | Business      Segments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Company organizes itself as one segment and conducts its operations in the      United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Company sells its products and technology to domestic and international      customers.  Revenues were generated from the following      geographic regions (inthousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|               |   | Three      Months Ended |   |   | Six      Months Ended |   |
|--------------------|--------|-------------------------|--------|--------|-----------------------|--------|
|               |   | June      30,           |   |   | June      30,         |   |
|               |   | 2009                    |   |   | 2008                  |   |   | 2009 |   |   | 2008 |   |
|               |   |                    |   |   |                  |   |   |   |   |   |   |   |
| United      States |   | $                       | 3,578  |   |                  | $      | 4,897 |   |   | $ | 6,103 |   |   | $ | 8,898 |   |
| Germany            |   |                    | 1,534  |   |                  |   | 856 |   |   |   | 2,568 |   |   |   | 2,371 |   |
| Rest      of World |   |                    | 652    |   |                  |   | 414 |   |   |   | 1,666 |   |   |   | 775 |   |
|               |   | $                       | 5,764  |   |                  | $      | 6,167 |   |   | $ | 10,337 |   |   | $ | 12,044 |   |

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| G)     | Income      Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | As      of December 31, 2008, we had federal net operating loss and research and      experimentation credit carryforwards of approximately $46.5 million and      $12.8 million respectively, which may be available to offset future      federal income tax liabilities and expire at various dates from 2009      through 2029.  In addition, at December 31, 2008, we had      approximately $11.4 million and $6.6 million of state net operating losses      and state research and development and investment tax carryforwards,      respectively, which expire at various dates from 2009 through      2023.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Based on an analysis that we      performed under Internal Revenue Code Section 382 on our NOLs generated      for the period 1997 through 2007, we have not experienced a change in      ownership as defined by Section 382, and, therefore, the NOLs are not      currently under any Section 382 limitation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| H)     | Recent      Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      May 2009, the FASB issued Statement of Financial Accounting Standards      (“SFAS”) No. 165, “Subsequent Events,” which establishes general      standards of accounting for and disclosure of events that occur after the      balance sheet date but before the financial statements are issued or are      available to be issued. SFAS No. 165 provides guidance on the period      after the balance sheet date during which management of a reporting entity      should evaluate events or transactions that may occur for potential      recognition or disclosure in the financial statements, the circumstances      under which an entity should recognize events or transactions occurring      after the balance sheet date in its financial statements and the      disclosures that an entity should make about events or transactions that      occurred after the balance sheet date. The Company adopted SFAS      No. 165 during the second quarter of 2009, and its application had no      impact on the Company’s consolidated financial  statements.                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      June 2009, the FASB issued Statement No. 168, The FASB      Accounting Standards Codification and the Hierarchy of Generally Accepted      Accounting Principles.  Statement No. 168 replaces FASB      Statement No. 162, The Hierarchy of Generally Accepted Accounting      Principles, and establishes the FASB Accounting Standards Codification      TM (the Codification) as the source of authoritative accounting      principles recognized by the FASB to be applied by nongovernmental      entities in the preparation of financial statements in conformity with      generally accepted accounting principles (GAAP).  Statement      No. 168 is effective for interim and annual periods ending after      September 15, 2009.  The Company will begin to use the new      Codification when referring to GAAP in its quarterly report on      Form 10-Q for the fiscal period ending September 30, 2009.       This will not have an impact on the consolidated results of the      Company.                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      September 2006, the FASB issued SFAS No. 157 ("SFAS 157"),      "Fair Value Measurements," which defines fair value, establishes      guidelines for measuring fair value and expands disclosures regarding fair      value measurements. SFAS 157 does not require any new fair value      measurements but rather eliminates inconsistencies in guidance found in      various prior accounting pronouncements. SFAS 157 is effective for      fiscal years beginning after November 15, 2007. However, on February      6, 2008, the FASB issued FSP FAS 157-b which defers the effective      date of SFAS 157 for one year for nonfinancial assets and      nonfinancial liabilities that are recognized or disclosed at fair value in      the financial statements on a recurring basis. We adopted SFAS 157 on      January 1, 2008, except as it applies to those nonfinancial assets and      nonfinancial liabilities as noted in FSP FAS 157-b. We adopted FSP      FAS 157-b on January 1, 2009. The adoption of SFAS 157 did not have a      material impact on our consolidated financial position, results of      operations or cashflows. |

