Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 09, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-39608 | ||
Entity Registrant Name | INTRUSION INC. | ||
Entity Central Index Key | 0000736012 | ||
Entity Tax Identification Number | 75-1911917 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 101 EAST PARK BLVD | ||
Entity Address, Address Line Two | SUITE 1200 | ||
Entity Address, City or Town | PLANO | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75074 | ||
City Area Code | (972) | ||
Local Phone Number | 234-6400 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | INTZ | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 248,751,286 | ||
Entity Common Stock, Shares Outstanding | 19,183,776 | ||
Auditor Firm ID | 726 | ||
Auditor Name | Whitley Penn LLP | ||
Auditor Location | Plano, Texas |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 4,100 | $ 16,704 |
Accounts receivable | 1,034 | 1,233 |
Prepaid expenses | 356 | 370 |
Total current assets | 5,490 | 18,307 |
Property and Equipment: | ||
Equipment | 2,517 | 1,453 |
Furniture and fixtures | 43 | 43 |
Leasehold improvements | 67 | 67 |
Property and equipment, gross | 2,627 | 1,563 |
Accumulated depreciation and amortization | (1,567) | (1,097) |
Property and equipment, net | 1,060 | 466 |
Finance leases, right-of-use assets, net | 1,709 | 20 |
Operating leases, right-of-use assets, net | 808 | 1,010 |
Other assets | 166 | 79 |
Total non-current assets | 3,743 | 1,575 |
TOTAL ASSETS | 9,233 | 19,882 |
Current Liabilities: | ||
Accounts payable, trade | 718 | 408 |
Accrued expenses | 534 | 628 |
Finance lease liabilities, current portion | 644 | 21 |
Operating lease liabilities, current portion | 935 | 487 |
PPP loan payable, current portion | 0 | 421 |
Deferred revenue | 560 | 177 |
Total current liabilities | 3,391 | 2,142 |
Non-Current Liabilities: | ||
PPP loan payable, noncurrent portion | 0 | 212 |
Finance lease liabilities, noncurrent portion | 673 | 0 |
Operating lease liabilities, noncurrent portion | 1,250 | 1,867 |
Total non-current liabilities | 1,923 | 2,079 |
Stockholders’ equity: | ||
Preferred Stock $0.01 par value: Authorized shares – 5,000 Issued shares – 0 in 2021 and 2020 | 0 | 0 |
Common stock $0.01 par value: Authorized shares — 80,000 Issued shares — 19,135 in 2021 and 17,428 in 2020 Outstanding shares — 19,125 in 2021 and 17,418 in 2020 | 191 | 174 |
Common stock held in treasury, at cost – 10 shares | (362) | (362) |
Additional paid-in capital | 84,230 | 77,187 |
Accumulated deficit | (80,097) | (61,295) |
Accumulated other comprehensive loss | (43) | (43) |
Total stockholders’ equity | 3,919 | 15,661 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 9,233 | $ 19,882 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 80,000 | 80,000 |
Common stock, shares issued (in shares) | 19,135 | 17,428 |
Common stock, shares outstanding (in shares) | 19,125 | 17,418 |
Common stock held in treasury, at cost, shares (in shares) | 10 | 10 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenue | $ 7,277,000 | $ 6,619,000 |
Cost of revenue | 2,625,000 | 2,709,000 |
Gross profit | 4,652,000 | 3,910,000 |
Operating expenses: | ||
Sales and marketing | 11,931,000 | 3,821,000 |
Research and development | 6,328,000 | 3,797,000 |
General and administrative | 5,896,000 | 2,815,000 |
Operating loss | (19,503,000) | (6,523,000) |
Interest and other income | 87,000 | 11,000 |
Interest expense | (21,000) | (6,000) |
Gain on the extinguishment of debt | 635,000 | 0 |
Loss from operations before income taxes | (18,802,000) | (6,518,000) |
Income tax provision | 0 | 0 |
Net loss | (18,802,000) | (6,518,000) |
Preferred stock dividends accrued | 0 | (79,000) |
Net loss attributable to common stockholders | $ (18,802,000) | $ (6,597,000) |
Net loss per share attributable to common stockholders: | ||
Basic | $ (1.05) | $ (0.45) |
Diluted | $ (1.05) | $ (0.45) |
Weighted average common shares outstanding: | ||
Basic | 17,992 | 14,678 |
Diluted | 17,992 | 14,678 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | AOCI Attributable to Parent [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,843 | $ 136 | $ (362) | $ (43) | $ 56,759 | $ (54,777) | $ 3,556 |
Beginning Balance, shares at Dec. 31, 2019 | 949,377 | 13,552,236 | 10,000 | ||||
Conversion of preferred stock to common | $ (1,843) | $ 10 | 1,833 | ||||
Conversion of preferred stock to common, shares | (949,377) | 1,067,443 | |||||
Preferred stock dividends declared, net of waived penalties by shareholders | 79 | 79 | |||||
Public offering, net of fees | $ 25 | 18,146 | 18,171 | ||||
Public offering, net of fees, shares | 2,465,000 | ||||||
Share-based compensation expense | 322 | 322 | |||||
Exercise of stock options | $ 3 | 206 | 209 | ||||
Exercise of stock options, shares | 343,100 | ||||||
Net loss | (6,518) | (6,518) | |||||
Ending balance, value at Dec. 31, 2020 | $ 174 | $ (362) | (43) | 77,187 | (61,295) | 15,661 | |
Ending Balance, shares at Dec. 31, 2020 | 17,427,779 | 10,000 | |||||
Public offering, net of fees | $ 13 | 5,543 | 5,556 | ||||
Public offering, net of fees, shares | 1,302,033 | ||||||
Restricted stock awarded | $ 1 | (1) | |||||
