Aware (AWRE) 10-K 18 Feb 20 2019 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Feb. 12, 2020	Jun. 30, 2019
Cover
Entity Registrant Name	AWARE INC /MA/
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		21,521,866
Entity Public Float			$ 43,519,131
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 47,742	$ 51,612
Accounts receivable (less allowance for doubtful accounts of $20 at December 31, 2019 and 2018)	2,487	2,010
Unbilled receivables	3,315	3,279
Prepaid expenses and other current assets	256	284
Total current assets	53,800	57,185
Property and equipment, net	3,755	4,085
Deferred tax assets		5,171
Total assets	57,555	66,441
Current liabilities:
Accounts payable	187	126
Accrued expenses	1,096	1,319
Deferred revenue	2,777	3,024
Total current liabilities	4,060	4,469
Long-term deferred revenue	60	75
Commitments and contingent liabilities (Note 7)
Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares authorized, none outstanding
Common stock, $.01 par value; shares authorized, 70,000,000 in 2019 and 2018; issued and outstanding 21,442,781 as of December 31, 2019 and 21,515,872 as of December 31, 2018	214	215
Additional paid-in capital	96,255	96,376
Accumulated deficit	(43,034)	(34,694)
Total stockholders' equity	53,435	61,897
Total liabilities and stockholders' equity	$ 57,555	$ 66,441

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 1	$ 1
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	21,442,781	21,515,872
Common stock, shares outstanding	21,442,781	21,515,872
Allowance For Doubtful Accounts Receivable, Current	$ 20	$ 20

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue:
Total revenue	$ 12,204	$ 16,131
Costs and expenses:
Research and development	7,928	7,105
Selling and marketing	3,610	4,178
General and administrative	3,583	3,296
Total costs and expenses	16,382	15,819
Patent related income	49	69
Operating income (loss)	(4,129)	381
Interest income	1,000	844
Income (loss) before provision (benefit) for income taxes	(3,129)	1,225
Provision (benefit) for income taxes	5,211	(8)
Net income (loss)	$ (8,340)	$ 1,233
Net income (loss) per share - basic (in dollars per share)	$ (0.39)	$ 0.06
Net income (loss) per share - diluted (in dollars per share)	$ (0.39)	$ 0.06
Weighted-average shares - basic (in shares)	21,523	21,544
Weighted-average shares - diluted (in shares)	21,523	21,605
Software licenses
Revenue:
Total revenue	$ 4,599	$ 8,038
Costs and expenses:
Cost of revenue		20
Software maintenance
Revenue:
Total revenue	5,262	5,397
Services
Revenue:
Total revenue	2,343	2,696
Costs and expenses:
Cost of revenue	$ 1,261	$ 1,220

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net income (loss)	$ (8,340)	$ 1,233
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	441	443
Stock-based compensation	692	580
Deferred tax assets	5,171	(100)
Increase (decrease) from changes in assets and liabilities:
Accounts receivable	(477)	379
Unbilled receivables	(36)	(1,850)
Prepaid expenses and other current assets	28	(68)
Accounts payable	61	(40)
Accrued expenses	(223)	(82)
Accrued income taxes		(2)
Deferred revenue	(262)	167
Net cash provided by (used in) operating activities	(2,945)	660
Cash flows from investing activities:
Purchases of property and equipment	(111)	(206)
Net cash used in investing activities	(111)	(206)
Cash flows from financing activities:
Proceeds from issuance of common stock	43	50
Payments made for taxes of employees who surrendered shares related to unrestricted stock	(92)	(107)
Repurchase of common stock	(765)	(393)
Net cash used in financing activities	(814)	(450)
Increase/(decrease) in cash and cash equivalents	(3,870)	4
Cash and cash equivalents, beginning of year	51,612	51,608
Cash and cash equivalents, end of year	47,742	51,612
Supplemental disclosure:
Cash paid for income taxes	$ 43	$ 96

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2017	$ 215	$ 96,246	$ (35,927)	$ 60,534
Balance (in shares) at Dec. 31, 2017	21,493,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee stock purchase plan		50		50
Issuance of common stock under employee stock purchase plan (in shares)	14,000
Issuance of unrestricted stock	$ 1	(1)
Issuance of unrestricted stock (in shares)	136,000
Shares surrendered by employees to pay taxes related to unrestricted stock		(107)		(107)
Shares surrendered by employees to pay taxes related to unrestricted stock (in shares)	(25,000)
Stock-based compensation expense		580		580
Repurchase of common stock	$ (1)	(392)		(393)
Repurchase of common stock (in shares)	(102,000)
Net income (loss)			1,233	1,233
Balance at Dec. 31, 2018	$ 215	96,376	(34,694)	$ 61,897
Balance (in shares) at Dec. 31, 2018	21,516,000			21,515,872
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)	4,000
Performance share award (in shares)	30,000
Issuance of common stock under employee stock purchase plan		43		$ 43
Issuance of common stock under employee stock purchase plan (in shares)	14,000
Issuance of unrestricted stock	$ 1	(1)
Issuance of unrestricted stock (in shares)	140,000
Shares surrendered by employees to pay taxes related to unrestricted stock		(92)		(92)
Shares surrendered by employees to pay taxes related to unrestricted stock (in shares)	(27,000)
Stock-based compensation expense		692		692
Repurchase of common stock	$ (2)	(763)		(765)
Repurchase of common stock (in shares)	(234,000)
Net income (loss)			(8,340)	(8,340)
Balance at Dec. 31, 2019	$ 214	$ 96,255	$ (43,034)	$ 53,435
Balance (in shares) at Dec. 31, 2019	21,443,000			21,442,781