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|   | In      December 2007, the Financial Accounting Standards Board issued Statement      of Financial Accounting Standard ("SFAS") No. 160, “Noncontrolling      Interests in Consolidated Financial Statements, an amendment of ARB No.      51.” SFAS 160 establishes accounting and reporting standards for the      noncontrolling interest in a subsidiary and for the deconsolidation of a      subsidiary. This accounting standard is effective for fiscal years      beginning after December 15, 2008. We adopted SFAS 160 on January 1, 2009.      The adoption of SFAS 160 did not have a material impact on our      consolidated financial position, results of operations or cash      flows.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In      December 2007, the Financial Accounting Standards Board issued Statement      of Financial Accounting Standard ("SFAS") No. 141(R), “Business      Combinations.” SFAS 141(R) establishes principles and requirements for how      the acquirer recognizes and measures in its financial statements the      identifiable assets acquired, the liabilities assumed, an any      noncontrolling interest in the acquiree, recognizes and measures the      goodwill acquired in the business combination or a gain from a bargain      purchase, and determines what information to disclose to enable users of      the financial statements to evaluate the nature and financial effects of      the business combination. This accounting standard is effective for fiscal      years beginning after December 15, 2008. We adopted SFAS 141(R) on January      1, 2009. The adoption of SFAS 141(R) did not have a material impact      on our consolidated financial position, results of operations or cash      flows as of the date of adoption. SFAS 141(R) will be applied to any      future business combinations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| I)     | Share      Repurchase Program                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On      August 28, 2007, we announced a stock repurchase program to purchase up to      $5.0 million of our common stock, subject to market conditions and other      factors. Any purchases under our stock repurchase program may be made from      time to time without prior notice. On October 29, 2008, we announced that      the program had been amended to increase the total amount of common stock      that may be repurchased from $5.0 million to $10.0 million and to extend      the period of time that shares may be repurchased from December 31, 2008      to December 31, 2009. As of June 30, 2009, we had repurchased 721,131      shares of common stock at a total cost of $2.4 million under this program.      We did not repurchase any shares during the three and six month periods      ended June 30, 2009.                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On      March 5, 2009, we announced a modified Dutch auction self-tender offer to      purchase up to 3,500,000 shares, or approximately 15%, of our outstanding      common stock (including the associated preferred share purchase rights),      at a price in the range of $2.20 to $2.60 per share, for a maximum      aggregate purchase price of approximately $9.1 million.  The      terms of the tender offer also provided the right for us to purchase up to      an additional 2% of our shares if the offer was      oversubscribed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      tender offer closed on April 17, 2009, and on April 23, 2009 we      repurchased 3,500,252 shares at $2.50 per share for a total cost of $9.0      million, including expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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|   | ● | Cash      and cash equivalents, which consist of financial instruments with original      maturities of three months or less;    |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|
|   | ● | Short-term      investments, which consist of financial instruments with remaining      maturities of twelve months or less; and |
|   | ● | Investments,      which consist of financial instruments that mature in three years or      less.                                |

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|   | ● | market      acceptance of broadband technologies we supply by semiconductor or      equipment companies;                                                                                                                                    |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | the      extent and timing of new transactions with customers;                                                                                                                                                                              |
|   | ● | changes      in our and our customers’ development schedules and levels of expenditure      on research and development;                                                                                                              |
|   | ● | the      loss of a strategic relationship or termination of a project by a      customer;                                                                                                                                                   |
|   | ● | equipment      companies' acceptance of integrated circuits produced by our      customers;                                                                                                                                                 |
|   | ● | the      loss by a customer of a strategic relationship with an equipment company      customer;                                                                                                                                            |
|   | ● | announcements      or introductions of new technologies or products by us or our      competitors;                                                                                                                                          |
|   | ● | delays      or problems in the introduction or performance of enhancements or of      future generations of our technology;                                                                                                                 |
|   | ● | failures      or problems in our hardware or software products;                                                                                                                                                                             |
|   | ● | price      pressure in the biometrics or test and diagnostics markets from our      competitors;                                                                                                                                            |
|   | ● | delays      in the adoption of new industry standards or changes in market perception      of the value of new or existing standards;                                                                                                       |
|   | ● | competitive      pressures resulting in lower contract revenues or royalty      rates;                                                                                                                                                      |
|   | ● | competitive      pressures resulting in lower software or hardware product      revenues;                                                                                                                                                   |
|   | ● | personnel      changes, particularly those involving engineering, technical, sales and      marketing personnel;                                                                                                                            |
|   | ● | costs      associated with protecting our intellectual property;                                                                                                                                                                            |
|   | ● | the      potential that customers could fail to make payments under their current      contracts;                                                                                                                                           |
|   | ● | ADSL      or VDSL market-related issues, including lower ADSL or VDSL chipset unit      demand brought on by excess channel inventory and lower average selling      prices for ADSL or VDSL chipsets as a result of market      surpluses; |
|   | ● | hardware      manufacturing issues, including yield problems in our hardware platforms,      and inventory buildup and obsolescence;                                                                                                        |
|   | ● | product      gross margin may be affected by various factors including, but not limited      to, product mix, product life cycle, and provision for excess and obsolete      inventory;                                                     |
|   | ● | significant      fluctuations in demand for our hardware products;                                                                                                                                                                          |
|   | ● | new      laws, changes to existing laws, or regulatory developments;      and                                                                                                                                                               |
|   | ● | general      economic trends and otherfactors.                                                                                                                                                                                              |

