Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2013	Oct. 21, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	AWARE INC /MA/
Entity Central Index Key	0001015739
Trading Symbol	awre
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,570,794
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 75,418	$ 71,074
Accounts receivable, net	2,754	3,457
Receivable from patent arrangement		1,121
Deferred tax assets	916	817
Prepaid expenses and other current assets	1,093	528
Total current assets	80,181	76,997
Property and equipment, net	5,644	5,904
Investments	2,962	2,010
Intangible assets	201
Long term deferred tax assets	659	943
Total assets	89,647	85,854
Current liabilities:
Accounts payable	243	328
Accrued expenses	101	148
Accrued compensation	589	817
Accrued professional	156	142
Due to customers	3,732
Deferred revenue	1,529	2,204
Total current liabilities	6,350	3,639
Long-term deferred revenue	40	319
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 22,570,794 as of September 30, 2013 and 22,509,518 as of December 31, 2012	226	225
Additional paid-in capital	100,917	100,561
Accumulated other comprehensive loss	(57)	(50)
Accumulated deficit	(17,829)	(18,840)
Total stockholders' equity	83,257	81,896
Total liabilities and stockholders' equity	$ 89,647	$ 85,854

CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	70,000,000	70,000,000
Common stock, shares issued	22,570,794	22,509,518
Common stock, shares outstanding	22,570,794	22,509,518

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue:
Software licenses	$ 2,334	$ 3,387	$ 7,704	$ 8,070
Software maintenance	1,023	661	3,187	2,471
Services	943	724	2,179	2,100
Hardware sales			1,129
Royalties	170	484	737	1,599
Total revenue	4,470	5,256	14,936	14,240
Costs and expenses:
Cost of hardware sales			813
Cost of services	494	421	1,075	1,138
Research and development	1,452	1,466	4,504	4,431
Selling and marketing	931	1,069	2,998	3,143
General and administrative	922	854	2,580	2,915
Exit costs	2,832		2,832
Total costs and expenses;	6,631	3,810	14,802	11,627
Operating income (loss) before patent related income	(2,161)	1,446	134	2,613
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Operating income (loss) after patent related income	(2,161)	16,613	914	89,007
Other income	27		27	85
Interest income	80	45	239	137
Income (loss) from continuing operations before income taxes	(2,054)	16,658	1,180	89,229
Provision for (benefit from) income taxes	(901)	6,578	169	23,248
Income (loss) from continuing operations	(1,153)	10,080	1,011	65,981
Income from discontinued operations, net of income taxes		217		360
Net income (loss)	(1,153)	10,297	1,011	66,341
Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations (in dollars per share)	$ (0.05)	$ 0.45	$ 0.04	$ 3.05
Basic net income per share from discontinued operations (in dollars per share)	$ 0.00	$ 0.01	$ 0.00	$ 0.02
Basic net income (loss) per share (in dollars per share)	$ (0.05)	$ 0.46	$ 0.04	$ 3.07
Diluted net income (loss) per share:
Diluted net income (loss) per share from continuing operations (in dollars per share)	$ (0.05)	$ 0.45	$ 0.04	$ 3.01
Diluted net income per share from discontinued operations (in dollars per share)	$ 0.00	$ 0.01	$ 0.00	$ 0.02
Diluted net income (loss) per share (in dollars per share)	$ (0.05)	$ 0.46	$ 0.04	$ 3.03
Weighted-average shares - basic (in shares)	22,571	22,339	22,533	21,609
Weighted-average shares - diluted (in shares)	22,571	22,501	22,623	21,888
Comprehensive income (loss):
Net income (loss)	(1,153)	10,297	1,011	66,341
Other comprehensive income:
Unrealized gains (losses) on available for sale securities	(26)	(4)	(6)	16
Comprehensive income (loss)	$ (1,179)	$ 10,293	$ 1,005	$ 66,357