NATURE OF BUSINESS

NATURE OF BUSINESS	12 Months Ended
	Dec. 31, 2019
NATURE OF BUSINESS
NATURE OF BUSINESS	1. NATURE OF BUSINESS We are primarily engaged in the development and sale of biometrics products, solutions and services. Our software products are used in government and commercial systems and applications and fulfill a broad range of functions critical to secure biometric enrollment, authentication, identity and transactions. 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: i) user enrollment and authentication used for login to mobile devices, computers, networks, and software programs; ii) user authentication for financial transactions and purchases (online and in-person); iii) physical access control to buildings; and iv) identity proofing of prospective employees and customers. We sell our biometrics software products and services globally through a multifaceted distribution strategy using systems integrators, original equipment manufacturers (“OEMs”), value added resellers (“VARs”), partners, and directly to end user customers. We also derive a portion of our revenue from the sale of imaging software licenses to OEMs and systems integrators that incorporate our software into medical imaging products and medical systems.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 subsidiary (“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, useful lives of fixed assets, valuation allowance for deferred income tax assets, and accrued liabilities. 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 $47.7 million and $51.6 million at December 31, 2019 and December 31, 2018, respectively. We classified our cash equivalents of $46.2 million and $47.9 million as of December 31, 2019 and 2018, respectively, within Level 1 of the fair value hierarchy because they are valued using quoted market prices. As of December 31, 2019, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2019 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 46,174 $ — $ — Total $ 46,174 $ — $ — As of December 31, 2018, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2018 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 47,939 $ — $ — Total $ 47,939 $ — $ — 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, 2019 and 2018, changes to and ending balances of the allowance for doubtful accounts were as follows (in thousands): Years ended December 31, 2019 2018 Allowance for doubtful accounts balance - beginning of year $ 20 $ 20 Additions to the allowance for doubtful accounts — — Deductions against the allowance for doubtful accounts — — Allowance for doubtful accounts balance - end of year $ 20 $ 20 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 used by us are: Building years Building improvements to years Furniture and fixtures years Computer, office & manufacturing equipment years Purchased software years Impairment 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. We believe that no significant impairment of our long-lived assets has occurred as of December 31, 2019 and 2018. Revenue recognition . Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the full retrospective transition method. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services. In addition, ASC 606 requires disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The core principle of the standard 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 should apply the following five step model: 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 the performance obligations in the contract; and 5. Recognize revenue when (or as) each performance obligation is satisfied. 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. 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, 2019 and 2018, none of our contracts contained a significant financing component. 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 as discussed in further detail below. 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. In addition to the general revenue recognition policies described above, 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 in perpetuity as it exists when made available to the customer. We recognize revenue from software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met. 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 Service revenue consists of fees from biometrics customers for software engineering services we provide to them. 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. Refer to Note 8 – Business Segments and Major Customers for further information on the disaggregation of revenue, including revenue by geography and category. 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: · 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. · 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 (i.e., labor hours incurred as a percentage of total labor hours budgeted). 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. · 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 (i.e., labor hours incurred as a percentage of total labor hours budgeted). 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 due date) or a contract liability (customer payment precedes performance). Customers that prepay are represented by the deferred revenue below until the performance obligation is satisfied. Contract assets represent arrangements in which the good or service has been delivered but payment is not yet due. 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, 2018 and 2019 (in thousands): Revenue Balance at Recognized Beginning of In Advance of Balance at End of Period Billings Billings Period Year ended December 31, 2018 Contract assets: Unbilled receivables $ 1,429 $ 3,278 $ (1,428) $ 3,279 Year ended December 31, 2019 Contract assets: Unbilled receivables $ 3,279 $ 2,638 $ (2,602) $ 3,315 Balance at Beginning of Revenue Balance at End of Period Billings Recognized Period Year ended December 31, 2018 Contract liabilities: Deferred revenue $ 2,932 $ 5,564 $ (5,397) $ 3,099 Year ended December 31, 2019 Contract liabilities: Deferred revenue $ 3,099 $ 5,006 $ (5,268) $ 2,837 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 67% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of December 31, 2019, 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 $1.4 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. Capitalization of Software Costs – We capitalize certain internally developed software development costs after technological feasibility of the product has been established. No software costs were capitalized during the years ended December 31, 2019 and 2018, because such costs incurred subsequent to the establishment of technological feasibility, but prior to commercial availability, were immaterial. 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, 2019 and 2018, we had cash and cash equivalents, in excess of federally insured deposit limits of approximately $47.5 million and $51.4 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: 2019 2018 Customer A 72 % 46 % Customer B 3 % 19 % 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. Advertising Costs – Advertising costs are expensed as incurred and were not material for 2019 and 2018. Recent Accounting Pronouncements: Recently Adopted Accounting Pronouncements None. Segments – We organize ourselves into a single segment reporting to the chief operating decision maker. We have sales outside of the United States, which are described in Note 8. All long-lived assets are maintained in the United States.

PATENT RELATED INCOME

PATENT RELATED INCOME	12 Months Ended
	Dec. 31, 2019
PATENT RELATED INCOME
PATENT RELATED INCOME	3. PATENT RELATED INCOME The composition of patent related income in 2019 and 2018 was as follows: Years ended December 31, 2019 and 2018. We entered into an arrangement with an unaffiliated third party in 2010 under which we assigned certain patents in return for royalties on proceeds from patent monetization efforts by the third party. The third party has engaged in various patent monetization activities, including enforcement, litigation and licensing. The party reported and we recorded $49,000 and $69,000 of income from this arrangement in the years ended December 31, 2019 and 2018, respectively.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2019
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT	4. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31 (in thousands): 2019 2018 Land $ 1,056 $ 1,056 Building and improvements 9,071 9,060 Computer equipment 830 795 Purchased software 117 81 Furniture and fixtures 778 778 Office equipment 100 138 Total 11,952 11,908 Less accumulated depreciation (8,197) (7,823) Property and equipment, net $ 3,755 $ 4,085 Depreciation expense was $0.4 million for the years ended December 31, 2019 and 2018. In 2019 and 2018, we identified $0.1 million of assets no longer in use and retired the assets and related accumulated depreciation.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2019
INCOME TAXES
INCOME TAXES	5. INCOME TAXES We recorded a provision for income taxes in the year ended December 31, 2019 of $5.2 million. We recorded a benefit from income taxes of $8,000 in the year ended December 31, 2018. The components of the provision for income taxes are as follows (in thousands): Year ended December 31, 2019 2018 Current: Federal 8 54 State 32 38 40 92 Deferred: Federal 4,965 (22) State 206 (78) 5,171 (100) Provision for (benefit from) income taxes $ 5,211 $ (8) A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows: Year ended December 31, 2019 2018 Federal statutory rate 21 % 21 % State rate, net of federal benefit 6 6 Tax credits 10 (26) Permanent adjustments (1) 1 FDII deduction — (4) Change in valuation allowance (202) — Other (1) 1 Effective tax rate (167) % (1) % Total income tax provision for the year ended December 31, 2019 was $5.2 million. The increase in the income tax provision for 2019 was primarily due to the change in valuation allowance for our deferred tax assets. Total income tax benefit for the year ended December 31, 2018 was $8,000. Income tax benefit for 2018 was based on: i) the U.S. statutory rate of 21%, ii) increased by state income taxes and permanent adjustments; and iii) reduced by Foreign-Derived Intangible Income (“FDII”) deduction and research tax credits. As of December 31, 2019, we had deferred tax assets of $6.3 million for which we recorded a $6.3 million valuation allowance. As of December 31, 2018, we had deferred tax assets of $5.2 million for which we recorded no valuation allowance. The principal components of deferred tax assets were as follows at December 31 (in thousands): 2019 2018 Depreciation $ 354 $ 327 Stock compensation 115 87 Research and development credits 4,975 4,689 Net operating loss 789 — Other 92 68 Total 6,325 5,171 Less valuation allowance (6,325) — Deferred tax assets, net $ — $ 5,171 As of December 31, 2019, we had a total of $6.3 million of deferred tax assets, of which $5.0 million relates to research credit carryforwards. We have 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 have given more weight to recent, historical evidence than future projections as we consider the past more objective. As of the fourth quarter of 2019, we have a cumulative pretax loss over the most recent three-year period including a pretax loss of $3.1 million in 2019. We considered the cumulative loss as of the end of the fourth quarter of 2019 to be significant negative evidence in the overall analysis. Prior to this quarter, we have incurred pretax income cumulatively when calculating it for the twelve most recent quarters, however, the levels of pretax income have been declining in recent periods, most notably as of the fourth quarter of 2019 as a result of certain internal changes. In September 2019, we appointed a new Chief Executive Officer and, as a result, we reviewed and made changes to our strategy and business plans. As a result, we will be making additional investments in research, product development and sales and marketing including additional headcount. These changes in strategy and additional investment started in the fourth quarter of 2019 and will continue over the proceeding years. Our pretax income forecasts are highly predicated upon new product development and penetrating new markets. Therefore, this evidence is given nominal weight in the analysis compared to the recent history of losses and anticipated investment. Further, a significant portion of our deferred tax assets relates to federal and state research 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. Based upon the information available to us at this time, the above analysis of evidence represents our best estimate regarding the utilization of the deferred tax assets, and we have concluded that it is more likely than not that the deferred tax assets of $6.3 million will not be realized. Therefore, we have recorded a full valuation allowance of $6.3 million against our deferred tax assets during the fourth quarter of 2019. 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. A rollforward of the uncertain tax position that was primarily related to our research and development tax credits is as follows (in thousands): Uncertain tax positions at December 31, 2017 $ 998 Increase due to positions taken in prior periods — Uncertain tax positions at December 31, 2018 998 Increase due to positions taken in prior periods 10 Uncertain tax positions at December 31, 2019 $ 1,008 Uncertain tax positions of $0.8 million will impact our tax rate if realized. The difference between this amount and the total uncertain tax positions in the table above is the federal tax effect on state tax credits. The tax years from 2016 through 2019 are subject to examination by the IRS and the tax years 2003 through 2019 are subject to examination by state tax authorities.

