0000950170-23-008185 | 10-K | XBRL Viewer

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Summary of Significant Accounting Policies - Remaining Performance Obligation , Contract Costs , Capitalization Costs and Concentration of Credit Risk (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Line Items]
Minimum period of remaining performance obligations		12 months
Revenue recognition performance obligation transaction price		$ 2,000,000.0
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]	true
Software costs capitalized during period	$ 0	0
Cash and cash equivalents, in excess of federally insured deposit limits	$ 11,500,000	$ 29,700,000
Percentage of accounts receivable and unbilled receivables owned by customers	10.00%
Minimum
Accounting Policies [Line Items]
Amortization period of capitalized software	3 years
Maximum
Accounting Policies [Line Items]
Amortization period of capitalized software	5 years

Gain on sale of fixed assets	12 Months Ended
Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Gain on sale of fixed assets	4. GAIN ON SALE OF FIXED ASSETS On July 15, 2022, we completed our sale to FDS Bedford, LLC of our former corporate headquarters located at 40 Middlesex Turnpike, Bedford, Massachusetts for total proceeds of $8.9 million less a brokerage commission of $0.3 million. We recorded a gain of $5.7 million on the sale and disposed of gross assets of $11.5 million and net book value of $2.9 million, of which of $1.8 million was property and equipment and $1.1 million was land.

Gain on sale of fixed assets

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Gain on sale of fixed assets

4. GAIN ON SALE OF FIXED ASSETS

On July 15, 2022, we completed our sale to FDS Bedford, LLC of our former corporate headquarters located at 40 Middlesex Turnpike, Bedford, Massachusetts for total proceeds of $8.9 million less a brokerage commission of $0.3 million.

We recorded a gain of $5.7 million on the sale and disposed of gross assets of $11.5 million and net book value of $2.9 million, of which of $1.8 million was property and equipment and $1.1 million was land.

Equity and Stock Compensation Plans - Summarizes of Stock Options Outstanding (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Exercise price range $4 to $5
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	2,316,250
Options exercisable, Number	62,500
Options outstanding, Weighted average remaining contractual term (in years)	8 years 1 month 9 days
Options outstanding, Weighted average exercise price	$ 4.72
Options exercisable, Weighted average exercise price	$ 4.50
Exercise price range $5 to $6
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	81,250
Options exercisable, Number	62,500
Options outstanding, Weighted average remaining contractual term (in years)	6 years 10 months 9 days
Options outstanding, Weighted average exercise price	$ 5.50
Options exercisable, Weighted average exercise price	$ 5.50
Exercise price range $6 to $7
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	81,250
Options exercisable, Number	62,500
Options outstanding, Weighted average remaining contractual term (in years)	6 years 10 months 9 days
Options outstanding, Weighted average exercise price	$ 6.50
Options exercisable, Weighted average exercise price	$ 6.50
Exercise price range $7 to $8
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	81,250
Options exercisable, Number	62,500
Options outstanding, Weighted average remaining contractual term (in years)	6 years 10 months 9 days
Options outstanding, Weighted average exercise price	$ 7.50
Options exercisable, Weighted average exercise price	$ 7.50
Stock Option [Member]
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	2,560,000	3,240,000	425,000
Options exercisable, Number	250,000	218,748
Options outstanding, Weighted average remaining contractual term (in years)	8 years 3 days
Options outstanding, Weighted average exercise price	$ 4.96	$ 4.97	$ 6.00
Options exercisable, Weighted average exercise price	6.00	$ 6.00
Stock Option [Member] \| Exercise price range $4 to $5
EQUITY AND STOCK COMPENSATION PLANS
Exercise price range (lower)	4
Exercise price range (upper)	5
Stock Option [Member] \| Exercise price range $5 to $6
EQUITY AND STOCK COMPENSATION PLANS
Exercise price range (lower)	5
Exercise price range (upper)	6
Stock Option [Member] \| Exercise price range $6 to $7
EQUITY AND STOCK COMPENSATION PLANS
Exercise price range (lower)	6
Exercise price range (upper)	7
Stock Option [Member] \| Exercise price range $7 to $8
EQUITY AND STOCK COMPENSATION PLANS
Exercise price range (lower)	7
Exercise price range (upper)	$ 8

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Retirement Plans 401 K Defined Benefit
Defined Contribution Plan Disclosure [Line Items]
Discretionary contribution by employer	$ 0.4	$ 0.4

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2022	Mar. 01, 2023	Jun. 30, 2022
Cover [Abstract]
Entity Registrant Name	AWARE, INC.
Entity Central Index Key	0001015739
Trading Symbol	AWRE
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		20,993,870
Entity Public Float			$ 32,068,865
Document Type	10-K
Document Period End Date	Dec. 31, 2022
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.01 par value per share
Security Exchange Name	NASDAQ
Entity File Number	000-21129
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2911026
Entity Address, Address Line One	76 Blanchard Road
Entity Address, City or Town	Burlington
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01803
City Area Code	781
Local Phone Number	-0300
Document Annual Report	true
Auditor Name	RSM US LLP
Auditor Location	Boston, Massachusetts
Auditor Firm ID	49
Document Transition Report	false
Documents Incorporated by Reference	DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive Proxy Statement to be delivered to shareholders in connection with the registrant’s Annual Meeting of Shareholders to be held on June 7, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Subscription Agreement

12 Months Ended

Dec. 31, 2022

Capitalization, Long-Term Debt and Equity [Abstract]

Subscription Agreement

7. SUBSCRIPTION AGREEMENT

On March 11, 2022, concurrently with our entry into a mutual reseller arrangement with MIRACL, we entered into a subscription agreement with Omlis. We purchased $2.5 million of the Omlis’ Note that accrues interest at 5% annually with a maturity date of March 11, 2026.

Prior to maturity, we have the right to convert the Note into the securities issued in a future financing at a 20% discount from the price per share paid by the investors in that financing. If the Note remains outstanding on the maturity date, the Note shall, at the option of the holders of a majority of the outstanding Note, (i) be converted into the most senior shares in Omlis, (ii) be redeemed by payment in cash of the Note and all accrued but unpaid interest or (iii) remain outstanding.

In connection with the sale of the Note, Omlis granted us a right of first refusal for 18 months with respect to any proposed sale by Omlis of equity securities constituting 20% or more of the outstanding voting power of Omlis or all or substantially all of the assets of Omlis or any of its material subsidiaries. Also, in connection with the sale of the Note, Omlis issued the Company a warrant that expires on September 11, 2023, which allows us to purchase up to 8% of the total equity shares in Omlis at a price per share of $33.91.

We initially recorded the Note and warrants at their fair values in accordance with ASC 825, Financial Instruments, for the Note and ASC 815, Derivatives and Hedging, for the warrants, which were $2.5 million and $0, respectively. Interest income of $0.1 million was earned during the year ended December 31, 2022. The $0.1 million in accrued interest is included in the fair value of $2.6 million for the Note as of December 31, 2022. At December 31, 2022, there was no change to the fair value of the warrant, which were valued at $0 in each period.

Gain on sale of fixed assets Additional Information (Details) - USD ($) $ in Thousands		12 Months Ended
	Jul. 15, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Long-lived assets held for sale	$ 2,900
Purchase obligation	8,900
Brokerage commission paid	300
Gain on sale of fixed assets	5,700	$ 5,672
Long-lived assets held for sale gross	11,500
Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Long-lived assets held for sale	1,800
Land
Property, Plant and Equipment [Line Items]
Long-lived assets held for sale	$ 1,100

Equity and Stock Compensation Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Equity and Stock Compensation Plans

. EQUITY AND STOCK COMPENSATION PLANS

Stock Option Plan – We have one active fixed stock option plan which is our 2001 Nonqualified Stock Plan (“2001 Plan”). We are authorized to grant nonqualified stock options, stock appreciation rights and stock awards to our employees and directors for up to 8,000,000 shares of common stock under this plan. As of December 31, 2022, there were 1,411,341 shares available for grant under the 2001 Plan.

Options are granted at exercise prices as determined by the Board of Directors and have a maximum term of ten years. Options generally vest over three to five years.

The following table presents stock-based compensation expenses included in our consolidated statements of operations and comprehensive loss (in thousands):


	Years ended December 31,
	2022		2021
Cost of services and other	$	21	$	23
Research and development		265		261
Selling and marketing		286		250
General and administrative		1,135		1,033
Stock-based compensation expense	$	1,707	$	1,567

Stock-based compensation expense in the preceding table includes expenses associated with grants of: i) stock options, ii) unrestricted shares of our common stock; and iii) performance share awards. The methods used to determine stock-based compensation expense for each type of equity grant are described in the following paragraphs.

Stock Option Grants. For the years ended December 31, 2022 and 2021, we granted zero and 2,875,000 stock options, respectively. We estimate the fair value of those stock options using the Black-Scholes valuation model.

The Black-Scholes 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 do not estimate our forfeiture rates as the actual forfeiture rate is known at the end of each reporting period due to the timing of our stock option vesting. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of stock options granted in the year ended December 31 2021. 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. Our 2001 Plan permits us to grant shares of unrestricted stock to our directors, officers, and employees. 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.

We granted 167,921 and 56,553 shares of unrestricted stock to directors, officers, and employees during the years ended December 31, 2022 and 2021, respectively. Of the shares granted in 2022, 61,460 were issued shortly after June 30, 2022 and 46,461 were issued shortly after December 31, 2022. The remaining 60,000 shares of unrestricted stock granted to an officer is to be issued in four equal installments in February 2022, and August of 2022, 2023, and 2024. The unrestricted shares granted in 2021 were issued in two equal installments shortly after June 30, 2021 and December 31, 2021.

Stock Options. Total options outstanding at December 31, 2022 and 2021 were as follows:


	2022					2021
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		3,240,000		$	4.97		425,000		$	6.00
Granted		-			-		2,875,000			4.73
Exercised		-			-		-			-
Forfeited or cancelled		(680,000	)		5.00		(60,000	)		4.73
Outstanding at end of year		2,560,000		$	4.96		3,240,000		$	4.97
Exercisable at year end		250,000		$	6.00		218,748		$	6.00

At December 31, 2022, the weighted average remaining contractual term for total options outstanding and total options exercisable was approximately 8.01 and 6.97 years, respectively.

At December 31, 2022, the aggregate intrinsic value of options outstanding and exercisable was $0. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.

The following table summarizes the stock options outstanding at December 31, 2022:


	Options Outstanding						Options Exercisable
Exercise Price Range	Number		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Number		Weighted Average Exercise Price
$4 to $5		2,316,250	$	4.72		8.11		62,500	$	4.50
$5 to $6		81,250	$	5.50		6.86		62,500	$	5.50
$6 to $7		81,250	$	6.50		6.86		62,500	$	6.50
$7 to $8		81,250	$	7.50		6.86		62,500	$	7.50
		2,560,000	$	4.96		8.01		250,000	$	6.00

At December 31, 2022, unrecognized compensation expense related to non-vested stock options was approximately $2.2 million, which is expected to be recognized over a weighted average period of 2.0 years.

We issue common stock from previously authorized but unissued shares to satisfy option exercises and purchases under our Employee Stock Purchase Plan.