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income	$ 1,011	$ 66,341
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	325	343
Stock-based compensation	445	299
Gain on sale of patent assets		(86,394)
Amortization of premium (discount) on investments	13	(24)
Gain on sale of investments	(27)	(85)
Loss on disposal of property and equipment	27
Provision for doubtful accounts		4
Changes in assets and liabilities:
Accounts receivable	703	(277)
Receivable from patent arrangement	1,121
Inventories		538
Prepaid expenses and other current assets	(565)	(210)
Deferred tax assets	185
Accounts payable	(85)	(1)
Accrued expenses, compensation, and professional	(261)	(90)
Accrued income taxes		5,339
Due to customers	3,732
Deferred revenue	(954)	112
Net cash provided by (used in) operating activities	5,670	(14,105)
Cash flows from investing activities:
Purchases of property and equipment	(117)	(90)
Proceeds from sale of property and equipment	24
Purchases of investments	(2,008)	(1,017)
Sales of investments	1,064	855
Purchase of intangible assets	(201)
Proceeds from sale of patent assets, net		86,394
Net cash provided by (used in) investing activities	(1,238)	86,142
Cash flows from financing activities:
Proceeds from issuance of common stock	46	5,896
Payment of dividends		(25,506)
Excess tax benefits from stock-based compensation	(63)	15,761
Payments made for taxes of employees who surrendered shares related to unrestricted stock	(71)	(174)
Net cash used in financing activities	(88)	(4,023)
Increase in cash and cash equivalents	4,344	68,014
Cash and cash equivalents, beginning of period	71,074	46,577
Cash and cash equivalents, end of period	75,418	114,591
Supplemental disclosure:
Cash paid for income taxes	$ 535	$ 2,388

Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis Of Accounting [Abstract]

Basis of Presentation

Basis of 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 notes 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 notes necessary for such presentation for the three years ended December 31, 2012 in conjunction with our 2012 Annual Report on Form 10-K. This Form 10-Q should be read in conjunction with that Form 10-K.

The accompanying unaudited consolidated balance sheets, statements of comprehensive income, 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 September 30, 2013, and of operations and cash flows for the interim periods ended September 30, 2013 and 2012.

The results of operations for the interim period ended September 30, 2013 are not necessarily indicative of the results to be expected for the year.

Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements. The Financial Accounting Standards Board (“FASB”) Codification defines fair value, and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to the unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the FASB Codification are: i) Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; ii) Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and iii) Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable.

Cash and cash equivalents, which primarily include money market mutual funds, were $75.4 million and $71.1 million as of September 30, 2013 and December 31, 2012, respectively. We classified our cash equivalents of $70.4 million and $67.1 million as of September 30, 2013 and December 31, 2012, respectively, within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

Our investments, which consist of high yield corporate debt securities, are also classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. We categorize our investments as available-for-sale securities, and carry them at fair value in our financial statements. We had $3.0 million and $2.0 million of available-for-sale investments as of September 30, 2013 and December 31, 2012, respectively.

As of September 30, 2013, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):

	Fair Value Measurement at September 30, 2013 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)
Corporate debt securities	$	2,962	$	-	$	-
Money market funds (included in cash and cash equivalents)		70,408		-		-
Total	$	73,370	$	-	$	-

As of December 31, 2012, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands):

	Fair Value Measurement at December 31, 2012 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)
Corporate debt securities	$	2,010	$	-	$	-
Money market funds (included in cash and cash equivalents)		67,050		-		-
Total	$	69,060	$	-	$	-

Computation of Earnings per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Computation of Earnings per Share

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 income per share is calculated as follows (in thousands, except per share data):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013		2012
Net income (loss):
Income (loss) from continuing operations	($	1,153	)	$	10,080	$	1,011	$	65,981
Income from discontinued operations		-			217		-		360
Net income (loss)	($	1,153	)	$	10,297	$	1,011	$	66,341

Shares outstanding:
Weighted-average common shares outstanding		22,571			22,339		22,533		21,609
Additional dilutive common stock equivalents		-			162		90		279
Diluted shares outstanding		22,571			22,501		22,623		21,888

Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.05
Basic net income per share from discontinued operations		0.00			0.01		0.00		0.02
Basic net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.07

Diluted net income (loss) per share:
Diluted net income(loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.01
Diluted net income per share from discontinued operations		0.00			0.01		0.00		0.02
Diluted net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.03

For the three months ended September 30, 2013, common stock equivalents of 111,349 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 three month periods ended September 30, 2013 and 2012, options to purchase 825,338 and 25,000 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 nine month periods ended September 30, 2013 and 2012, options to purchase 825,338 and 829,504 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.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock-Based Compensation