Restricted stock awarded, shares | 148,837 | ||||||
Share-based compensation expense | 1,260 | 1,260 | |||||
Exercise of stock options | $ 3 | 241 | 244 | ||||
Exercise of stock options, shares | 256,727 | ||||||
Net loss | (18,802) | (18,802) | |||||
Ending balance, value at Dec. 31, 2021 | $ 191 | $ (362) | $ (43) | $ 84,230 | $ (80,097) | $ 3,919 | |
Ending Balance, shares at Dec. 31, 2021 | 19,135,376 | 10,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities: | ||
Net loss | $ (18,802,000) | $ (6,518,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 780,000 | 231,000 |
Bad debt expense | 27,000 | 0 |
Stock-based compensation | 1,260,000 | 322,000 |
Noncash lease costs | 243,000 | 294,000 |
Loss on abandoned real estate operating lease | 0 | 1,092,000 |
Gain on extinguishment of debt | (635,000) | 0 |
Gain on modification of lease | (17,000) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 172,000 | 333,000 |
Prepaid expenses and other assets | 7,000 | (258,000) |
Accounts payable and accrued expenses | 25,000 | (334,000) |
Deferred revenue | 383,000 | (339,000) |
Net cash used in operating activities | (16,557,000) | (5,177,000) |
Investing Activities: | ||
Purchases of property and equipment | (1,064,000) | (320,000) |
Proceeds from sale of equipment | 1,000 | 0 |
Purchases of intangible assets – domain name | (85,000) | 0 |
Net cash used in investing activities | (1,148,000) | (320,000) |
Financing Activities: | ||
Proceeds from PPP loan payable | 0 | 629,000 |
Payments of dividends | 0 | (99,000) |
Principal payments on financing lease equipment | (699,000) | (43,000) |
Proceeds from public stock offering, net of fees | 5,556,000 | 18,171,000 |
Proceeds from stock options exercised | 244,000 | 209,000 |
Net cash provided by financing activities | 5,101,000 | 18,867,000 |
Net increase (decrease) in cash and cash equivalents | (12,604,000) | 13,370,000 |
Cash and cash equivalents at beginning of period | 16,704,000 | 3,334,000 |
Cash and cash equivalents at end of period | 4,100,000 | 16,704,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES: | ||
Cash paid for interest | 20,000 | 2,000 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Preferred stock dividends accrued | 0 | 79,000 |
Conversion of preferred stock to common stock | 0 | 1,843,000 |
Assets acquired under a Right of Use (“ROU”) operating lease | 489,000 | 824,000 |
Assets acquired under a ROU finance lease | $ 1,995,000 | $ 0 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business | 1. Description of Business Intrusion, Inc. (together with its consolidated subsidiaries, the “Company”, Intrusion”, “Intrusion Inc.”, “we”, “us”, “our”, or similar terms) was organized in Texas in September 1983 and reincorporated in Delaware in October 1995. Our principal executive offices are located at 101 East Park Boulevard, Suite 1200, Plano, Texas 75074, and our telephone number is (972) 234-6400. Our website URL is www.intrusion.com. We develop, sell and support products that protect any-sized company or government organization by fusing advanced threat intelligence with real-time mitigation to kill cyberattacks as they occur – including Zero-Days. We market and distribute our solutions through a direct sales force and value-added resellers. Our end-user customers include U.S. federal government entities, state and local government entities, and companies ranging in size from mid-market to large enterprises. Current Market Environment In March 2020, the World Health Organization declared the ongoing coronavirus (COVID-19) outbreak a pandemic and recommended containment and mitigation measures worldwide. Our customers were forced to allocate scarce and competing resources and balance budgetary demands placed upon them as a result of the effects of the coronavirus, mandatory quarantines, decreased travel, interruptions in workforce populations, scarcity of commodities, and similar economic and operational effects of the virus upon their own constituencies. These adverse effects resulted in decreased demand by many of our customers for our product offerings and cybersecurity solutions, negatively affecting revenue levels for the Company. We anticipate that our customers will continue to budget conservatively in the coming months, particularly as uncertainty remains about new strains and variants of the COVID-19 virus and potential future restrictions, slow-downs, or lock-downs. As of December 31, 2021, we had cash and cash equivalents of approximately $ 4,100,000 16,704,000 18,802,000 6,518,000 10,000,000 INTRUSION Shield TraceCop “(TraceCop™”) “Savant™ INTRUSION Shield |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation Our consolidated financial statements include our accounts and those of our wholly owned subsidiaries and are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used for, but not limited to, the accounting for doubtful accounts, sales discounts, sales returns, revenue recognition, warranty costs, depreciation, income taxes and stock-based compensation. Actual results could differ from these estimates. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We maintain cash balances that may at times exceed federally insured limits. Our cash balances are maintained at high-quality financial institutions, and we believe the credit risk related to these cash balances is minimal. As of December 31, 2021 and 2020, the Company had approximately $ 4,100,000 16,704,000 Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and an increase to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance. Our accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2021 and 2020, we had accounts receivable balance of $ 1,034,000 1,233,000 no Risk Concentration Financial instruments, which potentially subject us to concentrations of credit risk, consists primarily of cash and cash equivalents, investments and accounts receivable. Cash and cash equivalent deposits are at risk to the extent that they exceed Federal Deposit Insurance Corporation insured amounts. To minimize risk, we place our investments in U.S. government obligations, corporate securities and money market funds. Substantially all of our cash, cash equivalents and investments are maintained with two major U.S. financial institutions. We do not believe that we are subject to any unusual financial risk with our banking arrangements. We have not experienced any significant losses on our cash and cash equivalents. We sell our products to customers primarily in the United States. In the future, we may sell our products internationally. Fluctuations in currency exchange rates and adverse economic developments in foreign countries could adversely affect our operating results. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral. We maintain reserves for potential credit losses, and such losses, in the aggregate, have historically been minimal. Our operations are concentrated in one area—security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled 71.4 86.3 10 10 Prepaid Expenses Our prepaid expenses balance is primarily related to prepaid insurance, prepaid software, and other subscription services, which represents the unamortized balance of insurance premiums, or other prepaid services and products. These payments are amortized on a straight-line basis over the policy or service term. Property and Equipment Equipment, furniture and fixtures are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets. Such lives vary from 1 5 2 5 470,000 188,000 Long-Lived Assets We review long-lived assets, including property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows to be generated by the asset. If the carrying value exceeds the future undiscounted cash flows, the assets are written down to fair value. During the years ended December 31, 2021 and 2020, there was no Leases We account for leases using the guidance in FASB ASC 842. We evaluate new contracts at inception to determine if the contract conveys the right to control the use of an identified asset for a period of time in exchange for periodic payments. A lease exists if we obtain substantially all of the economic benefits of an asset, and we have the right to direct the use of that asset. When a lease exists, we record a right-of-use asset that represents our right to use the asset over the lease term and a lease liability that represents our obligation to make payments over the lease term. Lease liabilities are recorded at the sum of future lease payments discounted by the collateralized rate we could obtain to lease a similar asset over a similar period, and right-of-use assets are recorded equal to the corresponding lease liability, plus any prepaid or direct costs. At the time of adoption of ASC 842, we elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, we elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, or other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonable estimated. The Company is involved in various lawsuits, claims and administrative proceedings arising in the normal course of business. For additional information, see Note 9 – Commitments and Contingencies Accounting for Share-based Compensation Awards We account for share-based compensation awards using the guidance in FASB ASC Topic 718, Compensation-Stock Compensation Valuation Assumptions The fair values of option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions for fiscal years ended December 31, 2021 and 2020, respectively: Schedule of Share-based payment award, stock options, valuation assumptions 2021 2020 Weighted average grant date fair value $ 8.09 $ 3.50 Weighted average assumptions used: Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 0.70 % 0.41 % Expected volatility 66.72 % 75.70 % Expected life (in years) 4.29 5.93 Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award. Net Loss Per Share We report two separate net loss per share numbers, basic and diluted. Basic net loss attributable to common stockholders per share is computed by dividing net loss attributable to common stockholders for the year by the weighted average number of common shares outstanding for the year. Diluted net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders for the year by the weighted average number of common shares and dilutive common stock equivalents outstanding