EQUITY AND STOCK COMPENSATION P

EQUITY AND STOCK COMPENSATION PLANS	12 Months Ended
	Dec. 31, 2019
EQUITY AND STOCK COMPENSATION PLANS
EQUITY AND STOCK COMPENSATION PLANS	6. EQUITY AND STOCK COMPENSATION PLANS Fixed 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, 2019, there were 3,976,443 shares available for grant under the 2001 Plan. Options are granted at exercise prices as determined by the Board of Directors and have terms ranging from four to a maximum of ten years. Options generally vest over three to five years. The following table presents stock-based employee compensation expenses included in our consolidated statements of income and comprehensive income (in thousands): Years ended December 31, 2019 2018 Cost of services $ 18 $ 25 Research and development 117 101 Selling and marketing 57 13 General and administrative 500 441 Stock-based compensation expense $ 692 $ 580 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, 2019 and 2018, we granted stock options for 435,000 and 0 shares of our common stock, 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, 2019. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. Specific assumptions used to determine the fair value of options granted during the year ended December 31, 2019, using the Black-Scholes valuation model were: Year Ended December 31, 2019 Expected term (1) 6.08-6.18 years Expected volatility factor (2) 35-46 % Risk-free interest rate (3) 1.51-1.66 % Expected annual dividend yield n/a (1) The expected term for each grant was determined based on the simplified method. (2) The expected volatility for each grant is estimated based on an average of historical volatility over the expected term of the stock options. (3) The risk-free interest rate for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the expected term of the stock option. 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 285,500, and 138,000 shares of unrestricted stock during the years ended December 31, 2019, and 2018, respectively. The accounting treatment of unrestricted stock awards in 2019 and 2018 is described below: Year ended December 31, 2019. In March 2019, we granted 143,000 shares of unrestricted stock to directors, officers and employees. The shares were issued in two equal installments shortly after June 30, 2019 and December 31, 2019. We expensed $547,000 of stock-based compensation expense related to this grant in the year ended December 31, 2019. There was no unamortized stock-based compensation charge associated with this stock grant as of December 31, 2019. We issued shares of common stock related to the March 2019 grant as follows: i) 58,548 net shares of common stock were issued in early July 2019 after employees surrendered 12,952 shares for which we paid $43,000 of withholding taxes on their behalf; and ii) 56,605 net shares of common stock were issued in early January 2020 after employees surrendered 14,895 shares for which we paid $50,000 of withholding taxes on their behalf. In September 2019, we granted 15,000 shares of unrestricted stock to an officer, the shares are to be issued in one installment shortly after December 31, 2019, provided the grantee is serving as a director, officer or employee on that date. The total stock-based compensation expense related to this grant was $41,000 and was expensed in 2019. We issued 15,000 shares of common stock related to this grant in early January 2020. In September 2019, we granted 80,000 shares of unrestricted stock to an officer, the shares are to be issued in four equal installments shortly after September 19, 2020, September 19, 2021, September 19, 2022 and September 19, 2023, provided the grantee is serving as a director, officer or employee on those dates. The total stock-based compensation expense related to this grant is $220,000, of which $16,000 was charged to expense in 2019 and we anticipate the remaining $204,000 will be charged to expense ratably over the next fifteen quarters. In October 2019, we granted 7,500 shares of unrestricted stock to an officer, the shares are to be issued in one installment shortly after December 31, 2019, provided the grantee is serving as a director, officer or employee on that date. The total stock-based compensation expense related to this grant was $22,000 and was expensed in 2019. We issued 7,500 shares of common stock related to this grant in early January 2020. In October 2019, we granted 40,000 shares of unrestricted stock to an officer, the shares are to be issued in four equal installments shortly after October 1, 2020, October 1, 2021, October 1, 2022 and October 1, 2023, provided the grantee is serving as a director, officer or employee on those dates. The total stock-based compensation expense related to this grant is $117,000, of which $7,000 was charged to expense in 2019 and we anticipate the remaining $110,000 will be charged to expense ratably over the next fifteen quarters. Year ended December 31, 2018. In March 2018, we granted 138,000 shares of unrestricted stock to directors, officers and employees. The shares were issued in two equal installments shortly after June 30, 2018 and December 31, 2018. We expensed $580,000 of stock-based compensation expense related to this grant in the year ended December 31, 2018. There was no unamortized stock-based compensation charge associated with this stock grant as of December 31, 2018. We issued shares of common stock related to the March 2018 grant as follows: i) 57,592 net shares of common stock were issued in early July 2018 after employees surrendered 11,408 shares for which we paid $51,000 of withholding taxes on their behalf; and ii) 55,278 net shares of common stock were issued in early January 2019 after employees surrendered 13,722 shares for which we paid $50,000 of withholding taxes on their behalf. Performance Share Awards . In September 2019, we granted 20,000 shares of stock to an officer as a performance share award under our 2001 Nonqualified Stock Plan. The shares were issued in September 2019 and will be forfeitable if the grantee is not serving as a director, officer or employee on March 19, 2020. Stock-based compensation expense for this stock grant was determined based on the fair market value of our stock on the date of grant, as the number of shares in the grant was fixed on the grant date. The total stock-based compensation expense related to this grant is $55,000, of which $31,000 was charged to expense in 2019 and we anticipate the remaining $24,000 will be charged in the first quarter of 2020. In October 2019, we granted 10,000 shares of stock to an officer as a performance share award under our 2001 Nonqualified Stock Plan. The shares were issued in October 2019 and will be forfeitable if the grantee is not serving as a director, officer or employee on April 1, 2020. Stock-based compensation expense for this stock grant was determined based on the fair market value of our stock on the date of grant, as the number of shares in the grant was fixed on the grant date. The total stock-based compensation expense related to this grant is $29,000, of which $15,000 was charged to expense in 2019 and we anticipate the remaining $14,000 will be charged in the first and second quarter of 2020. A summary of stock option transactions for our fixed stock option plan for the years ended December 31, 2019, and 2018 are presented below: 2019 2018 Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Outstanding at beginning of year 18,000 $ 2.52 28,000 $ 2.97 Granted 435,000 $ 6.00 — — Exercised 18,000 $ 2.52 — — Forfeited or cancelled — — (10,000) 3.77 Outstanding at end of year 435,000 $ 6.00 18,000 $ 2.52 Exercisable at year end 16,248 $ 6.00 18,000 $ 2.52 Total options outstanding at December 31, 2019 were 435,000. 16,248 of those options were vested and had a weighted average exercise price of $6.00. Options to purchase up to 435,000 shares of our common stock were granted in the year ended December 31, 2019. No options were granted in the year ended December 31, 2018. At December 31, 2019, the weighted average remaining contractual term for total options outstanding and total options exercisable was approximately 9.76 and 9.72 years, respectively. At December 31, 2019, the aggregate intrinsic value of options outstanding and options exercisable was zero. 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, 2019: Options Outstanding Options Exercisable Weighted Weighted Average Weighted Average Remaining Average Exercise Price Exercise Contractual Exercise Range Number Price Term (in years) Number Price $4 to $5 108,750 $ 4.50 9.7585 4,062 $ 4.50 $5 to $6 108,750 $ 5.50 9.7585 4,062 $ 5.50 $6 to $7 108,750 $ 6.50 9.7585 4,062 $ 6.50 $7 to $8 108,750 $ 7.50 9.7585 4,062 $ 7.50 435,000 $ 6.00 9.7585 16,248 $ 6.00 At December 31, 2019, unrecognized compensation expense related to non-vested stock options was approximately $256,000, which is expected to be recognized over a weighted average period of 3.75 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 June 1996, we adopted an Employee Stock Purchase Plan (the “ESPP Plan”) 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. On November 29, 2005 we amended the ESPP Plan to provide that eligible employees may purchase common stock at a price equal to 95% of the fair market value of the common stock as of the end of each six-month offering period. There is no stock-based compensation expense related to our Employee Stock Purchase Plan because it is not considered a compensatory plan. The plan does not have a look-back feature, and has a minimal discount of 5% of the fair market value of the common stock as of the end of each six-month offering period. Participation in the ESPP Plan is limited to 6% of an employee’s compensation, may be terminated at any time by the employee and automatically ends on termination of employment. A total of 350,000 shares of common stock have been reserved for issuance. As of December 31, 2019 there were 39,023 shares available for future issuance under the ESPP Plan. We issued 13,699, and 13,667 common shares under the ESPP Plan in 2019, and 2018, respectively. Share Purchases - On April 24, 2018, we announced that our Board of Directors had approved a program authorizing the Company to purchase up to $10 million of our common stock. The shares may be purchased from time to time in the open market or through privately negotiated transactions at management’s discretion, depending upon market conditions and other factors. Shares are retired upon repurchase. The authorization to repurchase our stock expires on December 31, 2019. We repurchased 234,494 shares of common stock under this program for a total cost of $0.8 million during the year ended December 31, 2019. Since the program commenced in April 2018 and concluded in December 2019, we have repurchased 336,699 shares for a total cost of $1.2 million. Dividends – We did not pay dividends in the years ended December 31, 2019 and 2018.