Employee Stock Purchase Plan – In May 2021, we adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”) under which eligible employees could purchase common stock at a price equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six-month offering period. The 2021 ESPP Plan replaced our previous Employee Stock Purchase Plan (the “1996 ESPP”). Stock-based compensation expense related to our 2021 ESPP was $0.1 million in each of the years ended December 31, 2022 and 2021. Participation in the 2021 ESPP is limited to $25,000 worth of stock for each calendar year and may be terminated at any time by the employee and automatically ends on termination of employment. A total of 1,000,000 shares of common stock were reserved for issuance under the 2021 ESPP, and as of December 31, 2022, there were 870,435 shares available for future issuance thereunder. We issued 75,066 and 54,499 shares under the 2021 ESPP Plan during the years ended December 31, 2022 and 2021 respectively. We issued 0 and 6,972 shares under the 1996 ESPP in the years ended December 31, 2022 and 2021, respectively.

Share Purchases - On March 1, 2022, our Board of Directors authorized a new stock repurchase program pursuant to which we may purchase up to $10.0 million of our common stock, of which $1.3 million has been repurchased as of December 31, 2022. During the year ended December 31, 2022 we repurchased 705,201 shares of our common stock. The shares were purchased from time to time in the open market at management’s discretion, depending upon market conditions and other factors. Repurchases where made under the program using our own cash resources and will in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. The program does not obligate us to acquire any particular amount of common stock and the program may be modified or suspended at any time at our Board of Directors discretion.

Dividends – We did not pay dividends in the years ended December 31, 2022 and 2021.

Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	12 Months Ended
	Dec. 31, 2022
Leasehold Improvements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	10 years
Furniture and Fixtures
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	5 years
Computer and office equipment
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	3 years
Purchased software
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	3 years

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The consolidated financial statements include the accounts of Aware, Inc. and its subsidiaries (“the Company”). All significant intercompany transactions have been eliminated.

Use of Estimates – The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The most significant estimates included in the financial statements pertain to revenue recognition, reserves for doubtful accounts, valuation of acquired assets and assumed liabilities in business combinations, valuation of contingent acquisition payments, valuation of investment in note receivable, goodwill and long-lived asset impairment and valuation allowance for deferred income tax assets. Actual results could differ from those estimates.

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 $11.7 million and $30.0 million at December 31, 2022 and 2021, respectively. Marketable securities, which primarily include U.S. Treasuries and corporate bonds, were $17.2 million and $0 as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, our assets and liabilities that are measured at fair value on a recurring basis include the following (in thousands):


	Fair Value Measurement at December 31, 2022 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	10,967	$	-	$	-	$	10,967
Marketable securities		17,229		-		-		17,229
Note receivable		-		-		2,601		2,601
Total assets	$	28,196	$	-	$	2,601	$	30,797

Liabilities:
Contingent acquisition payments	$	-	$	-	$	812	$	812
Total liabilities	$	-	$	-	$	812	$	812

Our investments in marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive loss in stockholders' equity.

The investment in the Note Receivable ("Note") with Omlis Limited ("Omlis"), a limited company incorporated and registered in England and Wales and the parent of MIRCAL Technologies Limited ("MIRACL"), was negotiated at an arm’s length basis and the total carrying value of the investment of $2.6 million is representative of the fair value of the investment as of December 31, 2022. During the year ended December, 31, 2022, there were no changes in the underlying assumptions of the note receivable. The change in fair value during the year ended December 31, 2022 was the result of accrued interest. The fair value of our contingent acquisition payments, which was determined using a Monte Carlo simulation, was $0.8 million and $0.9 million as of December 31, 2022 and 2021, respectively. The $0.1 million decrease in fair value recognized during the year ended December 31, 2022 was due to changes in forecasted revenue and a de minims impact from the present value factor.

Marketable securities by security type consisted of the following (in thousands):


	December 31, 2022:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	13,389	$	24	$	(100	)	$	13,313
Corporate bonds		3,950		—		(34	)		3,916
	$	17,339	$	24	$	(134	)	$	17,229

As of December 31, 2021, our assets and liabilities that are measured at fair value on a recurring basis included the following (in thousands):


	Fair Value Measurement at December 31, 2021 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	28,952	$	-	$	-	$	28,952
Total assets	$	28,952	$	-	$	-	$	28,952

Liabilities:
Contingent acquisition payments	$	-	$	-	$	919	$	919
Total liabilities	$	-	$	-	$	919	$	919

Changes in note receivable consisted of the following (in thousands):


	Year Ended
	December 31, 2022

Balance as of December 31, 2021	$	—
Investment in Note Receivable		2,500
Accrued interest		101
Balance as of December 31, 2022	$	2,601

Cash and Cash Equivalents – Cash and cash equivalents, which consist primarily of money market funds and demand deposits, are stated at fair value. All highly liquid investments purchased with an original maturity of three months or less are considered cash equivalents. Our cash balances exceed the Federal Deposit Insurance Corporation limits. The Company does not believe it is exposed to significant credit risk related to cash and cash equivalents.

Allowance for Doubtful Accounts – Accounts are charged to the allowance for doubtful accounts as they are deemed uncollectible based on a periodic review of the accounts.

For the years ended December 31, 2022 and 2021, changes to and ending balances of the allowance for doubtful accounts were as follows (in thousands):


	Years ended December 31,
	2022			2021
Allowance for doubtful accounts balance - beginning of year	$	74		$	138
Additions to the allowance for doubtful accounts		156			-
Deductions against the allowance for doubtful accounts		(42	)		(64	)
Allowance for doubtful accounts balance - end of year	$	188		$	74

In addition, for the years ended December 31, 2022 and 2021 the bad debt expense related to unbilled receivables was $230K and $0, respectively.

Property and Equipment – Property and equipment is stated at cost. Depreciation and amortization of property and equipment is provided using the straight-line method over the estimated useful lives of the assets. Upon retirement or sale, the costs of the assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss on disposal is included in the determination of income or loss. Expenditures for repairs and maintenance are charged to expense as incurred.

The estimated useful lives of assets are:


Leasehold improvements		10 years
Furniture and fixtures		5 years
Computer and office equipment		3 years
Purchased software		3 years

Leases –We account for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. We determine the initial classification and measurement of our operating right of use assets and lease liabilities at the lease commencement date and thereafter if modified. Fixed lease costs are recognized on a straight-line basis over the lease term. Variable lease costs are recognized in the period in which the obligation for those payments is incurred. We combine lease and non-lease components when determining lease costs for its office space lease. The lease liability includes lease payments related to options to extend or renew the lease term if we are reasonably certain it will exercise those options. Our lease does not contain material residual value guarantees or restrictive covenants.

Goodwill – We record goodwill when consideration paid in a business acquisition exceeds the value of the net assets acquired. Our estimates of fair value are based upon assumptions believed to be reasonable at the time, but such estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate and unanticipated events or circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. Goodwill is not amortized but rather is tested for impairment annually in the fourth quarter or more frequently, if facts and circumstances warrant a review. Circumstances that could trigger an impairment test include, but are not limited to, a significant adverse change in the business climate or legal factors, an adverse action or assessment by a regulator, decline in market capitalization, or unanticipated competition. We have determined that there is a single reporting unit for the purpose of conducting the goodwill impairment assessment. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, we first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If after assessing the totality of events or circumstances, we determine that it is more likely than not (i.e., greater than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount, then the quantitative test is required. The quantitative goodwill impairment test requires us to estimate and compare the fair value of the reporting unit, determined using an income approach and a market approach, with its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss up to the amount of goodwill.

Application of the goodwill impairment test requires judgments, including identification of the reporting units, assigning goodwill to reporting units, a qualitative assessment to determine whether there are any impairment indicators, and determining the fair value of each reporting unit which often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. There is no assurance that the actual future earnings or cash flows of the reporting unit will not decline significantly from the projections used in the impairment analysis. Goodwill impairment charges may be recognized in future periods to the extent changes in factors or circumstances occur, including deterioration in the macroeconomic environment and industry, deterioration in the Company’s performance or its future projections, or changes in plans for its reporting unit.

As of December 31, 2022 and 2021, we had $3.1 million of goodwill. Impairment of goodwill could materially impact our operating results and financial position. We performed a quantitative analysis during the years ended December 31, 2022 and 2021 and determined there was no impairment loss and to date, there have been no impairments of goodwill.

The changes in goodwill for the years ended December 31, 2022 and 2021 were as follows (in thousands):


	Goodwill
Balance as of December 31, 2020	$	1,651
Goodwill arising from AFIX acquisition		1,469
Balance as of December 31, 2021 and 2022	$	3,120

Valuation of Long-Lived Assets – We review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows estimated to be generated by those assets over their estimated economic life to the related carrying value of those assets to determine if the assets are impaired. If an impairment is indicated, the asset is written down to its estimated fair value. The cash flow estimates used to identify the potential impairment reflect our best estimates using appropriate assumptions and projections at that time. In evaluating potential impairment of these assets, we specifically consider whether any indicators of impairment are present, including, but not limited to:

•

whether there has been a significant adverse change in the business climate that affects the value of an asset:

•

whether there has been a significant change in the extent or way an asset is used; and

•

whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life.

We did not identify any events or changes in business circumstances that would indicate the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate during the years ended December 31, 2022 and 2021.

Revenue recognition. The core principle of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) is that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve that core principle, we apply the following five step model:

1) Identify the contract with the customer

A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s intent and ability to pay, which is based on a variety of factors including the customer’s historical payment experience, or in the case of a new customer, published credit and financial information pertaining to the customer.

We evaluate contract modifications for the impact on revenue recognition if they have been approved by both parties such that the enforceable rights and obligations under the contract have changed. Contract modifications are either accounted for using a cumulative effect adjustment or prospectively over the remaining term of the arrangement. The determination of which method is more appropriate depends on the nature of the modification, which we evaluate on a case-by-case basis.

We combine two or more contracts entered into at or near the same time with the same customer and account for them as a single contract if (i) the contracts are negotiated as a package with a common commercial objective, (ii) the amount of consideration to be paid in one contract depends on the price or performance of the other contract, or (iii) some or all of the goods or services in one contract would be combined with some or all of the goods and services in the other contract into a single performance obligation. If two or more contracts are combined, the consideration to be paid is aggregated and allocated to the individual performance obligations without regard to the consideration specified in the individual contracts.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods and services, we apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation. To identify performance obligations, we consider all of the goods or services promised in a contract regardless of whether they are explicitly stated or are implied by customary business practices.

3) Determine the transaction price

The transaction price is determined based on the consideration we expect to be entitled in exchange for transferring promised goods and services to the customer. Determining the transaction price requires significant judgment. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period. Some of our arrangements include usage-based royalties where a software license is the predominant item that the royalty relates to. In these arrangements, revenue from the usage-based royalty is recognized when the subsequent usage occurs.

The amount of consideration is not adjusted for a significant financing component if the time between payment and the transfer of the related good or service is expected to be one year or less under the practical expedient in ASC 606-10-32-18. Our revenue arrangements are typically accounted for under such expedient, as payment is typically due within 30 to 60 days. As of December 31, 2022 and 2021, none of our contracts contained a significant financing component.

Our arrangements can include variable fees, such as the option to purchase additional usage of a previously delivered software license. The Company may also provide pricing concessions to clients, a business practice that also gives rise to variable fees in contracts. The Company also reviews contractual termination provisions in determining contractual term and total transaction price. For variable fees arising from the client’s purchase of additional usage of a previously delivered software license, we apply the sales and usage-based royalties guidance related to a license of intellectual property and recognizes the revenue in the period the underlying sale or usage occurs. We include variable fees in the determination of total transaction price if it is not probable that a future significant reversal of revenue will occur. We use the expected value or most likely value amount, whichever is more appropriate for specific circumstances, to estimate variable consideration, and the estimates are based on the level of historical price concessions offered to clients.

4) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative SSPs. The SSP is the price at which we would sell a promised good or service separately to a customer. The best estimate of SSP is the observable price of a good or service when we sell that good or service separately. A contractually stated price or a list price for a good or service may be the SSP of that good or service. We use a range of amounts to estimate SSP when we sell each of the goods and services separately and need to determine whether there is a discount that needs to be allocated based on the relative SSP of the various goods and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we typically determine the SSP using an adjusted market assessment approach using information that may include market conditions and other observable inputs. We typically have more than one SSP for individual goods and services due to the

stratification of those goods and services by customers and circumstances. In these instances, we may use information such as the nature of the customer and distribution channel in determining the SSP.

5) Recognize revenue when or as we satisfy a performance obligation

We satisfy performance obligations either over time or at a point in time. Revenue is recognized over time if 1) the customer simultaneously receives and consumes the benefits provided by our performance, 2) our performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) our performance does not create an asset with an alternative use to us and we have an enforceable right to payment for performance completed to date. If we do not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer.

We categorize revenue as software licenses, software maintenance, or services and other. Specific revenue recognition policies apply to each category of revenue.

Software licenses

Software licenses consist of revenue from the sale of software licenses for biometrics and imaging applications. Our software licenses are functional intellectual property and typically provide customers with the right to use our software on a term or perpetual basis as it exists when made available to the customer. We recognize revenue from perpetual software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met.

We also offer certain products pursuant to a subscription-based software model which includes a term software license to use the software for a fixed term. We recognize revenue for fixed fees associated with subscription-based software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met. Fees subject to the usage-based royalty exception are recognized when the subsequent usage occurs.

Also, with our acquisition of FortressID and adaption of our current products to be delivered in a hosted environment with AwareID, we expect to recognize revenue from our SaaS offerings ratably over the subscription period. For the years ended December 31, 2022 and 2021 we generated a de minimis amount of revenue from SaaS contracts.

Software maintenance

Software maintenance consists of revenue from the sale of software maintenance contracts for biometrics and imaging software. Software maintenance contracts entitle customers to receive software support and software updates, if and when they become available, during the term of the maintenance contract. Software support and software updates are considered distinct services. However, these distinct services are considered a single performance obligation consisting of a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. We recognize software maintenance revenue over time on a straight-line basis over the contract period.

Services and other

Service revenue consists of fees from biometrics customers for software engineering services. We recognize services revenue over time as the services are delivered using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted), provided all other revenue recognition criteria are met. The use of the over-time revenue recognition method requires judgment in developing budgeted labor hours. Changes in budgeted hours may occur and the resulting impact on revenue recognition is accounted for in the period of the change in estimate. Other revenue, which includes hardware sales that may be purchased with the software license, is recognized at a point in time upon delivery provided all other revenue recognition criteria are met

Arrangements with multiple performance obligations

In addition to selling software licenses, software maintenance and software services on a standalone basis, a significant portion of our contracts include multiple performance obligations. The various combinations of multiple performance obligations and our revenue recognition for each are described as follows:

•

Perpetual software licenses and software maintenance: When software licenses and software maintenance contracts are sold together, the software licenses and software maintenance are generally considered distinct performance obligations. The transaction price is allocated to the software licenses and the software maintenance based on relative SSP. Revenue allocated to the software licenses is recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. Revenue allocated to the software maintenance is recognized over time on a straight-line basis over the contract period.

•

Perpetual software licenses and services: When software licenses and significant customization engineering services are sold together, they are accounted for as a combined performance obligation, as the software licenses are generally highly dependent on, and interrelated with, the associated services and therefore are not distinct performance obligations. Revenue for the combined performance obligation is recognized over time as the services are delivered using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted). When software licenses and standard implementation or consulting-type services are sold together, they are generally considered distinct performance obligations, as the software licenses are not dependent on or interrelated with the associated services. The transaction price in these arrangements is allocated to the software licenses and services based on relative SSP. Revenue allocated to the software licenses is recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. Revenue allocated to the services is recognized over time using an input method. In arrangements with both software licenses and services, the software license portion of the arrangement is classified as software license revenue and the services portion is classified as services revenue in our consolidated statements of operations and comprehensive loss.

•

Perpetual software licenses, software maintenance and services: When we sell software licenses, software maintenance and software services together, we account for the individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations based on relative SSP. Revenue allocated to the software licenses is recognized at a point in time upon delivery. Revenue allocated to the services is recognized over time using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted). Revenue for the software maintenance is recognized over time on a straight-line basis over the contract period. However, if the software services are significant customization engineering services, they are accounted for with the software licenses as a combined performance obligation, as stated above. Revenue for the combined performance obligation is recognized over time using an input method.

•

Perpetual software licenses, hardware, software maintenance, and services: When we sell software licenses, hardware, software maintenance and software services together, we account for the individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations based on relative SSP. Revenue allocated to the software licenses is recognized at a point in time upon delivery. Revenue allocated to the services is recognized over time using an input method (i.e., labor hours incurred as a percentage of total labor hours budgeted). Revenue for the hardware is recognized at a point in time upon delivery. Revenue for the software maintenance is recognized over time on a straight-line basis over the contract period.

•

Subscription-based software consisting of a software license and software maintenance: When subscription-based software is sold, the software license and software maintenance are generally considered distinct performance obligations. The transaction price is allocated to software license and the software maintenance based on relative SSP. We sell subscription-based software licenses for a fixed fee and/or a usage-based royalty fee, sometimes subject to a minimum guarantee. When the amount is in the form of a fixed fee, including the guaranteed minimum in usage-based royalty, revenue is allocated to the software license recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. Any royalties not subject to the guaranteed minimum or earned in excess of the minimum amount are recognized as revenue when the subsequent usage occurs. Revenue allocated to the software maintenance is recognized on a straight-line basis over the contract period.

Returns

We do not offer rights of return for our products and services in the normal course of business.

Customer Acceptance

Our contracts with customers generally do not include customer acceptance clauses.

Contract Balances

When the timing of our delivery of goods or services is different from the timing of payments made by customers, we recognize either a contract asset (performance precedes contractual billing date) or a contract liability (customer payment precedes performance). Customers that prepay are represented by the deferred revenue until the performance obligation is satisfied. Our contract assets consist of unbilled receivables. Our contract liabilities consisted of deferred (unearned) revenue, which is generally related to software maintenance contracts. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue.

The following table presents changes in our contract assets and liabilities during the years ended December 31, 2022 and 2021 (in thousands):


	Balance at Beginning of period		Revenue Recognized In Advance of Billings		Billings			Balance at End of Period
Year ended December 31, 2022
Contract Assets:
Unbilled receivables	$	3,087	$	5,288	$	(5,446	)	$	2,929
Year ended December 31, 2021
Contract Assets:
Unbilled receivables	$	2,229	$	7,172	$	(6,314	)	$	3,087

	Balance at Beginning of period		Billings		Revenue Recognized			Balance at End of Period
Year ended December 31, 2022
Contract Liabilities:
Deferred revenue	$	3,740	$	7,104	$	(7,111	)	$	3,733
Year ended December 31, 2021
Contract Liabilities:
Deferred revenue	$	3,933	$	6,486	$	(6,679	)	$	3,740

Remaining Performance Obligations

Remaining performance obligations represent the transaction price from contracts for which work has not been performed or goods and services have not been delivered. We expect to recognize revenue on approximately 72% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations with a duration greater than one year, comprised of software maintenance contracts, was $2.0 million.

Contract Costs

We recognize an other-asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales commissions meet the requirements to be capitalized, and we amortize these costs on a consistent basis with the pattern of transfer of the goods and services in the contract. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets.

We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period is one year or less. These costs include sales commissions on software maintenance contracts with a contract period of one year or less as sales commissions paid on contract renewals are commensurate with those paid on the initial contract.

Income Taxes – We compute deferred income taxes based on the differences between the financial statement and tax basis of assets and liabilities using enacted rates in effect in the years in which the differences are expected to reverse. We establish a valuation allowance to offset temporary deductible differences, net operating loss carryforwards and tax credits when it is more likely than not that the deferred tax assets will not be realized.

We recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. The evaluation of an uncertain tax position is based on factors that include, but are not limited to, changes in the tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, and changes in facts or circumstances related to a tax position. Any changes to these estimates, based on the actual results obtained and/or a change in assumptions, could impact our tax provision in future periods. Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as a provision for income tax in the consolidated statements of operations and comprehensive loss.

Capitalization of Software Costs – We capitalize certain costs to develop software products to be sold, leased, or marketed to external users after technological feasibility of the product has been established. No software costs were capitalized during the years ended December 31, 2022 and 2021, because such costs incurred between the period after technological feasibility to product release were immaterial.

The Company capitalizes and amortizes certain direct costs associated with computer software developed or purchased for internal use incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company amortizes capitalized software costs generally over three to five years, commencing on the date the software is placed into service. No software costs were capitalized during the years ended December 31, 2022 and 2021, because such costs were related to converting our existing products into a hosted solution.

Research and Development Costs – Costs incurred in the research and development of our products are expensed as incurred.

Concentration of Credit Risk – At December 31, 2022 and 2021, we had cash and cash equivalents, in excess of federally insured deposit limits of approximately $11.5 million and $29.7 million, respectively.

Concentration of credit risk with respect to net accounts receivable and unbilled receivables consisted of amounts owed by the following customers that comprised more than 10% of net accounts receivable and unbilled receivables at December 31:


	2022			2021
Customer A		26	%		27	%
Customer B		11	%		5	%

We had no customer in 2022 or 2021 that provided 10% or more of revenue.

Stock-Based Compensation – We grant stock and stock options to our employees and directors. We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize stock-based compensation expense on a straight-line basis over the requisite service period of the award.

For stock awards, we determine the fair value of the award by using 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.

For stock options, we use the Black-Scholes option valuation model to estimate the fair value of the award. 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.

Computation of Earnings per Share – Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to common shareholders 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 antidilutive are excluded from the calculation.

Fair Value of Financial Instruments – The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of their short-term nature.

Segments – We organize ourselves into a single segment reporting to the chief operating decision maker, who we have designated as our Chief Executive Officer.

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):


	Year ended December 31,
	2022		2021
United States	$	7,613	$	9,624
Brazil		953		1,938
United Kingdom		1,717		1,726
Rest of world		5,725		3,566
	$	16,008	$	16,854

Revenue by product group was (in thousands):


	Year ended December 31,
	2022		2021
License and service contracts	$	12,937	$	14,164
Subscription-based contracts		3,071		2,690
	$	16,008	$	16,854

Revenue included by product group consists of all associated revenue within the contract, including license revenue, maintenance revenue, and services and other revenue. Revenue by product group may be recognized at a point in time or over-time. These revenues are attributable to both contracts with fixed fees or guaranteed minimums.