for the year. Our common stock equivalents include all common stock issuable upon conversion of convertible preferred stock and the exercise of outstanding options. The aggregate number of common stock equivalents excluded from the diluted loss per share calculation for the years ended December 31, 2021 and 2020 totaled 901,388 976,284 Revenue Recognition We generally recognize revenue upon shipment or after meeting certain performance obligations. Our products can include hardware, perpetual software licenses and data sets. Data set updates are the majority of our sales. Warranty costs and sales returns have not been material. We recognize sales of our data sets in accordance with FASB ASC Topic 606 whereby revenue from contracts with customers are recognized once the criteria under the five steps below are met: i) identify the contract with a customer; ii) identify the performance obligations in the contract; iii) determine the transaction price; iv) allocate the transaction price to the separate performance obligations; and v) recognize revenue upon satisfaction of a performance obligation. Data updates are typically done monthly and revenue is matched accordingly. Product sales may include maintenance and customer support allocated revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy using the relative selling price method. All of our product offering and service offering market values are readily determined based on current and prior stand-alone sales. We may defer and recognize maintenance, updates and support revenue over the term of the contract period, which is generally one year. Our normal payment terms offered to customers, distributors and resellers are net 30 days domestically and net 45 days internationally. We do not offer payment terms that extend beyond one year and rarely do we extend payment terms beyond our normal terms. If certain customers do not meet our credit standards, we do require payment in advance on some of our smaller sized customers, to limit our credit exposure. Shipping and handling costs are billed to the customer and included in revenue. Shipping and handling expenses are included in cost of revenue. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. With our newest product, INTRUSION Shield INTRUSION Shield We utilize the five-step process, mentioned above, per FASB ASC Topic 606 to recognize sales and will follow that directive, also, to define revenue items as individual and distinct. INTRUSION Shield · Access to our proprietary software and database to detect and prevent unauthorized access to our clients’ information networks; · Use of all software, associated media, printed materials, data, files, online documentation, and any equipment that we provide for customers to access the INTRUSION Shield · Tech support, post contract customer support (PCS) includes daily program releases or corrections provided by us without additional charge. The contract provided for no other services, and our customers have no rebates or return rights, nor are any such rights anticipated to be offered as part of this service. We satisfy our performance obligation when our INTRUSION Shield Our accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2021 and 2020, we had accounts receivable balance of $ 1,034,000 1,233,000 no We classify our contract assets as receivables because we generally have an unconditional right to payment for our sales or services performed at the end of the reporting period. As a result, we had no Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies deferred revenue as a contract liability. The following table presents changes in the Company’s contract liability during the years ended December 31, 2021 and 2020 (in thousands): Schedule of contract liability December 31, 2021 December 31, 2020 Balance at beginning of period $ 177 $ 516 Additions 1,953 353 Revenue recognized (1,570 ) (692 ) Balance at end of period $ 560 $ 177 Advertising Expenses The cost of advertising is expensed as incurred or deferred until first use of advertising and expensed ratably over the applicable periods. Advertising expense was $ 1.8 1.3 Research and Development Costs Costs incurred in the research and development of new software products are expensed as incurred until technological feasibility is established. We incur research and development costs that relate primarily to the development of new security software, appliances and integrated solutions, and major enhancements to existing services and products. Research and development costs are comprised primarily of salaries and related benefits expenses, contract labor and prototype and other expenses incurred during research and development efforts. Software development costs are included in research and development and are expensed as incurred. FASB ASC Topic 985 Software Foreign Currency All assets and liabilities in the balance sheets of foreign subsidiaries whose functional currency is other than the U.S. dollar are translated at year-end exchange rates. All revenues and expenses in the statement of operations of these foreign subsidiaries are translated at average exchange rates for the year. Translation