COMMITMENTS AND CONTINGENT LIAB

COMMITMENTS AND CONTINGENT LIABILITIES	12 Months Ended
	Dec. 31, 2019
COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND CONTINGENT LIABILITIES	7. COMMITMENTS AND CONTINGENT LIABILITIES Lease Commitments – We own our principal office and research facility in Bedford, Massachusetts, which we have occupied since November 1997. We have no real estate lease commitments and no equipment lease commitments. 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.

BUSINESS SEGMENTS AND MAJOR CUS

BUSINESS SEGMENTS AND MAJOR CUSTOMERS	12 Months Ended
	Dec. 31, 2019
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
BUSINESS SEGMENTS AND MAJOR CUSTOMERS	8. BUSINESS SEGMENTS AND MAJOR CUSTOMERS We organize ourselves into a single segment that reports to the chief operating decision maker. 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, 2019 2018 United States $ 6,091 $ 7,439 United Kingdom 2,334 4,004 Brazil 876 2,473 Rest of world 2,903 2,215 $ 12,204 $ 16,131 Revenue by product group was (in thousands): Year ended December 31, 2019 2018 Biometrics $ 11,170 $ 15,042 Imaging 1,034 1,089 $ 12,204 $ 16,131 The portion of total revenue that was derived from major customers was as follows: Year ended December 31, 2019 2018 Customer A 16 % 20 % Customer B 2 % 13 % Revenue by timing of transfer of goods or services for the years ended December 31, 2019 and 2018 was (in thousands): Year ended December 31, 2019 2018 Goods or services transferred at a point in time $ 3,812 $ 5,972 Goods or services transferred over time 8,392 10,159 $ 12,204 $ 16,131

EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN	12 Months Ended
	Dec. 31, 2019
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN	9. 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 approximately $241,000, and $238,000 in 2019 and 2018, respectively.

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE	12 Months Ended
	Dec. 31, 2019
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE	10. NET INCOME (LOSS) PER SHARE Net income (loss) per share is calculated as follows (in thousands, except per share data): Year ended December 31, 2019 2018 Net income (loss) $ (8,340) $ 1,233 Shares outstanding: Weighted-average common shares outstanding 21,523 21,544 Additional dilutive common stock equivalents — 61 Diluted shares outstanding 21,523 21,605 Net income (loss) per share – basic $ (0.39) $ 0.06 Net income (loss) per share - diluted $ (0.39) $ 0.06