Revenue by timing of transfer of goods or services was (in thousands):


	Year ended December 31,
	2022		2021
Goods or services transferred at a point in time	$	7,178	$	7,992
Goods or services transferred over time		8,830		8,862
	$	16,008	$	16,854

Subsequent Events

12 Months Ended

Dec. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

14. SUBSEQUENT EVENTS

We have evaluated subsequent events or transactions that have occurred after the consolidated balance sheet date of December 31, 2022 through the date of this filing of the consolidated financial statements with the SEC on this Annual Report on Form 10-K. No material subsequent events have occurred since December 31, 2022 through the date of this filing that would require recognition or disclosure in our consolidated financial statements.

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
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	0	0
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	21,093,447	21,613,982
Common stock, shares outstanding	21,093,447	21,613,982

Intangible Assets - Summary of Fair Value of Intangible Assets and Estimated Useful Live (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 3,420	$ 3,420
Accumulated Amortization	614	198
Net Book Value	2,806	3,222
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	2,680	2,680
Accumulated Amortization	424	132
Net Book Value	$ 2,256	$ 2,548
Customer Relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	8 years	8 years
Customer Relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	10 years	10 years
Developed Technology
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 710	$ 710
Accumulated Amortization	180	63
Net Book Value	$ 530	$ 647
Developed Technology \| Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	5 years	5 years
Developed Technology \| Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years	7 years
Trade Name / Trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 30
Accumulated Amortization	10
Net Book Value	$ 20
Trade Name / Trademarks \| Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Trade Name / Trademarks \| Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life	7 years
Tradenames
Finite-Lived Intangible Assets [Line Items]
Gross Amount		$ 30
Accumulated Amortization		3
Net Book Value		$ 27
Tradenames \| Minimum
Finite-Lived Intangible Assets [Line Items]
Useful life		3 years
Tradenames \| Maximum
Finite-Lived Intangible Assets [Line Items]
Useful life		7 years

Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Allowance for Doubtful Accounts Receivable
Allowance for doubtful accounts balance - beginning of year	$ 74	$ 138
Additions to the allowance for doubtful accounts	156	0
Deductions against the allowance for doubtful accounts	(42)	(64)
Allowance for doubtful accounts balance - end of year	$ 188	$ 74

Equity and Stock Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-based Employee Compensation Expenses Included in Consolidated Statements of Operations and Comprehensive Loss

The following table presents stock-based compensation expenses included in our consolidated statements of operations and comprehensive loss (in thousands):


	Years ended December 31,
	2022		2021
Cost of services and other	$	21	$	23
Research and development		265		261
Selling and marketing		286		250
General and administrative		1,135		1,033
Stock-based compensation expense	$	1,707	$	1,567

Summary of Stock Option Transactions for Fixed Stock Option Plan


	2022					2021
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		3,240,000		$	4.97		425,000		$	6.00
Granted		-			-		2,875,000			4.73
Exercised		-			-		-			-
Forfeited or cancelled		(680,000	)		5.00		(60,000	)		4.73
Outstanding at end of year		2,560,000		$	4.96		3,240,000		$	4.97
Exercisable at year end		250,000		$	6.00		218,748		$	6.00

Summary of Stock Options Outstanding

The following table summarizes the stock options outstanding at December 31, 2022:


	Options Outstanding						Options Exercisable
Exercise Price Range	Number		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Number		Weighted Average Exercise Price
$4 to $5		2,316,250	$	4.72		8.11		62,500	$	4.50
$5 to $6		81,250	$	5.50		6.86		62,500	$	5.50
$6 to $7		81,250	$	6.50		6.86		62,500	$	6.50
$7 to $8		81,250	$	7.50		6.86		62,500	$	7.50
		2,560,000	$	4.96		8.01		250,000	$	6.00

Leases - Summary of Supplemental Balance Sheet Information Related to Company's Operating Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Lessee Disclosure [Abstract]
Operating lease right-of-use assets	$ 4,538
Current portion operating lease liabilities	470
Operating lease liabilities, long term	4,047
Total operating lease liabilities	$ 4,517
Weighted average remaining lease term (years)	10 years 3 months 18 days
Weighted average incremental borrowing rate	10.10%

Equity and Stock Compensation Plans - Summary of Stock Option Transactions (Details) - Stock Option [Member] - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Shares
Outstanding at beginning of year	3,240,000	425,000
Number of stock options granted		2,875,000
Forfeited or cancelled	(680,000)	(60,000)
Outstanding at end of year	2,560,000	3,240,000
Exercisable at year end	250,000	218,748
Weighted Average Exercise Price
Outstanding at beginning of year	$ 4.97	$ 6.00
Granted		4.73
Forfeited or cancelled	5.00	4.73
Outstanding at end of year	4.96	4.97
Exercisable at year end	$ 6.00	$ 6.00

Equity and Stock Compensation Plans - Stock Option Grants and Unrestricted Stock Grants (Details)		12 Months Ended
	Jul. 01, 2022 shares	Dec. 31, 2022 USD ($) Installment $ / shares shares	Dec. 31, 2021 USD ($) Installment $ / shares shares	Dec. 31, 2020 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense \| $		$ 1,707,000	$ 1,567,000
Stock options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options granted		0	2,875,000
Options outstanding, Weighted average remaining contractual term (in years)		8 years 3 days
Weighted average remaining contractual term		6 years 11 months 19 days
Aggregate intrinsic value of options exercisable \| $		$ 0
Amount of unrecognized compensation expense related to non-vested options \| $		$ 2,200,000
Unrestricted Stock \| 2001 Nonqualified Stock Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares granted (in shares)		60,000
Unrestricted Stock \| 2001 Nonqualified Stock Plan \| 2022 Grant
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares granted (in shares)		167,921	56,553
Number of shares issued	61,460	46,461
Unrestricted Stock \| 2001 Nonqualified Stock Plan \| 2022 Grant \| Officer
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of installment \| Installment		4	2
Equity Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock options granted			2,875,000
Number of options outstanding		2,560,000	3,240,000	425,000
Weighted average exercise price of options outstanding \| $ / shares		$ 4.96	$ 4.97	$ 6.00
Options outstanding, Weighted average remaining contractual term (in years)		8 years 3 days
Weighted average period for nonvested options		2 years

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss
Balance at Dec. 31, 2020	$ 45,670	$ 214	$ 96,104	$ (50,648)
Balance (in shares) at Dec. 31, 2020		21,379,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of unrestricted stock		$ 2	(2)
Issuance of unrestricted stock (in shares)		189,000
Shares surrendered by employees to pay taxes related to unrestricted stock	(54)		(54)
Shares surrendered by employees to pay taxes related to unrestricted stock (in shares)		(16,000)
Issuance of common stock under employee stock purchase plan	163		163
Issuance of common stock under employee stock purchase plan (in shares)		62,000
Stock-based compensation expense	1,567		1,567
Net loss	(5,824)			(5,824)
Balance at Dec. 31, 2021	$ 41,522	$ 216	97,778	(56,472)
Balance (in shares) at Dec. 31, 2021	21,613,982	21,614,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of unrestricted stock	$ 2	$ 1	1
Issuance of unrestricted stock (in shares)		118,000
Shares surrendered by employees to pay taxes related to unrestricted stock	(26)		(26)
Shares surrendered by employees to pay taxes related to unrestricted stock (in shares)		(10,000)
Issuance of common stock under employee stock purchase plan	152	$ 1	151
Issuance of common stock under employee stock purchase plan (in shares)		76,000
Stock-based compensation expense	1,707		1,707
Repurchase of common stock	(1,312)	$ (7)	(1,305)
Repurchase of common stock (in shares)		(705,000)
Other comprehensive loss	(110)				$ (110)
Net loss	(1,726)			(1,726)
Balance at Dec. 31, 2022	$ 40,209	$ 211	$ 98,306	$ (58,198)	$ (110)
Balance (in shares) at Dec. 31, 2022	21,093,447	21,093,000

Income Taxes - Schedule of Reconciliation of U.S. Federal Statutory Rate to Effective Tax Rate (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Federal statutory rate	21.00%	21.00%
State rate, net of federal benefit	12.00%	6.00%
Tax credits	(2.00%)	2.00%
Permanent adjustments	(1.00%)
Change in valuation allowance	(24.00%)	(24.00%)
Other	(9.00%)	(1.00%)
Effective tax rate	(3.00%)	4.00%

Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property and Equipment
Total	$ 1,656	$ 12,465
Less accumulated depreciation	(930)	(9,249)
Property and equipment, net	726	3,216
Land
Property and Equipment
Total		1,056
Building and Improvements
Property and Equipment
Total	146	9,166
Computer and Office Equipment
Property and Equipment
Total	859	1,310
Purchased software
Property and Equipment
Total	78	155
Furniture and Fixtures
Property and Equipment
Total	$ 573	$ 778

Net Loss Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

13. NET LOSS PER SHARE

The number of common shares used in the computation of diluted net loss per share for the periods presented does not include the effect of the following potentially outstanding common shares because the effect would have been anti-dilutive (in thousands):


	Year ended December 31,
	2022		2021
Stock options		2,982		2,823

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


	Year ended December 31,
	2022			2021
Net loss		(1,726	)		(5,824	)
Shares outstanding:
Weighted-average common shares outstanding		21,604			21,525
Additional dilutive common stock equivalents		—			—
Diluted shares outstanding		21,604			21,525
Net loss per share – basic	$	(0.08	)	$	(0.27	)
Net loss per share - diluted	$	(0.08	)	$	(0.27	)

Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Beginning Balance	$ 1,651
Goodwill arising from AFIX acquisition	1,469
Ending Balance	3,120
Fortress ID
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Ending Balance	$ 1,469

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Income Taxes - Schedule of Components of Benefit from Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current:
Federal	$ 34
State	15
Total current tax	49
Deferred:
Federal		$ (147)
State		(122)
Total deferred tax		(269)
Provision (benefit) from income taxes	$ 49	$ (269)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Nature of Business	12 Months Ended
Nature of Business	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	NATURE OF BUSINESS We are a global leader in biometrics software offerings and solutions. Our portfolio enables government agencies and commercial entities to enroll, identify authenticate and enable using biometrics, which comprise physiological characteristics, such as fingerprints, faces, irises and voices. • Enroll: Register biometric identities into an organization’s secure database • Identify: Utilize an organization’s secure database to accurately identify individuals using biometric data • Authenticate: Provide frictionless multi-factor, passwordless access to secured accounts and databases with biometric verification • Enable: Manage the lifecycle of secure identities through optimized biometric interchanges We have been engaged in this business since 1993. Our comprehensive portfolio of biometric solutions is based on innovative, robust products designed explicitly for ease of integration, including customer-managed and integration ready biometric frameworks, platforms, software development kits (“SDKs”) and services. Principal government applications of biometrics systems include border control, visa applicant screening, law enforcement, national defense, intelligence, secure credentialing, access control, and background checks. Principal commercial applications include mobile enrollment, user authentication, identity proofing, and secure transaction enablement. Our products span multiple biometric modalities including fingerprint, face, iris and voice, and provide interoperable, standards-compliant, field-proven biometric functionality. Our products are used to capture, verify, format, compress and decompress biometric images as well as aggregate, analyze, process, match and transport those images and templates within biometric systems. For large deployments, we may provide project management and software engineering services. We sell our biometrics software products and services globally through a multifaceted distribution strategy using systems integrators, original equipment manufacturers (“OEMs”), VARs, partners, and directly to end user customers. Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts.