D)	Stock-Based Compensation. The following table presents stock-based employee compensation expenses included in our unaudited consolidated statements of comprehensive income (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012

Cost of services	$	12	$	2	$	23	$	14
Research and development		26		6		53		68
Selling and marketing		5		-		10		134
General and administrative		174		13		359		70
Income from discontinued operations		-		-		-		13
Stock-based compensation expense	$	217	$	21	$	445	$	299

Stock Option Grants. We grant stock options under our 2001 Nonqualified Stock Plan. We estimate 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. The assumptions used to estimate the fair value of stock options include the expected term, the expected volatility of our stock over the expected term, the risk-free interest rate over the expected term, and our expected annual dividend yield. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

Unrestricted Stock Grants. We also grant unrestricted shares of stock under our 2001 Nonqualified Stock Plan. Stock-based compensation expense for stock grants is determined based on the fair market value of our stock on the date of grant, provided the number of shares in the grant is fixed on the grant date.

The following summarizes stock-based grants during 2013 and 2012:

●

Stock Option Grants – We did not grant any stock options in the three and nine month periods ended September 30, 2013. We granted stock options for 0 shares and 50,000 shares in the three and nine month periods ended September 30, 2012, respectively.

●

Unrestricted Stock Grants – We granted shares of unrestricted stock in July 2010 and April 2013. The following summarizes those grants and their related impact on results of operations for the three and nine months ended September 30, 2013 and 2012:

July 2010 Unrestricted Stock Grant. In July 2010, we granted 575,443 shares of stock to directors, officers and employees. There was no stock-based compensation expense related to this grant in the three and nine month periods ended September 30, 2013. We expensed $0 and $189,000 of stock-based compensation expense related to this grant in the three and nine month periods ended September 30, 2012, respectively.

April 2013 Unrestricted Stock Grant. In April 2013, we granted 130,000 shares of unrestricted stock to directors, officers and employees. The shares are to be issued in two equal installments shortly after June 30, 2013 and December 31, 2013, provided each grantee is serving as a director, officer or employee on those dates. We expensed $208,000 and $415,000 of stock-based compensation expense related to this grant in the three and nine months ended September 30, 2013, respectively. The unamortized stock-based compensation charge associated with this grant as of September 30, 2013 is $208,000, which we anticipate will be charged to expense in the fourth quarter of 2013.

Business Segments

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Business Segments

E)	Business Segments. We organize ourselves into multiple segments reporting to the chief operating decision makers. The following table provides reportable segment financial data for the three and nine month periods ended September 30, 2013 and 2012 (in thousands):

	Segments
	Biometrics		DSL Service						Total
	& Imaging		Assurance			Corporate			Company
Three Months Ended September 30, 2013
Revenue	$	4,144	$	156		$	170		$	4,470

Operating income (loss) before patent related income		1,515		(3,457	)		(219	)		(2,161	)
Other income							27			27
Interest income							80			80
Loss from continuing operations before taxes										(2,054	)
Benefit from income taxes							(901	)		(901	)
Loss from continuing operations										(1,153	)
Income from discontinued operations, net of tax										-
Net loss									($	1,153	)

Three Months Ended September 30, 2012
Revenue	$	4,287	$	485		$	484		$	5,256

Operating income (loss) before patent related income		2,111		(446	)		(219	)		1,446
Gain on sale of patent assets							15,167			15,167
Interest income							45			45
Income from continuing operations before taxes										16,658
Provision for income taxes							6,578			6,578
Income from continuing operations										10,080
Income from discontinued operations, net of tax										217
Net income									$	10,297

Nine Months Ended September 30, 2013
Revenue	$	12,982	$	1,217		$	737		$	14,936

Operating income (loss) before patent related income		4,848		(4,266	)		(448	)		134
Income from patent arrangement							780			780
Other income							27			27
Interest income							239			239
Income from continuing operations before taxes										1,180
Provision for income taxes							169			169
Income from continuing operations										1,011
Income from discontinued operations, net of tax										-
Net income									$	1,011