OFF-BALANCE SHEET ARRANGEMENTS

OFF-BALANCE SHEET ARRANGEMENTS	12 Months Ended
	Dec. 31, 2019
OFF-BALANCE SHEET ARRANGEMENTS
OFF-BALANCE SHEET ARRANGEMENTS	11. OFF-BALANCE SHEET ARRANGEMENTS We do not currently have any arrangements with unconsolidated entities, such as entities often referred to as structured finance, special purpose entities, or variable interest entities which are often established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Accordingly, we are not exposed to any financing, liquidity, market or credit risk if we had such relationships.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation - The consolidated financial statements include the accounts of Aware, Inc. and its subsidiary (“the Company”). All significant intercompany transactions have been eliminated.
Use of Estimates	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, useful lives of fixed assets, valuation allowance for deferred income tax assets, and accrued liabilities. Actual results could differ from those estimates.
Fair Value Measurements	Fair Value Measurements - The Financial Accounting Standards Board (“FASB”) Codification defines fair value, and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to the unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under the FASB Codification are: i) Level 1 – valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; ii) Level 2 – valuations that are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and iii) Level 3 – valuations that require inputs that are both significant to the fair value measurement and unobservable. Cash and cash equivalents, which primarily include money market mutual funds, were $47.7 million and $51.6 million at December 31, 2019 and December 31, 2018, respectively. We classified our cash equivalents of $46.2 million and $47.9 million as of December 31, 2019 and 2018, respectively, within Level 1 of the fair value hierarchy because they are valued using quoted market prices. As of December 31, 2019, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2019 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 46,174 $ — $ — Total $ 46,174 $ — $ — As of December 31, 2018, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2018 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 47,939 $ — $ — Total $ 47,939 $ — $ —
Cash and Cash Equivalents	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	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, 2019 and 2018, changes to and ending balances of the allowance for doubtful accounts were as follows (in thousands): Years ended December 31, 2019 2018 Allowance for doubtful accounts balance - beginning of year $ 20 $ 20 Additions to the allowance for doubtful accounts — — Deductions against the allowance for doubtful accounts — — Allowance for doubtful accounts balance - end of year $ 20 $ 20
Property and Equipment	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 used by us are: Building years Building improvements to years Furniture and fixtures years Computer, office & manufacturing equipment years Purchased software years
Impairment of Long-Lived Assets	Impairment 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. We believe that no significant impairment of our long-lived assets has occurred as of December 31, 2019 and 2018.
Revenue recognition	Revenue recognition . Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the full retrospective transition method. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services. In addition, ASC 606 requires disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The core principle of the standard 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 should apply the following five step model: 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 the performance obligations in the contract; and 5. Recognize revenue when (or as) each performance obligation is satisfied. 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. 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, 2019 and 2018, none of our contracts contained a significant financing component. 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 as discussed in further detail below. 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. In addition to the general revenue recognition policies described above, 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 in perpetuity as it exists when made available to the customer. We recognize revenue from software licenses at a point in time upon delivery, provided all other revenue recognition criteria are met. 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 Service revenue consists of fees from biometrics customers for software engineering services we provide to them. 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. Refer to Note 8 – Business Segments and Major Customers for further information on the disaggregation of revenue, including revenue by geography and category. 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: · 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. · 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 (i.e., labor hours incurred as a percentage of total labor hours budgeted). 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. · 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 (i.e., labor hours incurred as a percentage of total labor hours budgeted). 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 due date) or a contract liability (customer payment precedes performance). Customers that prepay are represented by the deferred revenue below until the performance obligation is satisfied. Contract assets represent arrangements in which the good or service has been delivered but payment is not yet due. 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, 2018 and 2019 (in thousands): Revenue Balance at Recognized Beginning of In Advance of Balance at End of Period Billings Billings Period Year ended December 31, 2018 Contract assets: Unbilled receivables $ 1,429 $ 3,278 $ (1,428) $ 3,279 Year ended December 31, 2019 Contract assets: Unbilled receivables $ 3,279 $ 2,638 $ (2,602) $ 3,315 Balance at Beginning of Revenue Balance at End of Period Billings Recognized Period Year ended December 31, 2018 Contract liabilities: Deferred revenue $ 2,932 $ 5,564 $ (5,397) $ 3,099 Year ended December 31, 2019 Contract liabilities: Deferred revenue $ 3,099 $ 5,006 $ (5,268) $ 2,837 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 67% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. As of December 31, 2019, 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 $1.4 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	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.
Capitalization of Software Costs	Capitalization of Software Costs – We capitalize certain internally developed software development costs after technological feasibility of the product has been established. No software costs were capitalized during the years ended December 31, 2019 and 2018, because such costs incurred subsequent to the establishment of technological feasibility, but prior to commercial availability, were immaterial.
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	Concentration of Credit Risk – At December 31, 2019 and 2018, we had cash and cash equivalents, in excess of federally insured deposit limits of approximately $47.5 million and $51.4 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: 2019 2018 Customer A 72 % 46 % Customer B 3 % 19 %
Stock-based compensation	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	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	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.
Advertising Costs	Advertising Costs – Advertising costs are expensed as incurred and were not material for 2019 and 2018.
Recent Accounting Pronouncements	Recent Accounting Pronouncements: Recently Adopted Accounting Pronouncements None.
Segments	Segments – We organize ourselves into a single segment reporting to the chief operating decision maker. We have sales outside of the United States, which are described in Note 8. All long-lived assets are maintained in the United States.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of assets measured at fair value on a recurring basis	As of December 31, 2019, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2019 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 46,174 $ — $ — Total $ 46,174 $ — $ — As of December 31, 2018, our assets that are measured at fair value on a recurring basis and whose carrying values approximate their respective fair values include the following (in thousands): Fair Value Measurement at December 31, 2018 Using: Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Money market funds (included in cash and cash equivalents) $ 47,939 $ — $ — Total $ 47,939 $ — $ —
Schedule of allowance for doubtful accounts	Years ended December 31, 2019 2018 Allowance for doubtful accounts balance - beginning of year $ 20 $ 20 Additions to the allowance for doubtful accounts — — Deductions against the allowance for doubtful accounts — — Allowance for doubtful accounts balance - end of year $ 20 $ 20
Schedule of estimated useful lives assets	Building years Building improvements to years Furniture and fixtures years Computer, office & manufacturing equipment years Purchased software years
Schedule of changes in contract assets and liabilities	Revenue Balance at Recognized Beginning of In Advance of Balance at End of Period Billings Billings Period Year ended December 31, 2018 Contract assets: Unbilled receivables $ 1,429 $ 3,278 $ (1,428) $ 3,279 Year ended December 31, 2019 Contract assets: Unbilled receivables $ 3,279 $ 2,638 $ (2,602) $ 3,315 Balance at Beginning of Revenue Balance at End of Period Billings Recognized Period Year ended December 31, 2018 Contract liabilities: Deferred revenue $ 2,932 $ 5,564 $ (5,397) $ 3,099 Year ended December 31, 2019 Contract liabilities: Deferred revenue $ 3,099 $ 5,006 $ (5,268) $ 2,837
Schedules of concentration of credit risk with respect to net accounts receivable	2019 2018 Customer A 72 % 46 % Customer B 3 % 19 %

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2019
PROPERTY AND EQUIPMENT
Schedule of property and equipment	2019 2018 Land $ 1,056 $ 1,056 Building and improvements 9,071 9,060 Computer equipment 830 795 Purchased software 117 81 Furniture and fixtures 778 778 Office equipment 100 138 Total 11,952 11,908 Less accumulated depreciation (8,197) (7,823) Property and equipment, net $ 3,755 $ 4,085

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2019
INCOME TAXES
Schedule of components of the provision for income taxes	Year ended December 31, 2019 2018 Current: Federal 8 54 State 32 38 40 92 Deferred: Federal 4,965 (22) State 206 (78) 5,171 (100) Provision for (benefit from) income taxes $ 5,211 $ (8)
Schedule of reconciliation of the U.S. federal statutory rate to the effective tax rate	Year ended December 31, 2019 2018 Federal statutory rate 21 % 21 % State rate, net of federal benefit 6 6 Tax credits 10 (26) Permanent adjustments (1) 1 FDII deduction — (4) Change in valuation allowance (202) — Other (1) 1 Effective tax rate (167) % (1) %
Schedule of components of deferred tax assets	2019 2018 Depreciation $ 354 $ 327 Stock compensation 115 87 Research and development credits 4,975 4,689 Net operating loss 789 — Other 92 68 Total 6,325 5,171 Less valuation allowance (6,325) — Deferred tax assets, net $ — $ 5,171
Schedule of roll forward of the uncertain tax position related to research and development tax credits	Uncertain tax positions at December 31, 2017 $ 998 Increase due to positions taken in prior periods — Uncertain tax positions at December 31, 2018 998 Increase due to positions taken in prior periods 10 Uncertain tax positions at December 31, 2019 $ 1,008