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenue:
Total revenue	$ 16,008	$ 16,854
Costs and expenses:
Cost of services and other	1,260	1,210
Research and development	9,234	9,259
Selling and marketing	6,962	6,324
General and administrative	6,441	6,158
Gain on sale of fixed assets	(5,672)
Total costs and expenses	18,225	22,951
Operating loss	(2,217)	(6,097)
Interest and other income	540	4
Loss before provision for (benefit from) income taxes	(1,677)	(6,093)
Provision for (benefit from) income taxes	49	(269)
Net loss	$ (1,726)	$ (5,824)
Net loss per share – basic	$ (0.08)	$ (0.27)
Net loss per share – diluted	$ (0.08)	$ (0.27)
Weighted-average shares - basic	21,604	21,525
Weighted-average shares - diluted	21,604	21,525
Other comprehensive loss, net of tax
Unrealized loss on available-for-sale securities	$ (110)
Comprehensive loss	(1,836)	$ (5,824)
Software licenses
Revenue:
Total revenue	7,386	7,973
Software maintenance
Revenue:
Total revenue	7,111	6,679
Services and other
Revenue:
Total revenue	$ 1,511	$ 2,202

Property and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

3 PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31 (in thousands):


	2022			2021
Land	$	—		$	1,056
Building and improvements		146			9,166
Computer and office equipment		859			1,310
Purchased software		78			155
Furniture and fixtures		573			778
Total		1,656			12,465
Less accumulated depreciation		(930	)		(9,249	)
Property and equipment, net	$	726		$	3,216

Depreciation expense was $0.3 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively. The change in accumulated depreciation for the year ended December 31, 2022 primarily related to the sale and disposal of property and equipment related to our former corporate headquarters.

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 11,749	$ 29,963
Marketable securities	17,229
Accounts receivable, net	3,317	3,763
Unbilled receivables, net	2,929	3,087
Tax receivable	1,362	1,411
Prepaid expenses and other current assets	693	591
Total current assets	37,279	38,815
Property and equipment, net	726	3,216
Intangible assets, net	2,806	3,222
Goodwill	3,120	3,120
Note receivable	2,601
Right of use asset	4,538
Other long-term assets	122
Total assets	51,192	48,373
Current liabilities:
Accounts payable	639	283
Accrued expenses	1,282	1,909
Current portion operating lease liabilities	470
Deferred revenue	3,411	3,549
Total current liabilities	5,802	5,741
Long-term deferred revenue	322	191
Long-term operating lease liabilities	4,047
Long-term contingent acquisition payments	812	919
Total long-term liabilities	5,181	1,110
Commitments and contingent liabilities (Note 11)
Stockholders’ equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized, none outstanding	0	0
Common stock, $.01 par value; shares authorized, 70,000,000 in 2022 and 2021; issued and outstanding of 21,093,447 as of December 31, 2022 and 21,613,982 as of December 31, 2021	211	216
Additional paid-in capital	98,306	97,778
Accumulated deficit	(58,198)	(56,472)
Accumulated other comprehensive loss	(110)
Total stockholders’ equity	40,209	41,522
Total liabilities and stockholders’ equity	$ 51,192	$ 48,373

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consisted of the following at December 31 (in thousands):


	2022			2021
Land	$	—		$	1,056
Building and improvements		146			9,166
Computer and office equipment		859			1,310
Purchased software		78			155
Furniture and fixtures		573			778
Total		1,656			12,465
Less accumulated depreciation		(930	)		(9,249	)
Property and equipment, net	$	726		$	3,216

Leases - Summary of Components of Lease Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Lease, Cost [Abstract]
Operating lease costs	$ 182

Acquisition (Tables)

12 Months Ended

Dec. 31, 2022

Business Acquisition [Line Items]

Summary of Fair Value of Assets Acquired and Liabilities Assumed At Date of Acquisition

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


Customer relationships	$	1,740
Developed technology		430
Trade name / trademarks		10
Goodwill		1,469
Gross assets acquired		3,649
Net working capital		(11	)
Fair value of contingent consideration		(919	)
Net assets acquired	$	2,719

Leases - Additional Information (Details) $ in Millions	Oct. 01, 2022 USD ($) ft²	Dec. 31, 2022
Lessee, Lease, Description [Line Items]
Operating leases, remaining lease term		1 year
Original Lease Agreement
Lessee, Lease, Description [Line Items]
Rentable area \| ft²	20,730
Lease, term of contract	10 years 6 months
Lease, option to terminate	one-time termination right after seven years and six months
Lease commencement date	Oct. 01, 2022
Rent expenses \| $	$ 8.2
Lease, option to extend	a renewal option for up to two additional terms
Lease, renewal term	5 years

Commitments and Contingent Liabilities

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

11. COMMITMENTS AND CONTINGENT LIABILITIES

Litigation - There are no material pending legal proceedings to which we are a party or to which any of our properties are subject which, either individually or in the aggregate, are expected to have a material adverse effect on our business, financial position or results of operations.

Guarantees and Indemnification Obligations – We enter into agreements in the ordinary course of business that require us: i) to perform under the terms of the contracts, ii) to protect the confidentiality of our customers’ intellectual property, and iii) to indemnify customers, including indemnification against third party claims alleging infringement of intellectual property rights. We also have agreements with each of our directors and executive officers to indemnify such directors or executive officers, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer of the Company.

Given the nature of the above obligations and agreements, we are unable to make a reasonable estimate of the maximum potential amount that we could be required to pay. Historically, we have not made any significant payments on the above guarantees and indemnifications and no amount has been accrued in the accompanying consolidated financial statements with respect to these guarantees and indemnifications.

Summary of Significant Accounting Policies - Revenue by Timing of Transfer of Goods or Services (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 16,008	$ 16,854
Goods or services transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenue	7,178	7,992
Goods or services transferred over time
Disaggregation of Revenue [Line Items]
Total revenue	$ 8,830	$ 8,862

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130543-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
2023	$ 415
2024	415
2025	415
2026	412
2027	412
Thereafter	737
Net Book Value	$ 2,806	$ 3,222

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Line Items]
Income tax expense (Benefit)	$ 49	$ (269)
Deferred tax assets	11,100	10,700
Research and development credits	6,817	6,904
Net operating loss carryforward	16,700
Valuation allowance	$ 11,115	10,730
Percentage of offset tax liability after net operating loss carryforwards	75.00%
Operating loss carryforwards expiration year	2041
Increase in deferred tax assets valuation allowance	$ 400
Uncertain tax positions	800	800
Fortress ID
Income Tax Disclosure [Line Items]
Net operating loss carryforward	3,500
Federal
Income Tax Disclosure [Line Items]
Net operating loss carryforward		$ 7,500
Federal \| Carryforward Indefinitely
Income Tax Disclosure [Line Items]
Net operating loss carryforward	6,600
Federal \| Expires in 2037
Income Tax Disclosure [Line Items]
Net operating loss carryforward	$ 900
Operating loss carryforwards expiration year	2037

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Fair Value Measurements

As of December 31, 2022, our assets and liabilities that are measured at fair value on a recurring basis include the following (in thousands):


	Fair Value Measurement at December 31, 2022 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	10,967	$	-	$	-	$	10,967
Marketable securities		17,229		-		-		17,229
Note receivable		-		-		2,601		2,601
Total assets	$	28,196	$	-	$	2,601	$	30,797

Liabilities:
Contingent acquisition payments	$	-	$	-	$	812	$	812
Total liabilities	$	-	$	-	$	812	$	812

Marketable securities by security type consisted of the following (in thousands):


	December 31, 2022:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	13,389	$	24	$	(100	)	$	13,313
Corporate bonds		3,950		—		(34	)		3,916
	$	17,339	$	24	$	(134	)	$	17,229

As of December 31, 2021, our assets and liabilities that are measured at fair value on a recurring basis included the following (in thousands):


	Fair Value Measurement at December 31, 2021 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	28,952	$	-	$	-	$	28,952
Total assets	$	28,952	$	-	$	-	$	28,952

Liabilities:
Contingent acquisition payments	$	-	$	-	$	919	$	919
Total liabilities	$	-	$	-	$	919	$	919

Changes in note receivable consisted of the following (in thousands):


	Year Ended
	December 31, 2022

Balance as of December 31, 2021	$	—
Investment in Note Receivable		2,500
Accrued interest		101
Balance as of December 31, 2022	$	2,601

Cash and Cash Equivalents

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts – Accounts are charged to the allowance for doubtful accounts as they are deemed uncollectible based on a periodic review of the accounts.

For the years ended December 31, 2022 and 2021, changes to and ending balances of the allowance for doubtful accounts were as follows (in thousands):


	Years ended December 31,
	2022			2021
Allowance for doubtful accounts balance - beginning of year	$	74		$	138
Additions to the allowance for doubtful accounts		156			-
Deductions against the allowance for doubtful accounts		(42	)		(64	)
Allowance for doubtful accounts balance - end of year	$	188		$	74

In addition, for the years ended December 31, 2022 and 2021 the bad debt expense related to unbilled receivables was $230K and $0, respectively.

Property and Equipment

The estimated useful lives of assets are:


Leasehold improvements		10 years
Furniture and fixtures		5 years
Computer and office equipment		3 years
Purchased software		3 years

Leases

Goodwill

The changes in goodwill for the years ended December 31, 2022 and 2021 were as follows (in thousands):


	Goodwill
Balance as of December 31, 2020	$	1,651
Goodwill arising from AFIX acquisition		1,469
Balance as of December 31, 2021 and 2022	$	3,120

Valuation of Long-Lived Assets

•

whether there has been a significant adverse change in the business climate that affects the value of an asset:

•

whether there has been a significant change in the extent or way an asset is used; and

•

whether there is an expectation that the asset will be sold or disposed of before the end of its originally estimated useful life.

Revenue Recognition

1) Identify the contract with the customer

2) Identify the performance obligations in the contract

3) Determine the transaction price

4) Allocate the transaction price to performance obligations in the contract

5) Recognize revenue when or as we satisfy a performance obligation

We categorize revenue as software licenses, software maintenance, or services and other. Specific revenue recognition policies apply to each category of revenue.

Software licenses

Software maintenance

Services and other

Arrangements with multiple performance obligations

•

Returns

We do not offer rights of return for our products and services in the normal course of business.

Customer Acceptance

Our contracts with customers generally do not include customer acceptance clauses.

Contract Balances

The following table presents changes in our contract assets and liabilities during the years ended December 31, 2022 and 2021 (in thousands):


	Balance at Beginning of period		Revenue Recognized In Advance of Billings		Billings			Balance at End of Period
Year ended December 31, 2022
Contract Assets:
Unbilled receivables	$	3,087	$	5,288	$	(5,446	)	$	2,929
Year ended December 31, 2021
Contract Assets:
Unbilled receivables	$	2,229	$	7,172	$	(6,314	)	$	3,087

	Balance at Beginning of period		Billings		Revenue Recognized			Balance at End of Period
Year ended December 31, 2022
Contract Liabilities:
Deferred revenue	$	3,740	$	7,104	$	(7,111	)	$	3,733
Year ended December 31, 2021
Contract Liabilities:
Deferred revenue	$	3,933	$	6,486	$	(6,679	)	$	3,740

Remaining Performance Obligations

Contract Costs

Income Taxes

Capitalization of Software Costs

Research and Development Costs

Research and Development Costs – Costs incurred in the research and development of our products are expensed as incurred.

Concentration of Credit Risk


	2022			2021
Customer A		26	%		27	%
Customer B		11	%		5	%

We had no customer in 2022 or 2021 that provided 10% or more of revenue.

Stock-based Compensation

For stock awards, we determine the fair value of the award by using 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.