|   | ● | the      test and diagnostics, semiconductor, telecommunications or biometrics      markets decline;                                                                                                   |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | new      and/or existing customers do not choose to use our software or hardware      products;                                                                                                        |
|   | ● | new      and/or existing customers do not choose to license and/or buy our patents;      or                                                                                                            |
|   | ● | new      and/or existing customers do not choose to license our silicon IP for new      chipset products or do not maintain or increase their revenues from sales      of chipsets with ourtechnology. |

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|   | ● | we      must typically undergo a lengthy and expensive process of building a      relationship with a potential customer before there is any assurance of an      agreement with such party, and in some instances we must convince a      potential customer to enter the DSL market. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | we      must persuade semiconductor and equipment manufacturers with significant      resources to rely on us for critical technology on an ongoing basis rather      than trying to develop similar technology internally;                                                            |
|   | ● | we      must persuade potential customers to bear development costs associated      with our technology applications and to make the necessary investment to      successfully manufacture chipsets and products using our technology;      and                                        |
|   | ● | we      must successfully transfer technical know-how to  customers.                                                                                                                                                                                                                   |

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|   | ● | market      acceptance of our biometric technologies and products;                                                                              |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | changes      in contracting practices of government or law enforcement      agencies;                                                           |
|   | ● | the      failure of the biometrics market to experience continued      growth;                                                                  |
|   | ● | announcements      or introductions of new technologies or products by our      competitors;                                                    |
|   | ● | delays      or problems in the introduction or performance of enhancements or of      future generations of our technology;                     |
|   | ● | failures      or problems in our biometric software products;                                                                                   |
|   | ● | the      risk that current or potential customers might decide to develop their own      software rather than buy it from us;                   |
|   | ● | delays      in the adoption of new industry biometric standards or changes in market      perception of the value of new or existing standards; |
|   | ● | growth      of proprietary biometric systems which do not conform to industry      standards;                                                   |
|   | ● | competitive      pressures resulting in lower software product revenues;                                                                        |
|   | ● | personnel      changes, particularly those involving engineering, technical and sales and      marketing personnel;                             |
|   | ● | costs      associated with protecting our intellectual property;                                                                                |
|   | ● | litigation      by third parties for alleged infringement of their proprietary      rights;                                                     |
|   | ● | the      potential that customers could fail to make payments under their current      contracts;                                               |
|   | ● | new      laws, changes to existing laws, or regulatory developments;      and                                                                   |
|   | ● | general      economic trends and otherfactors.                                                                                                  |

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|   | ● | our      ability to structure and price technology contracts in a manner that is      consistent with our business model;                                     |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | our      ability to deliver contract milestones: i) in a timely and cost efficient      manner, and ii) in a form and condition acceptable to      customers; |
|   | ● | the      risk that customers could terminate projects;                                                                                                        |
|   | ● | the      risk that we rely substantially on third party contractors and consultants      to deliver certain contract milestones; and                          |
|   | ● | the      potential that customers could fail to make payments under their      contracts.                                                                     |

|   | ● | reduced      demand for our products or our customers’ products that incorporate our      technology;                   |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|
|   | ● | increased      risk of order cancellations or delays;                                                                         |
|   | ● | increased      risk that customers may delay or terminate projects;                                                           |
|   | ● | increased      pressure on the prices for our products or our customers’ products that      incorporate our technology; |
|   | ● | greater      difficulty in collecting accounts receivable; and                                                                |
|   | ● | risks      to our liquidity, including the possibility that we might not have access      to our cash when needed.            |

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|   | ● | quarterly      fluctuations in our operating results;                                                                                                                                                            |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | changes      in future financial guidance that we may provide to investors and public      market analysts;                                                                                                      |
|   | ● | changes      in our relationships with our customers;                                                                                                                                                            |
|   | ● | announcements      of technological innovations or new products by us, our customers or our      competitors;                                                                                                    |
|   | ● | changes      in DSL or biometrics market growth rates as well as investor perceptions      regarding the investment opportunity that companies participating in the      DSL or biometrics industry afford them; |
|   | ● | changes      in earnings estimates by public market analysts;                                                                                                                                                    |
|   | ● | key      personnel losses;                                                                                                                                                                                       |
|   | ● | sales      of our common stock;                                                                                                                                                                                  |
|   | ● | our      stock repurchase activities; and                                                                                                                                                                        |
|   | ● | developments      or announcements with respect to industry standards, patents or      proprietary rights.                                                                                                       |