Nine Months Ended September 30, 2012
Revenue	$	10,847	$	1,794		$	1,599		$	14,240

Operating income (loss) before patent related income		4,725		(1,062	)		(1,050	)		2,613
Gain on sale of patent assets							86,394			86,394
Other income							85			85
Interest income							137			137
Income from continuing operations before taxes										89,229
Provision for income taxes							23,248			23,248
Income from continuing operations										65,981
Income from discontinued operations, net of tax										360
Net income									$	66,341

We conduct our operations in the United States and sell our products and services to domestic and international customers. Revenues were generated from the following geographic regions (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012

United States	$	2,588	$	3,350	$	9,944	$	9,302
Saudi Arabia		524		338		613		360
Rest of World		1,358		1,568		4,379		4,578
	$	4,470	$	5,256	$	14,936	$	14,240

Gain on Sale of Patent Assets

9 Months Ended

Sep. 30, 2013

Gain On Sale Of Patent Assets [Abstract]

Gain on Sale of Patent Assets

Gain on Sale of Patent Assets. We recorded a $15.2 million gain on the sale of patent assets in the three months ended September 30, 2012. This gain relates to a transaction we completed in September 2012 in which we sold a portion of our patent portfolio pertaining to digital subscriber line (“DSL”) technology for $16.0 million. The proceeds from the sale were reduced by $0.8 million of transaction costs.

We recorded an $86.4 million gain on the sale of patent assets in the nine months ended September 30, 2012. This gain includes the $15.2 million gain described in the previous paragraph and a $71.2 million gain on the sale of patent assets that occurred in the second quarter of 2012. In June 2012, we completed a transaction to sell patents pertaining to wireless technology for $75 million. The proceeds from that sale were reduced by $3.8 million of transaction costs.

Income from patent arrangement

9 Months Ended

Sep. 30, 2013

Income From Patent Arrangement [Abstract]

Income from patent arrangement

Income from patent arrangement. We entered into an arrangement with an unaffiliated third party in 2010 under which we assigned patents in return for royalties on proceeds from patent monetization efforts by the third party. We recorded $0 and $0.8 million of income from this patent arrangement in the three and nine months ended September 30, 2013, respectively.

Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes. Income tax expense for the three ended September 30, 2013 was a tax benefit of $901,000. Income tax expense for the nine months ended September 30, 2013 was $169,000. Income tax expense for 2013 was based on the U.S. statutory rate of 34%, increased by state income taxes. Year-to-date tax expense also reflects two items related to 2012, including:

a tax benefit of $95,000 related to the 2012 research tax credit. This credit was extended retroactively back to January 1, 2012, by the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013; and

a tax benefit of $148,000 related to a reduction in the estimate of the 2012 tax expense recorded in our 2012 financial statements.

As of September 30, 2013, we had a total of $1.6 million of deferred tax assets for which we had recorded no valuation allowance. We will continue to assess the level of valuation allowance in future periods. Should evidence regarding the realizability of tax assets change at a future point in time, the valuation allowance will be adjusted accordingly.

In addition to deferred tax assets carried on our balance sheet, we also had net federal and state research and development credit carryforwards available at December 31, 2012 of $5.1 million and $0.7 million. These credits were not recorded as tax assets as they relate to excess stock compensation deductions that may not be recorded as tax assets under generally accepted accounting principles until the amounts have been utilized to reduce our tax liability. To the extent that these assets are used to reduce future taxes, the benefit will be recorded as a reduction to additional paid-in capital.

As a result of exit costs related to our DSL service assurance software business, we have revised our estimate of 2013 taxable income. As a result, we do not expect to utilize any of our excess stock compensation benefits to reduce our tax liability in 2013. Accordingly, we have not recorded any tax benefit to additional paid-in capital in 2013. As a separate matter, we reduced the benefit we recorded to additional paid-in capital in 2012 as a result of the reduction of our actual 2012 tax liability. The amount of the reduction to additional paid-in capital in 2013 related to 2012 was $63,000.

Income tax expense related to continuing operations was $6.6 million and $23.2 million for the three and nine months ended September 30, 2012, respectively. Income tax expense in 2012 was driven by an $86.4 million gain on sale of patent assets. Income tax expense of $23.2 million for the nine months ended September 30, 2012 consisted of a $7.5 million current income tax liability plus a $15.8 million non-cash adjustment related to cumulative deduction for stock options in excess of book expense that was recorded to equity.