Computation of Earnings per Share

Fair Value of Financial Instruments

Segments

Segments – We organize ourselves into a single segment reporting to the chief operating decision maker, who we have designated as our Chief Executive Officer.


	Year ended December 31,
	2022		2021
United States	$	7,613	$	9,624
Brazil		953		1,938
United Kingdom		1,717		1,726
Rest of world		5,725		3,566
	$	16,008	$	16,854

Revenue by product group was (in thousands):


	Year ended December 31,
	2022		2021
License and service contracts	$	12,937	$	14,164
Subscription-based contracts		3,071		2,690
	$	16,008	$	16,854

Revenue by timing of transfer of goods or services was (in thousands):


	Year ended December 31,
	2022		2021
Goods or services transferred at a point in time	$	7,178	$	7,992
Goods or services transferred over time		8,830		8,862
	$	16,008	$	16,854

Leases - Summary of Future Minimum Lease Payments for Operating Leases (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Lessee, Operating Lease, Liability, to be Paid [Abstract]
2023	$ 497
2024	667
2025	687
2026	708
2027	729
Thereafter	4,202
Total lease payments	7,490
Less implied interest	2,973
Total operating lease liabilities	$ 4,517

Summary of Significant Accounting Policies - Contract Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Unbilled receivables, Balance at Beginning of Period	$ 3,087	$ 2,229
Unbilled receivables, Revenue Recognized In Advance of Billings	5,288	7,172
Unbilled receivables, Billings	(5,446)	(6,314)
Unbilled receivables, Balance at End of Period	$ 2,929	$ 3,087

Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense on intangible assets	$ 415	$ 176

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

10. LEASES

On October 1, 2022, our Lease for our principal executive offices with 76/80 BURLINGTON GROUP LLC (the “Landlord”) commenced. We leased 20,730 rentable square feet at 76 Blanchard Road in Burlington, Massachusetts (the “Leased Space”) for a term of ten years and six months, which includes a one-time termination right after seven years and six months. The term of the Lease commenced on October 1, 2022, the date that the landlord notified us that the planned construction on the Leased Space was substantially complete. The Lease provides for an aggregate of $8.2 million of rent payments over the Lease term and also provides a renewal option for up to two additional terms of five years each.

The components of lease expense included in the consolidated statement of operations and comprehensive loss are as follows (in thousands):


	For the Year Ended December 31,
	2022		2021
Operating lease costs	$	182	$	-

Supplemental balance sheet information related to the Company's operating lease was as follows (in thousands):


	As of December 31,
	2022			2021
Operating lease right-of-use assets	$	4,538		$	-

Current portion, operating lease liabilities		470			-
Operating lease liabilities, long term		4,047			-
Total operating lease liabilities	$	4,517		$	-

Weighted average remaining lease term (years)		10.3
Weighted average incremental borrowing rate		10.1	%

The discount rate implicit in the lease was not readily determinable, as such, we engaged a third-party valuation specialist to calculate the incremental borrowing rate (“IBR”). The IBR was determined as of the lease commencement date and was dependent on several factors including the amount of lease payments, our credit rating based on a collateralized borrowing, the lease term and the currency of the lease.

Future minimum lease payments for operating leases with initial remaining terms in excess of one year as of December 31, 2022 are as follows:


2023	$	497
2024		667
2025		687
2026		708
2027		729
Thereafter		4,202
Total lease payments		7,490
Less implied interest		(2,973	)
Total operating lease liabilities	$	4,517

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

. INCOME TAXES

We recorded a provision for income tax of $49 thousand for the year ended December 31, 2022. We recorded a benefit for income taxes of $0.3 million in the year ended December 31, 2021 related to a release of our valuation allowance as a result the deferred taxes recorded as part of the FortressID acquisition. The components of the provision (benefit) from income taxes are as follows (in thousands):


	Year ended December 31,
	2022		2021
Current:
Federal	$	34	$	-
State		15		—
		49		—
Deferred:
Federal		—		(147	)
State		—		(122	)
		—		(269	)

Provision (benefit) from income taxes	$	49	$	(269	)

The 2022 difference between the effective tax rate and the U.S federal statutory rates was driven primarily due to the change in valuation allowance of our deferred tax assets, state income taxes and stock-based compensation to the deferred tax assets. The 2021 difference between the effective tax rate and the U.S federal statutory rates was driven primarily due to the change in valuation allowance of our deferred tax assets. A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows:


	Year ended December 31,
	2022			2021
Federal statutory rate		21	%		21	%
State rate, net of federal benefit		12			6
Tax credits		(2	)		2
Permanent adjustments		(1	)		—
Change in valuation allowance		(24	)		(24	)
Other		(9	)		(1	)
Effective tax rate		(3	)%		4	%

Deferred income taxes - We had net deferred tax assets of $11.1 million and $10.7 million as of December 31, 2022 and 2021 respectively. The principal components of deferred tax assets, net, were as follows at December 31 (in thousands):


	2022			2021
Depreciation	$	-		$	367
Stock-based compensation		554			405
Research and development credits		6,817			6,904
Capitalized research expense		1,557
Net operating loss		2,562			3,380
Other		335			254
Total deferred tax assts		11,825			11,310
Valuation allowance		(11,115	)		(10,730	)
Deferred tax liabilities
Depreciation		(193	)		—
Intangibles		(517	)		(580	)
Total deferred tax liabilities		(710	)		(580	)
Net deferred tax assets (liabilities)	$	-		$	-

As of December 31, 2022, $6.8 million of our deferred tax assets relate to research and development credit carryforwards. We assessed the need for a valuation allowance on our deferred tax assets. We evaluated and considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets was needed. As part of this analysis, we gave more weight to recent, historical evidence than future projections as we consider the past more objective.

Further, a significant portion of our deferred tax assets relates to federal and state research and development credits. These credits may only offset 75% of the tax liability after net operating loss carryforwards are utilized and thus, we have the risk that the credits could expire before utilization if sufficient taxable income in the carryforward periods doesn’t exist.

As of December 31, 2022, we had a federal net operating loss carryforward of $7.5 million, which may be available to offset future income tax liabilities. $6.6 million of those NOLs can be carried forward indefinitely and the remaining $0.9 million expire in 2037. As of December 31, 2022, we had State NOL carryforwards of $16.7 million, which expire at various dates though 2041.

We evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets, which are composed principally of net operating loss carryforwards, capitalized research costs and research and development credits. Under the applicable accounting standards, we considered our history of losses and concluded that is more likely that we will not recognize the benefits of feral and state deferred tax assets. Therefore, we have recorded a full valuation allowance of $11.1 million and $10.7 million at December 31,

2022 and 2021, respectively. During the year ended December 31, 2022, we increased the valuation allowance by $0.4 million from the prior year end. We will continue to monitor the evidence and the realizability of our deferred tax assets in future periods. Should evidence regarding the realizability of our deferred tax assets change at a future point in time, we will adjust the valuation allowance as required.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. In connection with our acquisition of FortressID during 2021, the historical NOL carryforwards of $3.5 million from FortressID are likely limited under Section 382 due to a change in ownership triggered by the acquisition, however, we do not expect the limitation to result in any of the NOL carryforwards to expire unused. We have not completed a study at the Aware, Inc. level to assess whether an “ownership change” has occurred or whether there have been multiple ownership changes since we became a “loss corporation” as defined in Section 382. Future changes in our stock ownership, which may be outside of our control, may trigger an “ownership change.” In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership change” has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.

Uncertain tax benefits - As of December 31, 2022 and 2021 we had $0.8 million of uncertain tax positions that was primarily related to our research and development tax credits. There were no changes to this amount during each of the years ended December 31, 2022 and 2021. The uncertain tax positions will impact our effective tax rate if realized.

Tax examinations – We file tax returns as prescribed by the tax laws of the jurisdictions in which we operate. In the normal course of business, we are subject to examination by federal and state jurisdictions, where applicable. The earliest tax years that remain subject to examination by jurisdiction is 2019 for both federal and Massachusetts. However, to the extent the Company utilizes net operating losses or credits from years prior to 2019, the statute remains open to the extent of the net operating losses or other credits are utilized.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Subparagraph (b)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Benefit from Income Taxes

The components of the provision (benefit) from income taxes are as follows (in thousands):


	Year ended December 31,
	2022		2021
Current:
Federal	$	34	$	-
State		15		—
		49		—
Deferred:
Federal		—		(147	)
State		—		(122	)
		—		(269	)

Provision (benefit) from income taxes	$	49	$	(269	)

Schedule of Reconciliation of U.S. Federal Statutory Rate to Effective Tax Rate


	Year ended December 31,
	2022			2021
Federal statutory rate		21	%		21	%
State rate, net of federal benefit		12			6
Tax credits		(2	)		2
Permanent adjustments		(1	)		—
Change in valuation allowance		(24	)		(24	)
Other		(9	)		(1	)
Effective tax rate		(3	)%		4	%

Schedule of Principal Components of Deferred Tax Assets

The principal components of deferred tax assets, net, were as follows at December 31 (in thousands):


	2022			2021
Depreciation	$	-		$	367
Stock-based compensation		554			405
Research and development credits		6,817			6,904
Capitalized research expense		1,557
Net operating loss		2,562			3,380
Other		335			254
Total deferred tax assts		11,825			11,310
Valuation allowance		(11,115	)		(10,730	)
Deferred tax liabilities
Depreciation		(193	)		—
Intangibles		(517	)		(580	)
Total deferred tax liabilities		(710	)		(580	)
Net deferred tax assets (liabilities)	$	-		$	-

Summary of Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) Customer	Dec. 31, 2021 USD ($) Customer	Dec. 31, 2020 USD ($)
Disclosure Of Significant Of Accounting Policies [Line Items]
Cash and cash equivalents	$ 11,749,000	$ 29,963,000
Marketable securities	17,229,000
Bad debt expense unbilled receivables	230,000	0
Goodwill impairment	0
Goodwill	$ 3,120,000	$ 3,120,000	$ 1,651,000
Percentage of remaining performance obligations	72.00%
Practical expedient for financing components	true
Minimum period of payment of transaction price in contract with customer	30 days
Maximum period of payment of transaction price in contract with customer	60 days
Revenue \| Customer Concentration Risk [Member]
Disclosure Of Significant Of Accounting Policies [Line Items]
Percentage of revenue owned by customers	10.00%	10.00%
Number of customers \| Customer	0	0
Minimum
Disclosure Of Significant Of Accounting Policies [Line Items]
Percentage of likelihood for goodwill examination of quantitative test	50.00%
U S Treasuries And Corporate Bonds
Disclosure Of Significant Of Accounting Policies [Line Items]
Marketable securities	$ 17,200,000	$ 0
Fair Value, Measurements, Recurring
Disclosure Of Significant Of Accounting Policies [Line Items]
Note receivable	2,601,000
Contingent acquisition payment	812,000	919,000
Decrease in fair value recognized due to change in forecasted revenue	100,000
Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Disclosure Of Significant Of Accounting Policies [Line Items]
Note receivable	0
Contingent acquisition payment	$ 0	$ 0

Summary of Significant Accounting Policies - Summary of Changes in Note Receivable (Details) - Note Receivable $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Investment in Note Receivable	$ 2,500
Accrued interest	101
Ending Balance	$ 2,601

Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

6. INTANGIBLE ASSETS

The fair value of intangible assets and their estimated useful live as of December 31, 2022 are as follows (dollars in thousands):