EQUITY AND STOCK COMPENSATION_2

EQUITY AND STOCK COMPENSATION PLANS (Tables)	12 Months Ended
	Dec. 31, 2019
EQUITY AND STOCK COMPENSATION PLANS
Schedule of stock-based employee compensation expense included in unaudited consolidated statements of comprehensive income	Years ended December 31, 2019 2018 Cost of services $ 18 $ 25 Research and development 117 101 Selling and marketing 57 13 General and administrative 500 441 Stock-based compensation expense $ 692 $ 580
Schedule of specific assumptions used to determine the fair value of options granted using the black scholes model	: Year Ended December 31, 2019 Expected term (1) 6.08-6.18 years Expected volatility factor (2) 35-46 % Risk-free interest rate (3) 1.51-1.66 % Expected annual dividend yield n/a (1) The expected term for each grant was determined based on the simplified method. (2) The expected volatility for each grant is estimated based on an average of historical volatility over the expected term of the stock options. (3) The risk-free interest rate for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the expected term of the stock option.
Schedule of the summary of stock option transactions for one fixed stock option plans	2019 2018 Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Outstanding at beginning of year 18,000 $ 2.52 28,000 $ 2.97 Granted 435,000 $ 6.00 — — Exercised 18,000 $ 2.52 — — Forfeited or cancelled — — (10,000) 3.77 Outstanding at end of year 435,000 $ 6.00 18,000 $ 2.52 Exercisable at year end 16,248 $ 6.00 18,000 $ 2.52
Schedule of the summary of stock options outstanding	The following table summarizes the stock options outstanding at December 31, 2019: Options Outstanding Options Exercisable Weighted Weighted Average Weighted Average Remaining Average Exercise Price Exercise Contractual Exercise Range Number Price Term (in years) Number Price $4 to $5 108,750 $ 4.50 9.7585 4,062 $ 4.50 $5 to $6 108,750 $ 5.50 9.7585 4,062 $ 5.50 $6 to $7 108,750 $ 6.50 9.7585 4,062 $ 6.50 $7 to $8 108,750 $ 7.50 9.7585 4,062 $ 7.50 435,000 $ 6.00 9.7585 16,248 $ 6.00

BUSINESS SEGMENTS AND MAJOR C_2

BUSINESS SEGMENTS AND MAJOR CUSTOMERS (Tables)	12 Months Ended
	Dec. 31, 2019
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Schedule of revenues generated from geographic regions	Year ended December 31, 2019 2018 United States $ 6,091 $ 7,439 United Kingdom 2,334 4,004 Brazil 876 2,473 Rest of world 2,903 2,215 $ 12,204 $ 16,131
Schedule of revenue by product group	Year ended December 31, 2019 2018 Biometrics $ 11,170 $ 15,042 Imaging 1,034 1,089 $ 12,204 $ 16,131
Schedule of total revenue that was derived from major customers	Year ended December 31, 2019 2018 Customer A 16 % 20 % Customer B 2 % 13 %
Schedule of revenue by timing of transfer of goods or services	Year ended December 31, 2019 2018 Goods or services transferred at a point in time $ 3,812 $ 5,972 Goods or services transferred over time 8,392 10,159 $ 12,204 $ 16,131

NET INCOME (LOSS) PER SHARE (Ta

NET INCOME (LOSS) PER SHARE (Tables)	12 Months Ended
	Dec. 31, 2019
NET INCOME (LOSS) PER SHARE
Schedule of net loss per share	Year ended December 31, 2019 2018 Net income (loss) $ (8,340) $ 1,233 Shares outstanding: Weighted-average common shares outstanding 21,523 21,544 Additional dilutive common stock equivalents — 61 Diluted shares outstanding 21,523 21,605 Net income (loss) per share – basic $ (0.39) $ 0.06 Net income (loss) per share - diluted $ (0.39) $ 0.06

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Assets measured at fair value (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Quoted Prices in Active Markets for Identical Assets (Level 1)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total	$ 46,174	$ 47,939
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds (included in cash and cash equivalents)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Money market funds (included in cash and cash equivalents)	46,174	47,939
Significant Other Observable Inputs (Level 2)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total	0	0
Significant Other Observable Inputs (Level 2) | Money market funds (included in cash and cash equivalents)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Money market funds (included in cash and cash equivalents)	0	0
Significant Unobservable Inputs (Level 3)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Total	0	0
Significant Unobservable Inputs (Level 3) | Money market funds (included in cash and cash equivalents)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Money market funds (included in cash and cash equivalents)	$ 0	$ 0

SUMMARY OF SIGNIFICANT ACCOUN_5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for doubtful accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Allowance for Doubtful Accounts Receivable
Allowance for doubtful accounts balance - beginning of year	$ 20	$ 20
Additions to the allowance for doubtful accounts	0	0
Deductions against the allowance for doubtful accounts	0	0
Allowance for doubtful accounts balance - end of year	$ 20	$ 20

SUMMARY OF SIGNIFICANT ACCOUN_6

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated useful lives of assets (Details)	12 Months Ended
	Dec. 31, 2019
Building
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	30 years
Building improvements | Minimum
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	5 years
Building improvements | Maximum
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	20 years
Furniture and Fixtures
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimated useful lives of assets	5 years
Computer, office & manufacturing 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 ACCOUN_7

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Unbilled Receivables Current
Unbilled receivables, Balance at Beginning of Period	$ 3,279	$ 1,429
Unbilled receivables, Revenue Recognized In Advance of Billings	2,638	3,278
Unbilled receivables, Billings	(2,602)	(1,428)
Unbilled receivables, Balance at End of Period	$ 3,315	$ 3,279

SUMMARY OF SIGNIFICANT ACCOUN_8

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Contract liabilities:
Deferred revenue, Balance at Beginning of Period	$ 3,099	$ 2,932
Deferred revenue, Billings	5,006	5,564
Deferred revenue, Revenue Recognized	(5,268)	(5,397)
Deferred revenue, Balance at End of Period	$ 2,837	$ 3,099

SUMMARY OF SIGNIFICANT ACCOUN_9

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of credit risk (Details) - Accounts Receivable [Member] - Credit Concentration Risk [Member]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Customer A [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk, percentage	72.00%	46.00%
Customer B [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration risk, percentage	3.00%	19.00%

SUMMARY OF SIGNIFICANT ACCOU_10

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Remaining Performance Obligation , Contract Costs , Capitalization Costs and Concentration of Credit Risk (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue, Practical Expedient
Revenue, Practical Expedient, Financing Component [true false]	true
Revenue, Performance Obligation
Percentage of remaining performance obligations expected to be recognized as revenue	67.00%
Minimum period of remaining performance obligations	12 months
Revenue recognition performance obligation transaction price	$ 1.4
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]	true
Capitalized Computer Software, Net
Software costs capitalized during period	$ 0	$ 0
Cash and cash equivalents, in excess of federally insured deposit limits	$ 47.5	$ 51.4

PATENT RELATED INCOME (Details)

PATENT RELATED INCOME (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
PATENT RELATED INCOME
Income From Patent Arrangement	$ 49,000	$ 69,000

PROPERTY AND EQUIPMENT - Summar

PROPERTY AND EQUIPMENT - Summary of property and equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
PROPERTY AND EQUIPMENT
Total	$ 11,952	$ 11,908
Less accumulated depreciation	(8,197)	(7,823)
Property and equipment, net	3,755	4,085
Land
PROPERTY AND EQUIPMENT
Total	1,056	1,056
Building and Improvements
PROPERTY AND EQUIPMENT
Total	9,071	9,060
Computer Equipment
PROPERTY AND EQUIPMENT
Total	830	795
Purchased software
PROPERTY AND EQUIPMENT
Total	117	81
Furniture and Fixtures
PROPERTY AND EQUIPMENT
Total	778	778
Office Equipment
PROPERTY AND EQUIPMENT
Total	$ 100	$ 138