Discontinued Operations

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations. In January 2012, our Board of Directors approved the shutdown of our DSL service assurance hardware product line which was previously a component of our DSL Service Assurance Segment. We completed the shutdown in 2012 and no longer have any continuing involvement with or cash flows from this product line. The results of our DSL service assurance hardware product line have been included in discontinued operations in the consolidated statements of comprehensive income. Income from discontinued operations attributable to the DSL service assurance hardware product line was (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012

Revenue	$	-	$	724	$	-	$	2,809
Expenses		-		364		-		2,206
Income before income taxes		-		360		-		603
Income taxes		-		143		-		243
Income from discontinued operations	$	-	$	217	$	-	$	360

DSL Service Assurance Software Exit

9 Months Ended

Sep. 30, 2013

Digital Subscriber Line Service Assurance Software Exit [Abstract]

DSL Service Assurance Software Exit

DSL Service Assurance Software Exit. In August 2013, our Board of Directors approved the shutdown of our DSL service assurance software product line, which is the remaining component of our DSL Service Assurance Segment. We intend to provide limited support to customers until December 31, 2013 at which point we expect to complete the shutdown. The results of operations for the DSL service assurance software product line have been reported in continuing operations for the three and nine month periods ended September 30, 2013 and 2012. We anticipate the results of operations for this product line will be reported in discontinued operations commencing next quarter.

We estimate our total shutdown costs to date to be approximately $3.0 million. Such costs comprise: i) $3.7 million of payments to customers to terminate contracts, which were offset by $1.2 million of deferred revenue obligations that were relieved as a result of such contract terminations; ii) $397,000 of severance and employee-related costs; and iii) $47,000 of asset write-offs. We recorded $2.8 million of those costs in “Exit costs” in the consolidated statements of comprehensive income for the three months ended September 30, 2013. The remaining $165,000 of costs represents employee severance and retention bonuses for employees who have been retained to support customers through December 31, 2013. We intend to charge those costs to expense in the three months ended December 31, 2013, if earned by employees.

We may incur additional costs or receive additional income related to the termination of customer contracts, however we are unable to estimate those amounts at this time.

At September 30, 2013, we recorded a liability for exit costs of $3.8 million. This liability comprises: i) $3.7 million of payments due to customers for contract terminations; and ii) $232,000 of severance and employee related costs earned by employees through September 30, 2013, less $176,000 of payments made to such employees before the end of the quarter.

The following table is a rollforward of our exit costs liability accounts. Customer contract termination costs were included in “Due to customers” and severance and employee-related costs were included in “Accrued compensation” in the consolidated balance sheets. (in thousands):

	Customer Contract Termination Costs		Severance and Employee-Related Costs			Other Costs			Total
Balance at June 30, 2013	$	-	$	-		$	-		$	-
Amount charged to expense		2,553		232			47			2,832
Deferred revenue offset		1,179		-			-			1,179
Payments/write-offs		-		(176	)		(47	)		(223	)
Balance at September 30, 2013	$	3,732	$	56		$	-		$	3,788

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Schedule of assets that are measured at fair value on a recurring basis

	Fair Value Measurement at September 30, 2013 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)
Corporate debt securities	$	2,962	$	-	$	-
Money market funds (included in cash and cash equivalents)		70,408		-		-
Total	$	73,370	$	-	$	-

	Fair Value Measurement at December 31, 2012 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)
Corporate debt securities	$	2,010	$	-	$	-
Money market funds (included in cash and cash equivalents)		67,050		-		-
Total	$	69,060	$	-	$	-

Computation of Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of net income per share

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013		2012
Net income (loss):
Income (loss) from continuing operations	($	1,153	)	$	10,080	$	1,011	$	65,981
Income from discontinued operations		-			217		-		360
Net income (loss)	($	1,153	)	$	10,297	$	1,011	$	66,341

Shares outstanding:
Weighted-average common shares outstanding		22,571			22,339		22,533		21,609
Additional dilutive common stock equivalents		-			162		90		279
Diluted shares outstanding		22,571			22,501		22,623		21,888

Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.05
Basic net income per share from discontinued operations		0.00			0.01		0.00		0.02
Basic net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.07