gains and losses are not included in determining net income but are shown in accumulated other comprehensive loss in the stockholders’ deficit section of the consolidated balance sheet. Foreign currency transaction gains and losses are included in determining net loss and were not significant. Fair Value of Financial Instruments We calculate the fair value of our assets and liabilities which qualify as financial instruments and include additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Financing leases and PPP loan approximate fair value as they bear market rates of interest. None of these instruments are held for trading purposes. Income Taxes Deferred income taxes are determined using the liability method in accordance with FASB ASC 740, Accounting for Income Taxes FASB ASC 740 creates a single model to address accounting for uncertainty in tax positions by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. FASB ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. There are no unrecognized tax benefits to disclose in the notes to the consolidated financial statements. We file income tax returns in the United States federal jurisdiction. At December 31, 2021, tax returns related to fiscal years ended December 31, 2018 through December 31, 2020 remain open to possible examination by the tax authorities. No tax returns are currently under examination by any tax authorities. Recent Accounting Pronouncements Effective January 1, 2021, we adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which amends ASC 350-40, Internal-Use Software (“ASC 350-40”) to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350-40 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. To the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding amortization will be included in “Operating expenses” or “General and administrative” in the consolidated statements of operations, rather than “Depreciation and amortization.” The amortization related to cloud computing arrangements was not material for the year ended December 31, 2021. Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). The updates in ASU 2016-13 provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Because our receivables are typically paid within 30 days, and because we closely monitor the credit-worthiness of all our counterparties, adopting ASU 2016-13 did not have a material effect on our financial statements. However, in the event we foresee further or sustained deterioration in the current market environment, or other factors indicating an increased likelihood of defaults by our customers, we may recognize additional losses. |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Prepaid Expenses | |
Prepaid Expenses | 3. Prepaid Expenses Prepaid expenses included the following (dollars in thousands): Schedule of prepaid expenses December 31, 2021 2020 Prepaid insurance $ 105 $ 47 Prepaid rent 14 33 Prepaid licenses 80 3 Prepaid maintenance – 1 Prepaid other 157 286 Prepaid expenses $ 356 $ 370 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 4. Accrued Expenses Accrued expenses consisted of the following (dollars in thousands): Schedule of accrued liabilities December 31, 2021 2020 Accrued legal and professional fees $ 254 $ – Accrued payroll 211 228 Accrued vacation 22 278 Employee benefits payable – 31 Other 47 91 Total accrued expenses $ 534 $ 628 |
SBA Paycheck Protection Program
SBA Paycheck Protection Program Loan | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
SBA Paycheck Protection Program Loan | 5. SBA Paycheck Protection Program Loan On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which included the provision for a Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”). The PPP allows qualifying businesses to borrow up to $10 million calculated based on qualifying payroll costs. The loan was guaranteed by the federal government and did not require collateral. On April 30, 2020, we entered into a PPP Loan with Silicon Valley Bank, pursuant to the PPP under CARES Act for a principal amount of $ 629,000 April 30, 2022 1.0 We utilized the full proceeds of the PPP Loan in accordance with the provisions of the CARES Act and submitted the PPP Loan Forgiveness Application. On April 7, 2021, we received notice from SBA that the PPP Loan and accrued interest was forgiven in full. As a result, the Company recorded a gain in the extinguishment of debt of $ 635,000 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | 6. Employee Benefit Plan Employee 401(k) Plan We have a plan known as the Intrusion Inc. 401(k) Savings Plan (the “Plan”) to provide retirement and incidental benefits for our employees. The Plan covers substantially all employees who meet minimum age and service requirements. As allowed under Section 401(k) of the Internal Revenue Code, the Plan provides tax deferred salary deductions for eligible employees. Employees may contribute from 1 25 0.25 4 65,000 36,000 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets (liabilities) as of December 31, 2021 and 2020 are as follows (in thousands): Schedule of deferred tax assets and liabilities December 31 2021 2020 Net operating loss