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
PROPERTY AND EQUIPMENT
Depreciation expense	$ 0.4	$ 0.4
Retired assets	$ 0.1	$ 0.1

INCOME TAXES - Components of pr

INCOME TAXES - Components of provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current:
Federal	$ 8	$ 54
State	32	38
Total current tax	40	92
Deferred:
Federal	4,965	(22)
State	206	(78)
Total deferred tax	5,171	(100)
Provision for income taxes	$ 5,211	$ (8)

INCOME TAXES - Reconciliation o

INCOME TAXES - Reconciliation of U.S. federal statutory rate (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES
Federal statutory rate	21.00%	21.00%
State rate, net of federal benefit	6.00%	6.00%
Tax credits	10.00%	(26.00%)
Permanent adjustments	(1.00%)	1.00%
FDII deduction	(0.00%)	(4.00%)
Change in valuation allowance	(202.00%)	0.00%
Other	(1.00%)	1.00%
Effective tax rate	(167.00%)	(1.00%)

INCOME TAXES - Principal compon

INCOME TAXES - Principal components of deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES
Depreciation	$ 354	$ 327
Stock compensation	115	87
Research and development credits	4,975	4,689
Net operating loss	789	0
Other	92	68
Total	6,325	5,171
Less valuation allowance	(6,325)	0
Deferred tax assets, net	$ 0	$ 5,171

INCOME TAXES - Rollforward of u

INCOME TAXES - Rollforward of uncertain tax position (Details) - Research Tax Credit Carryforward [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Uncertain tax positions
Uncertain tax positions at December 31	$ 998	$ 998
Increase due to positions taken in prior periods	10	0
Uncertain tax positions at December 31	$ 1,008	$ 998

INCOME TAXES - Additional Infor

INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES
Income tax expense (Benefit)	$ 5,211	$ (8)
U.S. statutory rate	21.00%	21.00%
Deferred tax assets	$ 0	$ 5,171
Valuation allowance	6,325	0
Research and development credits	4,975	$ 4,689
Pre Tax Gain (Loss)	(3,100)
Uncertain tax positions	$ 800

EQUITY AND STOCK COMPENSATION_3

EQUITY AND STOCK COMPENSATION PLANS - Stock-based employee compensation expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
EQUITY AND STOCK COMPENSATION PLANS
Total stock-based compensation expense	$ 692	$ 580
Cost of services
EQUITY AND STOCK COMPENSATION PLANS
Total stock-based compensation expense	18	25
Research and development
EQUITY AND STOCK COMPENSATION PLANS
Total stock-based compensation expense	117	101
Selling and marketing
EQUITY AND STOCK COMPENSATION PLANS
Total stock-based compensation expense	57	13
General and administrative
EQUITY AND STOCK COMPENSATION PLANS
Total stock-based compensation expense	$ 500	$ 441

EQUITY AND STOCK COMPENSATION_4

EQUITY AND STOCK COMPENSATION PLANS - Assumptions to determine fair value of options (Details)	12 Months Ended
	Dec. 31, 2019
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items]
Expected volatility factor, minimum	35.00%
Expected volatility factor, maximum	46.00%
Risk-free interest rate, minimum	1.51%
Risk-free interest rate, maximum	1.66%
Minimum
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items]
Expected term	6 years 29 days
Maximum
Share-Based Compensation Arrangement By Share-Based Payment Award [Line Items]
Expected term	6 years 2 months 5 days

EQUITY AND STOCK COMPENSATION_5

EQUITY AND STOCK COMPENSATION PLANS - Summary of stock option transactions (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Shares
Outstanding at end of year	435,000
Exercisable at year end	16,248
Weighted Average Exercise Price
Outstanding at end of year	$ 6
Exercisable at year end	$ 6
Stock Option [Member]
Shares
Outstanding at beginning of year	18,000	28,000
Number of stock options granted	435,000	0
Exercised	18,000	0
Forfeited or cancelled	0	(10,000)
Outstanding at end of year	435,000	18,000
Exercisable at year end	16,248	18,000
Weighted Average Exercise Price
Outstanding at beginning of year	$ 2.52	$ 2.97
Granted	6	0
Exercised	2.52	0
Forfeited or cancelled	0	3.77
Outstanding at end of year	6	2.52
Exercisable at year end	$ 6	$ 2.52

EQUITY AND STOCK COMPENSATION_6

EQUITY AND STOCK COMPENSATION PLANS - Summarizes of stock options outstanding (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	435,000
Options outstanding, Weighted average exercise price	$ 6
Options outstanding, Weighted average remaining contractual term (in years)	9 years 9 months 3 days
Options exercisable, Number	16,248
Options exercisable, Weighted average exercise price	$ 6
Exercise price range $4 to $5
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	108,750
Options outstanding, Weighted average exercise price	$ 4.50
Options outstanding, Weighted average remaining contractual term (in years)	9 years 9 months 3 days
Options exercisable, Number	4,062
Options exercisable, Weighted average exercise price	$ 4.50
Exercise price range $5 to $6
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	108,750
Options outstanding, Weighted average exercise price	$ 5.50
Options outstanding, Weighted average remaining contractual term (in years)	9 years 9 months 3 days
Options exercisable, Number	4,062
Options exercisable, Weighted average exercise price	$ 5.50
Exercise price range $6 to $7
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	108,750
Options outstanding, Weighted average exercise price	$ 6.50
Options outstanding, Weighted average remaining contractual term (in years)	9 years 9 months 3 days
Options exercisable, Number	4,062
Options exercisable, Weighted average exercise price	$ 6.50
Stock Option [Member]
EQUITY AND STOCK COMPENSATION PLANS
Options outstanding, Number	435,000	18,000	28,000
Options outstanding, Weighted average exercise price	$ 6	$ 2.52	$ 2.97
Options exercisable, Number	16,248	18,000
Options exercisable, Weighted average exercise price	$ 6	$ 2.52
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
Options outstanding, Number	108,750
Options outstanding, Weighted average exercise price	$ 7.50
Options outstanding, Weighted average remaining contractual term (in years)	9 years 9 months 3 days
Options exercisable, Number	4,062
Options exercisable, Weighted average exercise price	$ 7.50

EQUITY AND STOCK COMPENSATION_7

EQUITY AND STOCK COMPENSATION PLANS - Fixed Stock Option Plan (Details) - 2001 Nonqualified Stock Plan	12 Months Ended
	Dec. 31, 2019shares
EQUITY AND STOCK COMPENSATION PLANS
Number of stock awards authorized to grant	8,000,000
Number of stock awards available for grant	3,976,443
Minimum
EQUITY AND STOCK COMPENSATION PLANS
Term of options granted at exercise prices	4 years
Term of options vested	3 years
Maximum
EQUITY AND STOCK COMPENSATION PLANS
Term of options granted at exercise prices	10 years
Term of options vested	5 years