Diluted net income (loss) per share:
Diluted net income(loss) per share from continuing operations	($	0.05	)	$	0.45	$	0.04	$	3.01
Diluted net income per share from discontinued operations		0.00			0.01		0.00		0.02
Diluted net income (loss) per share	($	0.05	)	$	0.46	$	0.04	$	3.03

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of stock-based employee compensation expense included in statements of comprehensive income

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012

Cost of services	$	12	$	2	$	23	$	14
Research and development		26		6		53		68
Selling and marketing		5		-		10		134
General and administrative		174		13		359		70
Income from discontinued operations		-		-		-		13
Stock-based compensation expense	$	217	$	21	$	445	$	299

Business Segments (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Schedule of results of operations for reportable segments

	Segments
	Biometrics		DSL Service						Total
	& Imaging		Assurance			Corporate			Company
Three Months Ended September 30, 2013
Revenue	$	4,144	$	156		$	170		$	4,470

Operating income (loss) before patent related income		1,515		(3,457	)		(219	)		(2,161	)
Other income							27			27
Interest income							80			80
Loss from continuing operations before taxes										(2,054	)
Benefit from income taxes							(901	)		(901	)
Loss from continuing operations										(1,153	)
Income from discontinued operations, net of tax										-
Net loss									($	1,153	)

Three Months Ended September 30, 2012
Revenue	$	4,287	$	485		$	484		$	5,256

Operating income (loss) before patent related income		2,111		(446	)		(219	)		1,446
Gain on sale of patent assets							15,167			15,167
Interest income							45			45
Income from continuing operations before taxes										16,658
Provision for income taxes							6,578			6,578
Income from continuing operations										10,080
Income from discontinued operations, net of tax										217
Net income									$	10,297

Nine Months Ended September 30, 2013
Revenue	$	12,982	$	1,217		$	737		$	14,936

Operating income (loss) before patent related income		4,848		(4,266	)		(448	)		134
Income from patent arrangement							780			780
Other income							27			27
Interest income							239			239
Income from continuing operations before taxes										1,180
Provision for income taxes							169			169
Income from continuing operations										1,011
Income from discontinued operations, net of tax										-
Net income									$	1,011

Nine Months Ended September 30, 2012
Revenue	$	10,847	$	1,794		$	1,599		$	14,240

Operating income (loss) before patent related income		4,725		(1,062	)		(1,050	)		2,613
Gain on sale of patent assets							86,394			86,394
Other income							85			85
Interest income							137			137
Income from continuing operations before taxes										89,229
Provision for income taxes							23,248			23,248
Income from continuing operations										65,981
Income from discontinued operations, net of tax										360
Net income									$	66,341

Schedule of revenues generated from geographic regions

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012

United States	$	2,588	$	3,350	$	9,944	$	9,302
Saudi Arabia		524		338		613		360
Rest of World		1,358		1,568		4,379		4,578
	$	4,470	$	5,256	$	14,936	$	14,240

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of income (loss) from discontinued operations

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012

Revenue	$	-	$	724	$	-	$	2,809
Expenses		-		364		-		2,206
Income before income taxes		-		360		-		603
Income taxes		-		143		-		243
Income from discontinued operations	$	-	$	217	$	-	$	360

DSL Service Assurance Software Exit (Tables)

9 Months Ended

Sep. 30, 2013

Digital Subscriber Line Service Assurance Software Exit [Abstract]

Schedule of roll forward of exit costs liability

	Customer Contract Termination Costs		Severance and Employee-Related Costs			Other Costs			Total
Balance at June 30, 2013	$	-	$	-		$	-		$	-
Amount charged to expense		2,553		232			47			2,832
Deferred revenue offset		1,179		-			-			1,179
Payments/write-offs		-		(176	)		(47	)		(223	)
Balance at September 30, 2013	$	3,732	$	56		$	-		$	3,788

Fair Value Measurements - Assets measured at fair value on a recurring basis and whose carrying values approximate their respective fair values (Details) (Fair value on recurring basis, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	$ 73,370	$ 69,060
Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value
Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value
Corporate debt securities \| Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value	2,962	2,010
Corporate debt securities \| Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value
Corporate debt securities \| Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities, fair value
Money market funds (included in cash and cash equivalents) \| Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)	70,408	67,050
Money market funds (included in cash and cash equivalents) \| Fair Value Measurement, Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)
Money market funds (included in cash and cash equivalents) \| Fair Value Measurement, Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds (included in cash and cash equivalents)

