What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-15 compared with 2021-02-17 · 33 added, 24 removed, 155 unchanged (27% of the section changed)

Company Overview

(“Aware”, “we”, “us”, “our”, or the “Company”) is a global leader in biometrics software offerings and solutions.

(“Aware”, “we”, “us”, “our”, or the “Company”) is a leading, global authentication company that validates and secures identities using proven and trusted adaptive biometrics.

Aware’s software offerings address the growing challenges that government and commercial enterprises face in knowing, authenticating and securing individuals through frictionless and highly secure user experiences.

Aware’s algorithms are based on the most diverse data sets in the world and can be tailored to the unique security and requirements of each customer.

Our portfolio enables government agencies and commercial entities to enroll, identify, authenticate and enable using biometrics, which comprise physiological characteristics, such as fingerprints, faces, irises and voices.

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As of December 31, 2021, we were in a hybrid model with some employees coming into the office and others continuing to work remotely.

The global outbreak of COVID-19 continues to evolve, and the extent to which COVID-19 may have long-term impact on our business and the markets we serve, will depend on future developments—which are highly uncertain and cannot be predicted with confidence, such as the pace of ongoing vaccination efforts in the United States and the rest of the world, the duration of the outbreak, travel restrictions and social distancing measures in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

The global outbreak of COVID-19 continues to evolve, and the extent to which COVID-19, particularly with regard the new variants that emerged in 2021 (“Delta” and “Omicron”) may have long-term impact on our business and the markets we serve, will depend on future developments—which are highly uncertain and cannot be predicted with confidence, such as the pace of ongoing vaccination efforts in the United States and the rest of the world, the duration of the outbreak, travel restrictions and social distancing measures in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

We are continuing to monitor the situation with our primary focus on the health and safety of our employees and clients.

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Knomi® Mobile Framework

The Knomi mobile biometric authentication framework is built on our hardened biometric SDK component , which are optimized to operate on mobile devices, and a server that together enable strong, multi-factor, password-free authentication from a mobile device using biometrics.

The Knomi mobile biometric authentication framework is built on our hardened biometric SDK components, which are optimized to operate on mobile devices, and a server that together enable strong, multi-factor, password-free authentication from a mobile device using biometrics.

Knomi offers multiple biometric modality options, including facial recognition, and voice authentication as means to enroll, onboard or authenticate.

Knomi software components can be used in different combinations and configurations to enable either a server-centric architecture, a web-based or a device-centric implementation.

Knomi has primarily been sold as a perpetual license and is also available as a fixed term license that is priced based on a usage-based model.

Knomi has primarily been sold as a perpetual license and is also available as a fixed term license that is priced on a subscription-based model.

AwareABIS™ Platform

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The platform is built upon several mature, high-performance, field-proven applications and algorithms from Aware.

AwareABIS has primarily been sold as perpetual license and is also available as a fixed term license that is priced based on a usage-based model or the size of the biometric system.

AwareABIS has primarily been sold as perpetual license and is also available as a fixed term license that is priced on a subscription-based model or the size of the biometric system.

AFIX Suite of Products

Aware’s recently acquired AFIX suite of products is used for small-scale law enforcement focused biometric identification.

Aware’s AFIX suite of products is used for small-scale law enforcement focused biometric identification.

AFIX Tracker™ supports fingerprint, palmprint and latent print identification, designed to serve between 15,000 and 2 million identities.

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The product provides minutiae-based search capability and can be configured as either a standalone system, or for use with centralized, server-based data stores.

AFIX Tracker has primarily been sold as a perpetual license and is also available as a fixed term license that is priced based on a usage-based model or the size of the biometric system.

AFIX Tracker has primarily been sold as a perpetual license and is also available as a fixed term license that is priced on a subscription-based model or the size of the biometric system.

BioSP™ - Biometric Services Platform

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BioSP is modular, programmable, scalable, and secure, capable of managing all aspects of transaction workflow , including messaging, submissions, responses, and logging.

BioSP has primarily been sold as a perpetual license and is also available as a fixed term lice nse that is priced based on users, transactions, or enterprise wide.

BioSP has primarily been sold as a perpetual license and is also available as a fixed term license that is priced on users, transactions, or enterprise wide.

BioSP™ Biometric Services Platform - WebEnroll

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Once images are captured, they are submitted to BioSP, where configurable workflows and modular software applications are used for processing, routing, and storage of each transaction.

Indigo™ is Aware’s family of cloud-based biometric application programming interfaces (APIs) and turnkey services, each provided as a subscription-based software-as-a-service (SaaS).

Indigo|API provides biometric face and fingerprint image analysis, matching, and enrollment functionality;

all as granular REST services that can enhance identity systems with biometric functionality.

