Company: AWRE
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038714
Chunk: 89

Company: AWARE INC /MA/
Filing Date: 2025-03-13
Form: 10-K
Item: Item 7
Chunk 89
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Note”) that accrues interest at 5% annually with a maturity date of March 11, 2026.  

We recorded the fair value of the Note as $0 as of both December 31, 2024 and 2023 as a result of our evaluation of the impact of Omlis's liquidity issues on the collectability of the Note.  In addition, in January 2024, Omlis  and MIRACL petitioned to enter the United Kingdom administration process, which remains ongoing, adding to our unlikely recoverability of the Note's carrying value.

Fair value adjustment to contingent acquisition payment

In December 2021, we acquired 100% of the outstanding shares and acquired all of the assets and liabilities of FortressID for a purchase price of $3.4 million, which consisted of $2.5 million of cash consideration and contingent acquisition payments which was fair valued at $0.9 million at the acquisition date.  The maximum contingent acquisition payments at the time of the acquisition were $4.0 million, which consisted of a cash payment of up to $2.0 million for the achievement of set revenue targets in 2022 and an additional $2.0 million cash payment for the achievement of set revenue targets in 2023.  No revenue targets were achieved and the earnout period was closed as of December 31, 2023.  We recorded a fair value adjustment of $0.8 million to contingent acquisition payment for the year ended December 31, 2023.  

Interest Income

Interest income decreased from $1.3 million in 2023 to $1.2 million in 2024.  The dollar decrease in interest income was primarily due to lower interest rates within our money market accounts. 

Income Taxes

We are subject to income taxes in the United States, and we use estimates in determining our provisions for income taxes. We account for income taxes using the asset and liability method for accounting and reporting income taxes. Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.

Total income tax expense for the years ended December 31, 2024 and 2023 was $65 thousand and $59 thousand, respectively.  The income tax expense for both years relates to limitations on the usage of net operating loss carryforwards generated in years beginning after December 31, 2017.

LIQUIDITY AND CAPITAL RESOURCES

In recent years, we have financed