Fair Value Measurements (Detail Textuals) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, primarily include money market funds	$ 75,418	$ 71,074	$ 114,591	$ 46,577
Corporate debt securities \| Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1) \| Fair value on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	2,962	2,010
Money market funds (included in cash and cash equivalents) \| Fair Value Measurement, Quoted Prices in Active Markets for Identical Assets (Level 1) \| Fair value on recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents, primarily include money market funds	$ 70,408	$ 67,050

Computation of Earnings per Share - Summary of net income per share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income (loss):
Income (loss) from continuing operations	$ (1,153)	$ 10,080	$ 1,011	$ 65,981
Income from discontinued operations		217		360
Net income (loss)	$ (1,153)	$ 10,297	$ 1,011	$ 66,341
Shares outstanding:
Weighted-average common shares outstanding (in shares)	22,571	22,339	22,533	21,609
Additional dilutive common stock equivalents (in shares)		162	90	279
Diluted shares outstanding (in shares)	22,571	22,501	22,623	21,888
Basic net income (loss) per share:
Basic net income (loss) per share from continuing operations (in dollars per share)	$ (0.05)	$ 0.45	$ 0.04	$ 3.05
Basic net income per share from discontinued operations (in dollars per share)	$ 0.00	$ 0.01	$ 0.00	$ 0.02
Basic net income (loss) per share (in dollars per share)	$ (0.05)	$ 0.46	$ 0.04	$ 3.07
Diluted net income (loss) per share:
Diluted net income (loss) per share from continuing operations (in dollars per share)	$ (0.05)	$ 0.45	$ 0.04	$ 3.01
Diluted net income per share from discontinued operations (in dollars per share)	$ 0.00	$ 0.01	$ 0.00	$ 0.02
Diluted net income (loss) per share (in dollars per share)	$ (0.05)	$ 0.46	$ 0.04	$ 3.03

Computation of Earnings per Share (Detail Textuals)	3 Months Ended		9 Months Ended
Computation of Earnings per Share (Detail Textuals)	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Common stock equivalents
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock Share purchase (in shares)	111,349
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common stock Share purchase (in shares)	825,338	25,000	825,338	829,504

Stock-Based Compensation - Summary of stock-based employee compensation expenses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 217	$ 21	$ 445	$ 299
Cost of services
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	12	2	23	14
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	26	6	53	68
Selling and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	5		10	134
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	174	13	359	70
Income from discontinued operations
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense				$ 13

Stock-Based Compensation (Detail Textuals) (USD $)	1 Months Ended		3 Months Ended		9 Months Ended
Stock-Based Compensation (Detail Textuals) (USD $)	Apr. 30, 2013	Jul. 31, 2010	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 217,000	$ 21,000	$ 445,000	$ 299,000
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted Stock options (in shares)				0		50,000
Unrestricted Stock Grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted Stock options (in shares)	130,000	575,443
Stock-based compensation expense			208,000	0	415,000	189,000
Unamortized stock-based compensation			$ 208,000		$ 208,000

Business Segment - Results of operations for reportable segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenue	$ 4,470	$ 5,256	$ 14,936	$ 14,240
Operating income (loss) before patent related income	(2,161)	1,446	134	2,613
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Other income	27		27	85
Interest income	80	45	239	137
Income (loss) from continuing operations before taxes	(2,054)	16,658	1,180	89,229
Provision for (benefit from) income taxes	(901)	6,578	169	23,248
Income (loss) from continuing operations	(1,153)	10,080	1,011	65,981
Income from discontinued operations, net of tax		217		360
Net income (loss)	(1,153)	10,297	1,011	66,341
Reportable Segment \| Biometrics & Imaging
Segment Reporting Information [Line Items]
Revenue	4,144	4,287	12,982	10,847
Operating income (loss) before patent related income	1,515	2,111	4,848	4,725
Reportable Segment \| DSL Service Assurance
Segment Reporting Information [Line Items]
Revenue	156	485	1,217	1,794
Operating income (loss) before patent related income	(3,457)	(446)	(4,266)	(1,062)
Corporate
Segment Reporting Information [Line Items]
Revenue	170	484	737	1,599
Operating income (loss) before patent related income	(219)	(219)	(448)	(1,050)
Gain on sale of patent assets		15,167		86,394
Income from patent arrangement			780
Other income	27		27	85
Interest income	80	45	239	137
Provision for (benefit from) income taxes	$ (901)	$ 6,578	$ 169	$ 23,248