These functions include quality scoring, liveness detection, enrollment, verification, comparison and matching, and searching for fingerprint and face modalities.

Indigo turnkey solutions deliver biometric capabilities accessible from a browser.

Indigo is provided as a subscription-based solution that is available with enterprise-based, usage-based pricing.

Going forward, we plan to transition Indigo into a wider SaaS offering.

WebEnroll has primarily been sold as a perpetual license and is also available as a fixed term license that is priced on users, transactions, or enterprise wide.

AwareID ™ is our new Software-as-a-Service (“SaaS) offering that is used for Aware’s adaptive authentication platform of cloud-based biometric application programming interfaces (“APIs”) and turnkey services.

AwareID provides biometric face and voice analysis for liveness-verification, and document validation.

The platform uses proprietary Adaptive Authentication technology in cloud-based bundles to provide comprehensive authentication functionality with situational awareness for onboarding, access control/management, and authentication of transactions.

These services can be used discretely to enhance investments already in place or combined to provide higher functionality.

The AwareID platform is built on open architecture and interfaces to maximize interoperability and connection to other biometric and/or digital identity applications and platforms.

AwareID is provided as a SaaS offering with usage-based pricing.

This wider SaaS offering includes the solution formerly referred to as Indigo ™ .

Aware’s Fortress Identity cloud platform (“FortressID”), acquired in December 2021, is used for user authentication with compound biometrics.

The Fortress Identity Biometric Authenticator™ and Onboarding Authentication Platform ™ provide multi-factor authentication through passive and active biometrics for multiple modalities, including voice, fingerprint, face and behavior to enable online onboarding and identity proofing.

FortressID also includes a mobile SDK for iOS and Android applications, a Citrix connector to enable full multi-modal, multi-factor biometric user authentication with Citrix, and an Active Directory connector to enable the addition of biometrics to strengthen or replace password access.

FortressID is sold as a SaaS offering.

Going forward, we plan to transition FortressID into the AwareID offering.

Software products

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We also license our software unbundled as building blocks and have primarily sold these offerings as a perpetual license.

Historically, we sold our software products under perpetual or fixed-term licenses.

With the introduction of AwareID and FortressI D , we have incorporated SaaS offerings into our product line-up.

While we did not recognize revenues from our SaaS offerings during 2021, we expect SaaS to become a significant product offering moving forward .

Building Blocks:

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and iv) software integration and installation.

Services are sold in conjunction with our products and solutions and are provided for a fixed fee or as part of a subscription-based fee.

Services are sold in conjunction with our products and solutions and are provided for a fixed fee.

Service engagement deliverables may include:

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All of our revenue in 2021 and 2020 was derived from unaffiliated customers.

In 2019, one customer represented 16% of total revenue.

No other customer represented 10% or more of total revenue in either 2020 or 2019.

No customer represented 10% or more of total revenue in either 2021 or 2020.

Competitive Business Conditions

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Component providers that offer biometrics software and hardware components for fingerprint, facial, iris and voice biometric identification.

This group of competitors includes companies such as FaceTec, Dermalog, and Innovatrics.

This group of competitors includes companies such as FaceTec, iProov, and Innovatrics.

We expect competition to intensify in the near term in the biometrics market.

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Third parties may assert exclusive patent, copyright and other intellectual property rights to technologies that are important to us.

We may receive claims from third parties suggesting that we may be obligated to license such intellectual property rights.

W e may receive claims from third parties suggesting that we may be obligated to license such intellectual property rights.

If we were found to have infringed any third party’s patents, we could be subject to substantial damages or an injunction preventing us from conducting our business.

As of December 31, 2020, we employed 90 people, including 52 in engineering and research, 25 in sales and marketing, and 13 in finance and administration.

As of December 31, 2021, we employed 81 people, all based in the U.S, including 49 in engineering and research, 20 in sales and marketing, and 12 in finance and administration.

Of these employees, 66 were based in Massachusetts and were based outside of Massachusetts.

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Available Information

amended, are made available free of charge on or through our website at w ww.aware.com as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission (the SEC).

The SEC also maintains a website, www.sec.gov, that contains reports and other information regarding issuer s that file electronically with the SEC.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge on or through our website at www.aware.com as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission (“the SEC”).

The SEC also maintains a website, www.sec.gov, that contains reports and other information regarding issuers that file electronically with the SEC.

Copies of our (i) Corporate Governance Principles, (ii) charters for the Audit Committee, Compensation Committee, and Nominating Committee, and (iii) Code of Ethics are available in the Investor Relations section of our website at www.aware.com.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business