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| Period                               |   | (a)Total      Number ofShares      Purchased |      |   | (b)Average      PricePaid      per Share |   |   | (c)Total      Number of SharesPurchased      as Part ofPublicly      Announced Plansor      Programs(1) (2) |   |   | (d)Maximum      Number (orApproximate      DollarValue)      of Shares thatMay      Yet Be PurchasedUnder      the Plansor      Programs |   |
|--------------------------------------|--------|----------------------------------------------|-----------|--------|------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| April      1, 2009 to June 30, 20091 |   |                                         | -         |   |                                     |   | -      |                                                                                                        |   |   | -                                                                                                                                             |   |   | $ | 7,603,874 |   |
| April      1 to April 30, 20092      |   |                                         | 3,500,252 |   |                                     | $      | 2.50   |                                                                                                        |   |   | 3,500,252                                                                                                                                     |   |   |   | - |   |

| (1)    | On      August 28, 2007, we issued a press release announcing that our board of      directors had approved the repurchase from time to time through December      31, 2008 of up to $5,000,000 of our common stock. On October 29, 2008, we      announced that our board of directors had approved an amendment to the      program that increased the total amount of common stock that may be      repurchased from $5,000,000 to $10,000,000.  The amendment also      extended the period of time that shares may be repurchased from December      31, 2008 to December 31, 2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | During      2007 and 2008, we purchased 9,107 and 712,024 shares, respectively, at a      total cost of $38,716 and $2,357,410, respectively, under this plan. We      did not purchase any shares under the plan in the first six months of      2009.                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (2)    | On      March 5, 2009, we announced a modified Dutch auction tender offer to      purchase up to 3,500,000 shares of our common stock at a price per share      of not less than $2.20 and not greater than $2.60. The terms of the tender      offer also provided the right for us to purchase up to an additional 2% of      our shares if the offer was oversubscribed.  The tender offer      closed on April 17, 2009, and on April 23, 2009 we repurchased 3,500,252      shares at $2.50 per share for a total cost of $9.0 million, including      expenses.                    |

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|   | (1)    | Each      of G. David Forney, Jr., Charles K. Stewart and Michael A. Tzannes was      elected to serve as a Class I director of the Company for a term expiring      at the annual meeting of stockholders of the Company in 2012 or a special      meeting in lieu thereof.  John K. Kerr, Mark G. McGrath, Adrian      F. Kruse and Edmund C. Reiter continued to serve as directors following      the Annual Meeting. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | The      votes cast to elect the Class I directorswere:                                                                                                                                                                                                                                                                                                                                                                             |

| Name                      | For        | Withheld                  |
|---------------------------|------------|---------------------------|
| G.      David Forney, Jr. | 15,496,051 | 1,279,111                 |
| Charles      K. Stewart   | 15,498,040 | 1,277,122                 |
| Michael      A. Tzannes   | 16,121,735 |    653,427 |

|   | (2)    | The      Company’s existing equity plans were amended to allow for an option      exchange program for employees other directors and executive      officers. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                |
|   |   | The      votes cast to amend the Company’s existing equity plans    were:                                                                                     |

| For       | Against   | Abstain | Non Votes |
|-----------|-----------|---------|-----------|
| 7,814,195 | 2,958,366 | 15,172  | 5,987,429 |

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|   | Exhibit      31.1 | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.                            |
|--------|-------------------|------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                     |
|   | Exhibit      31.2 | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.                            |
|   |              |                                                                                                                                     |
|   | Exhibit      32.1 | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to Section      906 of the Sarbanes-Oxley Act of2002. |

|                     |   | AWARE,      INC.                                              |   |
|--------------------------|--------|---------------------------------------------------------------|--------|
|                     |   |                                                          |   |
|                     |   |                                                          |   |
| Date:      July 31, 2009 | By:    | /s/ Michael A. Tzannes                                        |   |
|                     |   | Michael      A. Tzannes, Chief Executive                      |   |
|                     |   | Officer                                                       |   |
|                     |   |                                                          |   |
|                     |   |                                                          |   |
| Date:      July 31, 2009 | By:    | /s/ Richard P. Moberg                                         |   |
|                     |   | Richard      P. Moberg, Chief Financial                       |   |
|                     |   | Officer      (Principal Financial andAccounting      Officer) |   |