carryforwards $ 22,497 $ 19,965 Net operating loss carryforwards of foreign subsidiaries 56 374 Depreciation expense (94 ) (99 ) Stock-based compensation expense 52 53 Other 544 304 Net deferred tax assets 23,055 20,597 Valuation allowance for net deferred tax assets (23,055 ) (20,597 ) Net deferred tax assets, net of allowance $ – $ – Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the future benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the near to medium term. Management has considered these factors in determining the valuation allowance for 2021 and 2020. The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended December 31, 2021 and 2020 are as follows (in thousands): Schedule of effective income tax rate reconciliation 2021 2020 Reconciliation of income tax benefit to statutory rate: Income benefit at statutory rate $ (3,948 ) $ (1,369 ) State income taxes (benefit), net of federal income tax benefit (331 ) (121 ) Permanent differences (206 ) 60 Change in valuation allowance 2,458 1,425 Other 2,027 5 Income tax provision $ – $ – At December 31, 2021, we had federal net operating loss carryforwards of approximately $ 107.1 |
Right-of-use Asset and Leasing
Right-of-use Asset and Leasing Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Right-of-use Asset And Leasing Liabilities | |
Right-of-use Asset and Leasing Liabilities | 8. Right-of-use Asset and Leasing Liabilities We have operating and finance leases where we record the right-of-use assets and a related lease liability as required under ASC 842. The lease liabilities are determined by the net present value of total lease payments and amortized over the life of the lease. All obligations under our lease agreements are designed to terminate with the last scheduled payment. Our leases are for the following types of assets: · Computer hardware and copy machines - Our finance lease right-of-use assets consist of computer hardware and copy machines. These leases have a three-year life and are in various stages of completion. · Office space - Our operating lease right-of-use assets include rental agreements for our offices in Plano, TX and a data service center in Allen, TX. The Plano offices operating lease liability was modified during the year ended December 31, 2021, to add an additional floor of office space and terminate the prior lease. The modified lease has a life of one year and eleven months as of December 31, 2021. The data service center operating lease liability has a life of three years and ten months as of December 31, 2021. We also have an operating lease liability for our former corporate office in Richardson. The Richardson operating lease liability has a life of two years and eleven months as of December 31, 2021; however, the related right-of-use asset was fully impaired due to our abandonment of the lease as of December 31, 2020. See further discussion on the abandonment of this lease discussed below. Lease balances are recorded on the consolidated balance sheet as follows (in thousands): Schedule of lease information December 31, 2021 2020 Assets: Finance leases, right-of-use assets, net $ 1,709 $ 20 Operating leases, right-of-use assets, net 808 1,010 Total lease assets 2,517 1,030 Liabilities: Current: Finance leases liabilities, current portion 644 21 Operating leases liabilities, current portion 935 487 Non-current: Finance leases liability, noncurrent portion 673 – Operating lease liability, noncurrent portion 1,250 1,867 Total lease liabilities $ 3,502 $ 2,375 Weighted average remaining lease term – Finance leases 2.66 0.62 Weighted average remaining lease term – Operating leases 2.94 3.86 Weighted average discount rate – Finance leases 3.35 4.55 Weighted average discount rate – Operating leases 4.70 4.31 As the implicit rate is not readily determinable for the Company's lease agreement, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. This discount rate for the lease approximates SVB's prime rate. The gross amount of assets recorded under our finance leases were $ 3.2 1.2 Certain of our lease agreements have options to extend the lease for a certain period after the expiration of the initial term. We recognize the cost of a lease over the expected total term of the lease, including optional renewal periods that we can reasonably expect to exercise. We do not have material obligations whereby we guarantee a residual value on assets we lease, nor do our lease agreements impose restrictions or covenants that could affect our ability to make distributions. Lease Abandonment As a result of the breach of contract mentioned in Legal Proc dings 1.1 Schedule of Items Appearing on the Statement of Operations (in thousands): Lease cost table Year Ended December 30, 2021 December 31, 2020 Operating expense: Amortization expense – Finance ROU $ 306 $ 43 Lease expense – Operating ROU 341 380 Other expense: Interest expense – Finance ROU 20 2 Loss on abandoned lease – Operating ROU – 1,092 Total Lease Expense $ 667 $ 1,517 Other supplemental information related to our leases are as follows: Schedule of other supplemental information related to our leases Year Ended December 30, 2021 December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 33 $ 1,092 Operating cash flows for finance leases 306 43 Financing cash flows for finance leases (699 ) (43 ) Future minimum lease obligations consisted of the following as of December 31, 2021 (in thousands): Future minimum lease obligations Operating Finance Period ending December 31, ROU Leases ROU Leases Total 2022 $ 1,005 $ 679 $ 1,684 2023 705 679 1,384 2024 486 6 492 2025 115 1 116 2026 – – – $ 2,311 $ 1,365 $ 3,676 Less Interest* (126 ) (48 ) $ 2,185 $ 1,317 ____________________ * Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying consolidated statements of operations. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Change of Control and Severance Agreements Certain members of our management are parties to severance and change of control agreements with the Company. The severance and change in control agreements provide those individuals with severance payments in certain circumstances and prohibit such individuals from, among other things, competing with the Company during his or her employment. In addition, the severance and change of control agreements prohibit subject individuals from, among other things, disclosing confidential information about the Company and its products or interfering with a client or customer of the Company, in each case during his or her employment and for certain periods (including indefinite periods) following the termination of such person’s employment. Legal Proceedings We are periodically involved in various litigation claims arising in the normal course of business. We believe these actions are routine and incidental to the business. While the outcome of these actions cannot be predicted with certainty, we do not believe that any will have a material adverse impact on our business. Class Action Litigation On April 16, 2021, a purported class action lawsuit was filed in the United States District Court, Eastern District of Texas, Sherman Division, captioned Celeste v. Intrusion Inc. et al., Case No. 4:21-cv-00307 (E.D.Tex) against the Company, the Company’s chief financial officer, and now-former chief executive officer alleging, among other things, that the defendants made false and/or misleading statements or omissions about the Company’s business, operations, and prospects in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act. The Celeste lawsuit claims compensatory damages and legal fees. On May 14, 2021, a related purported class action lawsuit was filed in the United States District Court, Eastern District of Texas, Sherman Division, captioned Neely v. Intrusion Inc., et al., Case No. 4:12-cv-00374 (E.D. Tex.) against the Company, the Company’s chief financial officer, and now-former chief executive officer. The Neely lawsuit alleges the same violations under the federal securities laws as those alleged in the Celeste lawsuit. The Neely lawsuit also seeks compensatory damages and legal fees. On November 23, 2021, the Court consolidated the Celeste and Neely actions, and appointed a lead plaintiff and lead plaintiff’s counsel. The lead plaintiff filed his amended complaint on February 7, 2022. The amended complaint named the following additional parties as named defendants: Mr. Michael Paxton, a former director and executive officer; Mr. Gary Davis, a former officer, Mr. Joe Head, our current chief technology officer and a former director; and Mr. James Gero, a current director and chair of our compensation committee. Our current deadline to respond to the amended complaint is June 9, 2022. Our management believes the claims in the lawsuit are without merit and intend to defend our position vigorously. Our management is unable to predict the ultimate outcome and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome of the Class Action Litigation. Securities Investigation On August 8, 2021, the Company received a notification from the Securities and Exchange Commission, Division of Enforcement, that it was conducting an investigation captioned In the Matter of Intrusion Inc. and requesting the Company produce certain documents and information. On November 9, 2021, the Securities and Exchange Commission served a subpoena to the Company in connection with this investigation which formally requested substantially similar information as in the prior request. The Company is continuing to comply with the requests and is cooperating in the investigation. The Company can offer no assurances as to the outcome of this investigation or its potential effect on the Company or its results of operations. Lease Abandonment On February 16, 2021, Intrusion Inc. instituted legal proceedings in the District Court of Dallas County, Texas, 14th Judicial District against Purple Plaza LLC, the landlord for the facilities we previously occupied in Richardson, Texas. This lawsuit claims damages for breach of contract for, among other things, failure to maintain and repair the leased facilities and to provide adequate heating, air conditioning and ventilation on the premises, resulting in a constructive eviction. Intrusion is seeking damages in excess of $ 1,000,000 229,000 2,000,000 In addition to this pending litigation, we are subject to various other legal proceedings and claims that may arise in the ordinary course of business. We do not believe that any claims exist where the outcome of such matters would have a material adverse effect on our consolidated financial position, operating results or cash flows. However, there can be no assurance such legal proceedings will not have a material impact on future results. |