Business Segments - Revenues were generated from following geographic regions (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenue	$ 4,470	$ 5,256	$ 14,936	$ 14,240
United States
Segment Reporting Information [Line Items]
Revenue	2,588	3,350	9,944	9,302
Saudi Arabia
Segment Reporting Information [Line Items]
Revenue	524	338	613	360
Rest of World
Segment Reporting Information [Line Items]
Revenue	$ 1,358	$ 1,568	$ 4,379	$ 4,578

Gain on Sale of Patent Assets (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended
Gain on Sale of Patent Assets (Detail Textuals) (USD $)	Sep. 30, 2012	Sep. 30, 2012	Jun. 30, 2012 Wireless patent	Sep. 30, 2012 DSL patent
Finite-Lived Intangible Assets [Line Items]
Gain on sale of patent assets	$ 15,167,000	$ 86,394,000	$ 71,200,000	$ 15,200,000
Sale of patent			75,000,000	16,000,000
Transaction cost			$ 3,800,000	$ 800,000

Income Taxes (Detail Textuals) (USD $)	3 Months Ended		9 Months Ended
Income Taxes (Detail Textuals) (USD $)	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income tax expense	$ (901,000)	$ 6,578,000	$ 169,000	$ 23,248,000
Income tax U.S. statutory rate			34.00%
Tax benefit related to research tax credit				95,000
Tax benefit related to a reduction in the estimate of tax expense				148,000
Deferred tax assets	1,600,000		1,600,000
Total deferred tax assets of federal research and development credit carryforwards					5,100,000
Total deferred tax assets of state research and development credit carryforwards					700,000
Equity adjustment to additional paid-in capital			63,000
Gain on sale of patent assets				86,400,000
Current income tax liability		7,500,000		7,500,000
Non cash adjustment related to cumulative deduction for stock options in excess of book expense		$ 15,800,000		$ 15,800,000

Discontinued Operations - Income from discontinued operations attributable to the DSL service assurance hardware product line (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Discontinued Operations and Disposal Groups [Abstract]
Revenue		$ 724		$ 2,809
Expenses		364		2,206
Income before income taxes		360		603
Income taxes		143		243
Income from discontinued operations		$ 217		$ 360

DSL Service Assurance Software Exit - A rollforward of our exit costs liability accounts (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	2,832	2,832
Deferred revenue obligations	1,179
Payments/write-offs	(223)
Balance at September 30, 2013	3,788	3,788
Customer Contract Termination Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	2,553
Deferred revenue obligations	1,179
Payments/write-offs
Balance at September 30, 2013	3,732	3,732
Severance and Employee-Related Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	232
Deferred revenue obligations
Payments/write-offs	(176)
Balance at September 30, 2013	56	56
Other Costs
Restructuring Reserve [Roll Forward]
Balance at June 30, 2013
Amount charged to expense	47
Deferred revenue obligations
Payments/write-offs	(47)
Balance at September 30, 2013

DSL Service Assurance Software Exit (Detail Textuals) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Estimated shutdown cost	$ 3,000,000
Liability for exit costs	3,788,000	3,788,000
Deferred revenue obligations	1,179,000
Amount charged to expense	2,832,000	2,832,000
Asset write-offs	47,000
Payments to employees	176,000
Severance and Employee-Related Costs
Restructuring Cost and Reserve [Line Items]
Liability for exit costs	56,000	56,000
Deferred revenue obligations
Amount charged to expense	232,000
Severance and employee-related costs	397,000
Customer Contract Termination Costs
Restructuring Cost and Reserve [Line Items]
Liability for exit costs	3,732,000	3,732,000
Deferred revenue obligations	1,179,000
Amount charged to expense	2,553,000
Employee Severance And Retention Bonus
Restructuring Cost and Reserve [Line Items]
Employee severance and retention bonuses	$ 165,000