EQUITY AND STOCK COMPENSATION_8

EQUITY AND STOCK COMPENSATION PLANS - Unrestricted Stock Grants (Details) $ in Thousands	Jan. 01, 2020shares	Jan. 31, 2020USD ($)shares	Oct. 31, 2019USD ($)installmentshares	Sep. 30, 2019USD ($)installmentshares	Jul. 31, 2019USD ($)shares	Mar. 31, 2019shares	Jan. 31, 2019USD ($)shares	Jul. 31, 2018USD ($)shares	Mar. 31, 2018shares	Dec. 31, 2019USD ($)installmentshares	Dec. 31, 2018USD ($)installmentshares
EQUITY AND STOCK COMPENSATION PLANS
Stock-based compensation charge										$ 692	$ 580
Unrestricted Stock
EQUITY AND STOCK COMPENSATION PLANS
Unamortized share-based compensation charges											$ 0
Unrestricted Stock | 2019 Grant
EQUITY AND STOCK COMPENSATION PLANS
Unamortized share-based compensation charges										$ 0
2001 Nonqualified Stock Plan | Directors, officers and employees
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares										435,000	0
2001 Nonqualified Stock Plan | Unrestricted Stock
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares										285,500	138,000
2001 Nonqualified Stock Plan | Unrestricted Stock | 2019 Grant | Directors, officers and employees
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares					58,548	143,000
Number of installment | installment										2
Stock-based compensation charge										$ 547
Number of common stock shares surrendered by employees withholding taxes | shares					12,952
Common stock value surrendered by employees withholding taxes					$ 43
2001 Nonqualified Stock Plan | Unrestricted Stock | 2019 Grant | Directors, officers and employees | Subsequent Event
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares		56,605
Number of common stock shares surrendered by employees withholding taxes | shares		14,895
Common stock value surrendered by employees withholding taxes		$ 50
2001 Nonqualified Stock Plan | Unrestricted Stock | 2019 Grant one | Officer
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares			7,500	15,000
Number of installment | installment			1	1
Stock-based compensation charge			$ 22	$ 41
2001 Nonqualified Stock Plan | Unrestricted Stock | 2019 Grant one | Officer | Subsequent Event
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares	7,500	15,000
2001 Nonqualified Stock Plan | Unrestricted Stock | 2019 Grant two | Officer
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares			40,000	80,000
Number of installment | installment			4	4
Share Based Compensation Expense for the Total Grant			$ 117	$ 220
Stock-based compensation charge			7	16
Unamortized share-based compensation charges			$ 110	$ 204
2001 Nonqualified Stock Plan | Unrestricted Stock | February 2017 grant | Directors, officers and employees
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares							55,278	57,592	138,000
Number of installment | installment											2
Stock-based compensation charge											$ 580
Number of common stock shares surrendered by employees withholding taxes | shares							13,722	11,408
Common stock value surrendered by employees withholding taxes							$ 50	$ 51
2001 Nonqualified Stock Plan | Performance Share Awards | Officer
EQUITY AND STOCK COMPENSATION PLANS
Number of shares granted (in shares) | shares			10,000	20,000
Share Based Compensation Expense for the Total Grant			$ 29	$ 55
Stock-based compensation charge			15	31
Unamortized share-based compensation charges			$ 14	$ 24

EQUITY AND STOCK COMPENSATION_9

EQUITY AND STOCK COMPENSATION PLANS - Performance share awards (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
EQUITY AND STOCK COMPENSATION PLANS
Number of options outstanding	435,000
Weighted average exercise price of options outstanding	$ 6
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	9 years 9 months 3 days
Stock options
EQUITY AND STOCK COMPENSATION PLANS
Number of options outstanding	435,000
Weighted average exercise price of options outstanding	$ 6
Number of stock options granted	0	0
Number of shares vested	16,248
Weighted average remaining contractual term	9 years 8 months 19 days
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term	9 years 9 months 4 days
Aggregate intrinsic value of options outstanding	$ 0
Aggregate intrinsic value of options exercisable	0
Amount of unrecognized compensation expense related to non-vested options	$ 0
Weighted average period for nonvested options	3 years 9 months

EQUITY AND STOCK COMPENSATIO_10

EQUITY AND STOCK COMPENSATION PLANS - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan [Member] - shares	Nov. 29, 2005	Jun. 30, 1996	Dec. 31, 2019	Dec. 31, 2018
EQUITY AND STOCK COMPENSATION PLANS
Percentage of common stock at a price lower of the fair market value	95.00%	85.00%
Period of common stock offering	6 months	6 months
Minimal discount of fair market value of the common stock	5.00%
Percentage of employee's compensation	6.00%
Total number of common stock shares reserved for issuance	350,000
Number of common stock shares reserved for issuance			39,023
Issuance of common stock under employee stock purchase plan (in shares)			13,699	13,667

EQUITY AND STOCK COMPENSATIO_11

EQUITY AND STOCK COMPENSATION PLANS - Share Purchases (Details) - Share Purchases - USD ($) $ in Millions	12 Months Ended	21 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Apr. 24, 2018
EQUITY AND STOCK COMPENSATION PLANS
Number of common stock authorized for repurchase			$ 10
Number of stock repurchased (in shares)	234,494	336,699
Value of stock repurchased	$ 0.8	$ 1.2

BUSINESS SEGMENTS AND MAJOR C_3

BUSINESS SEGMENTS AND MAJOR CUSTOMERS - Revenues generated from geographic regions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 12,204	$ 16,131
Operating Segments | United States
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	6,091	7,439
Operating Segments | United Kingdom
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	2,334	4,004
Operating Segments | Brazil
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	876	2,473
Operating Segments | Rest of World
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 2,903	$ 2,215

BUSINESS SEGMENTS AND MAJOR C_4

BUSINESS SEGMENTS AND MAJOR CUSTOMERS - Summary of revenue by product group (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 12,204	$ 16,131
Operating Segments | Biometrics
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	11,170	15,042
Operating Segments | Imaging
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 1,034	$ 1,089

BUSINESS SEGMENTS AND MAJOR C_5

BUSINESS SEGMENTS AND MAJOR CUSTOMERS - Revenue derived from major customers (Details) - Sales Revenue, Net [Member]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Customer A [Member]
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Concentration risk, percentage	16.00%	20.00%
Customer B [Member]
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Concentration risk, percentage	2.00%	13.00%

BUSINESS SEGMENTS AND MAJOR C_6

BUSINESS SEGMENTS AND MAJOR CUSTOMERS - Revenue by timing of transfer of goods or services (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 12,204	$ 16,131
Goods or services transferred at a point in time
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	3,812	5,972
Goods or services transferred over time
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Total revenue	$ 8,392	$ 10,159

BUSINESS SEGMENTS AND MAJOR C_7

BUSINESS SEGMENTS AND MAJOR CUSTOMERS (Details)	12 Months Ended
	Dec. 31, 2019segment
BUSINESS SEGMENTS AND MAJOR CUSTOMERS
Number of operating segment	1

EMPLOYEE BENEFIT PLAN (Details)

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Retirement Plans 401 K Defined Benefit
EMPLOYEE BENEFIT PLAN
Discretionary contribution by employer	$ 241,000	$ 238,000

NET INCOME (LOSS) PER SHARE - C

NET INCOME (LOSS) PER SHARE - Calculation of net income per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
NET INCOME (LOSS) PER SHARE
Net income (loss)	$ (8,340)	$ 1,233
Shares outstanding:
Weighted-average shares - basic (in shares)	21,523	21,544
Additional dilutive common stock equivalents (in shares)	0	61
Diluted shares outstanding (in shares)	21,523	21,605
Net income (loss) per share - basic (in dollars per share)	$ (0.39)	$ 0.06
Net income (loss) per share - diluted (in dollars per share)	$ (0.39)	$ 0.06