	Useful Life	Gross Amount		Accumulated Amortization		Net Book Value
Customer relationships	8 and 10 years	$	2,680	$	424	$	2,256
Developed technology	5 and 7 years		710		180		530
Trade name / trademarks	3 and 7 years		30		10		20
		$	3,420	$	614	$	2,806

The fair value of intangible assets and their estimated useful live as of December 31, 2021 are as follows (dollars in thousands):


	Useful Life	Gross Amount		Accumulated Amortization		Net Book Value
Customer relationships	8 and 10 years	$	2,680	$	132	$	2,548
Developed technology	5 and 7 years		710		63		647
Tradenames	3 and 7 years		30		3		27
		$	3,420	$	198	$	3,222

During the years ended December 31, 2022 and 2021 we recorded $415 thousand and $176 thousand of amortization expense on intangible assets, respectively. The Company expects to record amortization for the years ended December 31 as follows (in thousands):


2023	$	415
2024		415
2025		415
2026		412
2027		412
Thereafter		737
	$	2,806

Summary of Significant Accounting Policies - Contract Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Deferred revenue, Balance at Beginning of Period	$ 3,740	$ 3,933
Deferred revenue, Billings	7,104	6,486
Deferred revenue, Revenue Recognized	(7,111)	(6,679)
Deferred revenue, Balance at End of Period	$ 3,733	$ 3,740

Equity and Stock Compensation Plans - Stock Option Plan (Details) - 2001 Nonqualified Stock Plan	12 Months Ended
	Dec. 31, 2022 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock awards authorized to grant	8,000,000
Number of stock awards available for grant	1,411,341
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Term of options vested	3 years
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Term of options granted at exercise prices	10 years
Term of options vested	5 years

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Schedule of Assets Measured at Fair Value on a Recurring Basis

As of December 31, 2022, our assets and liabilities that are measured at fair value on a recurring basis include the following (in thousands):


	Fair Value Measurement at December 31, 2022 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	10,967	$	-	$	-	$	10,967
Marketable securities		17,229		-		-		17,229
Note receivable		-		-		2,601		2,601
Total assets	$	28,196	$	-	$	2,601	$	30,797

Liabilities:
Contingent acquisition payments	$	-	$	-	$	812	$	812
Total liabilities	$	-	$	-	$	812	$	812

As of December 31, 2021, our assets and liabilities that are measured at fair value on a recurring basis included the following (in thousands):


	Fair Value Measurement at December 31, 2021 Using:
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	$	28,952	$	-	$	-	$	28,952
Total assets	$	28,952	$	-	$	-	$	28,952

Liabilities:
Contingent acquisition payments	$	-	$	-	$	919	$	919
Total liabilities	$	-	$	-	$	919	$	919

Summary of Marketable Securities by Security Type

Marketable securities by security type consisted of the following (in thousands):


	December 31, 2022:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	13,389	$	24	$	(100	)	$	13,313
Corporate bonds		3,950		—		(34	)		3,916
	$	17,339	$	24	$	(134	)	$	17,229

Summary of Changes in Note Receivable

Changes in note receivable consisted of the following (in thousands):


	Year Ended
	December 31, 2022

Balance as of December 31, 2021	$	—
Investment in Note Receivable		2,500
Accrued interest		101
Balance as of December 31, 2022	$	2,601

Schedule of Allowance for Doubtful Accounts

For the years ended December 31, 2022 and 2021, changes to and ending balances of the allowance for doubtful accounts were as follows (in thousands):


	Years ended December 31,
	2022			2021
Allowance for doubtful accounts balance - beginning of year	$	74		$	138
Additions to the allowance for doubtful accounts		156			-
Deductions against the allowance for doubtful accounts		(42	)		(64	)
Allowance for doubtful accounts balance - end of year	$	188		$	74

In addition, for the years ended December 31, 2022 and 2021 the bad debt expense related to unbilled receivables was $230K and $0, respectively.

Schedule of Estimated Useful Lives Assets

The estimated useful lives of assets are:


Leasehold improvements		10 years
Furniture and fixtures		5 years
Computer and office equipment		3 years
Purchased software		3 years

Schedule of Goodwill

The changes in goodwill for the years ended December 31, 2022 and 2021 were as follows (in thousands):


	Goodwill
Balance as of December 31, 2020	$	1,651
Goodwill arising from AFIX acquisition		1,469
Balance as of December 31, 2021 and 2022	$	3,120

Schedule of Changes in Contract Assets and Liabilities

The following table presents changes in our contract assets and liabilities during the years ended December 31, 2022 and 2021 (in thousands):


	Balance at Beginning of period		Revenue Recognized In Advance of Billings		Billings			Balance at End of Period
Year ended December 31, 2022
Contract Assets:
Unbilled receivables	$	3,087	$	5,288	$	(5,446	)	$	2,929
Year ended December 31, 2021
Contract Assets:
Unbilled receivables	$	2,229	$	7,172	$	(6,314	)	$	3,087

	Balance at Beginning of period		Billings		Revenue Recognized			Balance at End of Period
Year ended December 31, 2022
Contract Liabilities:
Deferred revenue	$	3,740	$	7,104	$	(7,111	)	$	3,733
Year ended December 31, 2021
Contract Liabilities:
Deferred revenue	$	3,933	$	6,486	$	(6,679	)	$	3,740

Schedules of Concentration of Credit Risk with Respect to Net Accounts Receivable and Total Revenue


	2022			2021
Customer A		26	%		27	%
Customer B		11	%		5	%

Schedule of Revenues Generated from Geographic Regions

Revenues were generated from the following geographic regions (in thousands):


	Year ended December 31,
	2022		2021
United States	$	7,613	$	9,624
Brazil		953		1,938
United Kingdom		1,717		1,726
Rest of world		5,725		3,566
	$	16,008	$	16,854

Schedule of Revenue by Product Group

Revenue by product group was (in thousands):


	Year ended December 31,
	2022		2021
License and service contracts	$	12,937	$	14,164
Subscription-based contracts		3,071		2,690
	$	16,008	$	16,854

Schedule of Revenue by Timing of Transfer of Goods or Services

Revenue by timing of transfer of goods or services was (in thousands):


	Year ended December 31,
	2022		2021
Goods or services transferred at a point in time	$	7,178	$	7,992
Goods or services transferred over time		8,830		8,862
	$	16,008	$	16,854

Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands		12 Months Ended
	Jul. 15, 2022	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Depreciation expense		$ 300	$ 500
Purchase obligation	$ 8,900
Brokerage commission paid	300
Gain on sale of fixed assets	5,700	$ 5,672
Long-lived assets held for sale gross	$ 11,500

Equity and Stock Compensation Plans - Summary of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 1,707	$ 1,567
Cost of services and other
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	21	23
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	265	261
Selling and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	286	250
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 1,135	$ 1,033

Equity and Stock Compensation Plans - Share Purchases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Mar. 01, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Repurchase of common stock	$ (1,312)
Share Purchases
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized for repurchase		$ 10,000
Number of stock repurchased	705,201
Repurchase of common stock	$ (1,300)

Summary of Significant Accounting Policies - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Assets:
Marketable securities	$ 17,229
Fair Value, Measurements, Recurring
Assets:
Note receivable	2,601
Total assets	30,797	$ 28,952
Liabilities:
Contingent acquisition payments	812	919
Total liabilities	812	919
Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Note receivable	0
Total assets	28,196	28,952
Liabilities:
Contingent acquisition payments	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2)
Assets:
Note receivable	0
Total assets	0	0
Liabilities:
Contingent acquisition payments	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring \| Significant Unobservable Inputs (Level 3)
Assets:
Note receivable	2,601
Total assets	2,601	0
Liabilities:
Contingent acquisition payments	812	919
Total liabilities	812	919
Money market funds (included in cash and cash equivalents) \| Fair Value, Measurements, Recurring
Assets:
Money market funds (included in cash and cash equivalents)	10,967	28,952
Money market funds (included in cash and cash equivalents) \| Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Money market funds (included in cash and cash equivalents)	10,967	28,952
Money market funds (included in cash and cash equivalents) \| Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2)
Assets:
Money market funds (included in cash and cash equivalents)	0	0
Money market funds (included in cash and cash equivalents) \| Fair Value, Measurements, Recurring \| Significant Unobservable Inputs (Level 3)
Assets:
Money market funds (included in cash and cash equivalents)	0	$ 0
Marketable Securities \| Fair Value, Measurements, Recurring
Assets:
Marketable securities	17,229
Marketable Securities \| Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Marketable securities	17,229
Marketable Securities \| Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2)
Assets:
Marketable securities	0
Marketable Securities \| Fair Value, Measurements, Recurring \| Significant Unobservable Inputs (Level 3)
Assets:
Marketable securities	$ 0

Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combinations [Abstract]

Acquisition

5. ACQUISTION

In December 2021, we acquired 100% of the outstanding shares and acquired all of the assets and liabilities of FortressID for a purchase price of $3.4 million, which consisted of $2.5 million of cash consideration and contingent acquisition payments with a fair value of $0.9 million. The maximum contingent acquisition payments at the time of the acquisition was $4.0 million and required cash payments of up to $2.0 million for set revenue targets in 2022 and another $2.0 million for set revenue targets in 2023. No revenue targets were achieved in 2022 and the maximum contingent acquisition payments as of December 31, 2022 is $2.0 million. The acquisition of FortressID, expands our offerings around identity proofing-enhancing its onboarding, verification and authentication offerings to directly address financial compliance requirements and enable organizations to mitigate risk and curtail increasing fraud.

The acquisition was accounted for as a business combination, whereby all the assets acquired and liabilities assumed were recognized at fair value on the acquisition date, with any excess of the consideration transferred

over the fair value of the net assets acquired recognized as goodwill. Unaudited pro forma results of operations assuming the above acquisition had taken place at the beginning of each period are not provided because the historical operating results and pro forma results would not be materially different from reported results for the periods presented.

The fair values recorded were based on a valuation performed by a third-party valuation specialist. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


Customer relationships	$	1,740
Developed technology		430
Trade name / trademarks		10
Goodwill		1,469
Gross assets acquired		3,649
Net working capital		(11	)
Fair value of contingent consideration		(919	)
Net assets acquired	$	2,719

After allocating the purchase price to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, we recorded goodwill of approximately $1.5 million, which included $0.3 million related to the release of certain deferred tax assets. Goodwill largely consists of expected synergies to be realized from combining operations. The goodwill is deductible for income tax purposes.

Net Loss Per Share - Summary of Potentially Outstanding Common Shares Anti-dilutive (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	2,982	2,823

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Summary of Components of Lease Expense

The components of lease expense included in the consolidated statement of operations and comprehensive loss are as follows (in thousands):


	For the Year Ended December 31,
	2022		2021
Operating lease costs	$	182	$	-

Summary of Operating Lease Supplemental Balance Sheet Information

Supplemental balance sheet information related to the Company's operating lease was as follows (in thousands):


	As of December 31,
	2022			2021
Operating lease right-of-use assets	$	4,538		$	-

Current portion, operating lease liabilities		470			-
Operating lease liabilities, long term		4,047			-
Total operating lease liabilities	$	4,517		$	-

Weighted average remaining lease term (years)		10.3
Weighted average incremental borrowing rate		10.1	%

Summary of Future Minimum Lease Payments for Operating Leases

Future minimum lease payments for operating leases with initial remaining terms in excess of one year as of December 31, 2022 are as follows:


2023	$	497
2024		667
2025		687
2026		708
2027		729
Thereafter		4,202
Total lease payments		7,490
Less implied interest		(2,973	)
Total operating lease liabilities	$	4,517

Net Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Summary of Potentially Outstanding Common Shares Anti-dilutive


	Year ended December 31,
	2022		2021
Stock options		2,982		2,823

Schedule of Net Loss Per Share

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


	Year ended December 31,
	2022			2021
Net loss		(1,726	)		(5,824	)
Shares outstanding:
Weighted-average common shares outstanding		21,604			21,525
Additional dilutive common stock equivalents		—			—
Diluted shares outstanding		21,604			21,525
Net loss per share – basic	$	(0.08	)	$	(0.27	)
Net loss per share - diluted	$	(0.08	)	$	(0.27	)

Employee Benefit Plan

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plan

12. EMPLOYEE BENEFIT PLAN

In 1994, we established a qualified 401(k) Retirement Plan (the “Plan”) under which employees are allowed to contribute certain percentages of their pay, up to the maximum allowed under Section 401(k) of the Internal Revenue Code. Our contributions to the Plan are at the discretion of the Board of Directors. Our contributions were $0.4 million in 2022 and 2021.

- Definition

The entire disclosure for retirement benefits.

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+ Details

Commitments and Contingent Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Summary of Components of Lease Expense

The components of lease expense included in the consolidated statement of operations and comprehensive loss are as follows (in thousands):


	For the Year Ended December 31,
	2022		2021
Operating lease costs	$	182	$	-

Summary of Operating Lease Supplemental Balance Sheet Information

Supplemental balance sheet information related to the Company's operating lease was as follows (in thousands):


	As of December 31,
	2022			2021
Operating lease right-of-use assets	$	4,538		$	-

Current portion, operating lease liabilities		470			-
Operating lease liabilities, long term		4,047			-
Total operating lease liabilities	$	4,517		$	-

Weighted average remaining lease term (years)		10.3
Weighted average incremental borrowing rate		10.1	%

Summary of Future Minimum Lease Payments for Operating Leases

Future minimum lease payments for operating leases with initial remaining terms in excess of one year as of December 31, 2022 are as follows:


2023	$	497
2024		667
2025		687
2026		708
2027		729
Thereafter		4,202
Total lease payments		7,490
Less implied interest		(2,973	)
Total operating lease liabilities	$	4,517

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net loss	$ (1,726)	$ (5,824)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	760	687
Gain on sale of fixed assets	(5,672)
Stock-based compensation	1,707	1,567
Interest receivable	(101)
Non-cash lease expense	128
Change in fair value of contingent acquisition payments	(107)
Deferred taxes		(269)
Bad debt provision (recoveries)	344	(64)
Increase (decrease) from changes in assets and liabilities:
Accounts receivable	332	(1,410)
Unbilled receivables	(71)	(837)
Prepaid expenses and other current assets	(406)	(9)
Tax receivable	49	(13)
Accounts payable	356	(249)
Accrued expenses	(628)	380
Deferred revenue	(7)	(193)
Net cash used in operating activities	(5,042)	(6,234)
Cash flows from investing activities:
Purchases of property and equipment	(730)	(27)
Proceeds from sale of fixed assets, net	8,547
Purchases of marketable securities	(18,555)
Sale of marketable securities	1,250
Investment in note receivable	(2,500)
Cash paid for acquisitions, net		(2,450)
Net cash used in investing activities	(11,988)	(2,477)
Cash flows from financing activities:
Proceeds from issuance of unrestricted stock	154	163
Payments made for taxes of employees who surrendered shares related to unrestricted stock	(26)	(54)
Repurchase of common stock	(1,312)
Net cash (used in) provided by financing activities	(1,184)	109
Decrease in cash and cash equivalents	(18,214)	(8,602)
Cash and cash equivalents, beginning of year	29,963	38,565
Cash and cash equivalents, end of year	$ 11,749	$ 29,963

Net Loss Per Share - Schedule of Net loss per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Net loss	$ (1,726)	$ (5,824)
Shares outstanding:
Weighted-average common shares outstanding (in shares)	21,604	21,525
Diluted shares outstanding (in shares)	21,604	21,525
Net loss per share – basic	$ (0.08)	$ (0.27)
Net loss per share – diluted	$ (0.08)	$ (0.27)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Equity and Stock Compensation Plans - Employee Stock Purchase Plan (Details) - USD ($)	1 Months Ended	12 Months Ended
	May 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense		$ 1,707,000	$ 1,567,000
2021 ESPP Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of common stock at a price lower of the fair market value	85.00%
Period of common stock offering	6 months
Total stock-based compensation expense		100,000	$ 100,000
Annual purchase limit		$ 25,000
Total number of common stock shares reserved for issuance		1,000,000
Number of common stock shares reserved for issuance		870,435
Issuance of common stock under employee stock purchase plan (in shares)		75,066	4,499
1996 ESPP Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Issuance of common stock under employee stock purchase plan (in shares)		0	6,972

Acquisition - Summary of Fair Value of Assets Acquired and Liabilities Assumed At Date of Acquisition (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Goodwill	$ 3,120	$ 3,120	$ 1,651
Fortress ID
Business Acquisition [Line Items]
Goodwill		1,469
Gross assets acquired		3,649
Net working capital		(11)
Fair value of contingent consideration		(919)
Net assets acquired		2,719
Customer Relationships \| Fortress ID
Business Acquisition [Line Items]
Intangible assets acquired		1,740
Developed Technology \| Fortress ID
Business Acquisition [Line Items]
Intangible assets acquired		430
Trade Name / Trademarks \| Fortress ID
Business Acquisition [Line Items]
Intangible assets acquired		$ 10

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Accounts Receivable [Member] - Credit Concentration Risk [Member]	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Customer A [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk, percentage	26.00%	27.00%
Customer B [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk, percentage	11.00%	5.00%

Summary of Significant Accounting Policies - Summary of Marketable Securities by Security Type (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	$ 17,339
Gross Unrealized Gains	24
Gross Unrealized Losses	(134)
Fair Value	17,229
U.S. Treasury Notes and Bonds
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	13,389
Gross Unrealized Gains	24
Gross Unrealized Losses	(100)
Fair Value	13,313
Corporate Bonds
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	3,950
Gross Unrealized Gains	0
Gross Unrealized Losses	(34)
Fair Value	$ 3,916

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Fair Value of Intangible Assets and Estimated Useful Live

The fair value of intangible assets and their estimated useful live as of December 31, 2022 are as follows (dollars in thousands):


	Useful Life	Gross Amount		Accumulated Amortization		Net Book Value
Customer relationships	8 and 10 years	$	2,680	$	424	$	2,256
Developed technology	5 and 7 years		710		180		530
Trade name / trademarks	3 and 7 years		30		10		20
		$	3,420	$	614	$	2,806

The fair value of intangible assets and their estimated useful live as of December 31, 2021 are as follows (dollars in thousands):


	Useful Life	Gross Amount		Accumulated Amortization		Net Book Value
Customer relationships	8 and 10 years	$	2,680	$	132	$	2,548
Developed technology	5 and 7 years		710		63		647
Tradenames	3 and 7 years		30		3		27
		$	3,420	$	198	$	3,222

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The Company expects to record amortization for the years ended December 31 as follows (in thousands):


2023	$	415
2024		415
2025		415
2026		412
2027		412
Thereafter		737
	$	2,806

Acquisition - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2023	Dec. 31, 2020
Business Acquisition [Line Items]
Business acquisition, purchase price		$ 2,450,000
Goodwill	$ 3,120,000	3,120,000		$ 1,651,000
Goodwill related to deferred tax assets	517,000	580,000
Maximum
Business Acquisition [Line Items]
Contingent consideration earn out payable		$ 4,000,000.0
Earn out cash payments	2,000,000.0
Maximum \| Scenario Forecast
Business Acquisition [Line Items]
Earn out cash payments			$ 2,000,000.0
Fortress ID
Business Acquisition [Line Items]
Percentage of ownership control		100.00%
Business acquisition, purchase price		$ 3,400,000
Business acquisition, cash consideration		2,500,000
Business acquisition, earnout with fair value		900,000
Goodwill		1,469,000
Goodwill related to deferred tax assets		$ 300,000
Fortress ID \| Maximum
Business Acquisition [Line Items]
Contingent consideration earn out payable	$ 2,000,000.0

Income Taxes - Schedule of Principal Components of Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Depreciation		$ 367
Stock-based compensation	$ 554	405
Research and development credits	6,817	6,904
Capitalized research expense	1,557
Net operating loss	2,562	3,380
Other	335	254
Total deferred tax assts	11,825	11,310
Valuation allowance	(11,115)	(10,730)
Depreciation	(193)
Intangibles	517	580
Total deferred tax liabilities	$ (710)	$ (580)

Subscription Agreement - Additional Information (Details) - USD ($)		12 Months Ended
	Mar. 11, 2022	Dec. 31, 2022
Schedule Of Capitalization Longterm Debt [Line Items]
Note receivable		$ 2,601,000
Omlis Limited \| Warrant
Schedule Of Capitalization Longterm Debt [Line Items]
Warrants expire date	Sep. 11, 2023
Equity shares purchase price per shares	$ 33.91
Change in fair value warrants		0
Investment in warrant equity security		$ 0
Omlis Limited \| Warrant \| Maximum
Schedule Of Capitalization Longterm Debt [Line Items]
Issuance of warrants purchase percentage	8.00%
Omlis Limited \| Note Receivable
Schedule Of Capitalization Longterm Debt [Line Items]
Convertible Note amount	$ 2,500,000
Interest rate percentage	5.00%
Maturity date	Mar. 11, 2026
Discount from effective price per share paid by investors, percentage	20.00%
Sale of note, description		Omlis granted us a right of first refusal for 18 months with respect to any proposed sale by Omlis of equity securities constituting 20% or more of the outstanding voting power of Omlis or all or substantially all of the assets of Omlis or any of its material subsidiaries.
Note receivable		$ 2,500,000
Accrued Interest		100,000
Debt instrument fair value		$ 2,600,000

Summary of Significant Accounting Policies - Summary of Revenue by Product Group (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 16,008	$ 16,854
License and Service Contracts
Disaggregation of Revenue [Line Items]
Total revenue	7,386	7,973
Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	16,008	16,854
Operating Segments \| License and Service Contracts
Disaggregation of Revenue [Line Items]
Total revenue	12,937	14,164
Operating Segments \| Subscription-based Contracts
Disaggregation of Revenue [Line Items]
Total revenue	$ 3,071	$ 2,690

- Definition

+ References

+ Details

Summary of Significant Accounting Policies - Revenues Generated Following Geographic Regions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total revenue	$ 16,008	$ 16,854
Operating Segments
Disaggregation of Revenue [Line Items]
Total revenue	16,008	16,854
Operating Segments \| United States
Disaggregation of Revenue [Line Items]
Total revenue	7,613	9,624
Operating Segments \| Brazil
Disaggregation of Revenue [Line Items]
Total revenue	953	1,938
Operating Segments \| United Kingdom
Disaggregation of Revenue [Line Items]
Total revenue	1,717	1,726
Operating Segments \| Rest of World
Disaggregation of Revenue [Line Items]
Total revenue	$ 5,725	$ 3,566

- Definition

+ References

+ Details