Employee Incentive Plans
Employee Incentive Plans | 12 Months Ended |
Dec. 31, 2021 | |
Employee Incentive Plans | |
Employee Incentive Plans | 10. Employee Incentive Plans We account for equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation We had three stock-based compensation plans at December 31, 2021 and two stock-based compensation plans at December 31, 2020. These plans which are described below, were developed to retain and attract key employees and directors. As of December 31, 2021, we recognized stock option expense of $ 985,000 275,000 1,260,000 322,000 The 2021 Omnibus Incentive Plan (the “2021 Plan”) During 2021, the Company added a new incentive 2021 Omnibus Incentive Plan (the “2021 Plan”). The purpose of the 2021 Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of common stock, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Company’s stockholders. The 2021 Plan is administered by the Compensation Committee of our Board of Directors and permits the grant of cash and equity-based awards, which may be awarded in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, other stock-based awards and other cash-based awards. The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the 2021 Plan shall not exceed 2,500,000 Restricted Stock Awards During the year ended December 31, 2021, the Company issued new Restricted Stock Awards (RSAs) under the 2021 Plan in the amount of $ 925,000 174,811 79,488 17,401 77,922 The following table summarizes the activities for the Company’s unvested RSAs in Intrusion Inc. stock for the year ended December 31, 2021: Schedule of unvested RSAs Unvested Restricted Stock Awards Number of Shares (in thousands) Weighted-Average Unvested as of December 31, 2020 – $ – Granted 175 5.29 Vested – – Forfeited/canceled (26 ) 3.85 Unvested as of December 31, 2021 149 $ 5.54 The Company recognized compensation expense related to its RSAs of $ 275,000 550,000 1.52 Stock Option Awards The Company also granted new option awards under the 2021 Plan to its employees with the option price for each option set at the closing price for the Company’s Common Stock on the Nasdaq Capital Market on the grant date (the “2021 Option Awards”) during the year ended December 31, 2021. Accordingly, 541,000 With recent employee resignations, terminations, and departures, a number of unexercised and unvested options were forfeited resulting in an addition of 315,000 25,974 The 2015 Stock Incentive Plan (“the “2015 Plan”) On March 19, 2015, the Board approved the 2015 Stock Incentive Plan (the “2015 Plan”), which was approved by the stockholders on May 14, 2015. The 2015 Plan serves as a replacement for the 2005 Plan which expired by its terms on June 14, 2015. The approval of the 2015 Plan had no effect on the 2005 Plan or any options granted pursuant to the plan. All options will continue with their existing terms and will be subject to the 2005 Plan. Further, the Company will not be able to re-issue any option which is cancelled or terminated under the 2005 Plan. The 2015 Plan provided for the issuance of up to 600,000 The 2015 Plan consists of three separate equity incentive programs: the Discretionary Option Grant Program; the Stock Issuance Program; and the Automatic Option Grant Program for non-employee Board members. Officers and employees, non-employee Board members and independent contractors are eligible to participate in the Discretionary Option Grant and Stock Issuance Programs. Participation in the Automatic Option Grant Program is limited to non-employee members of the Board. Each non-employee Board member will receive an option grant for 10,000 shares of common stock upon initial election or appointment to the Board, provided that such individual has not previously been employed by the Company in the preceding three (3) months. In addition, on the date of each annual stockholders meeting, each Board member will automatically be granted an option to purchase 10,000 shares of common stock, provided he or she has served as a non-employee Board member for at least three months. At December 31, 2021, 70,000 131,000 622,000 421,000 399,000 During the year ended December 31, 2021, the Board of Directors (“Board”) approved a new clause to the 2015 Plan, to accelerate the vesting of any unvested equity grants held by outside directors upon their retirement from the Board. Pursuant to the approval of the acceleration clause, during the second quarter of 2021, the equity awards held by two outside board members who retired from the Board in May 2021 became fully vested. The Company accounts for the acceleration of the related stock options as a modification of the option award under ASC 718. Accordingly, the Company recognized incremental stock compensation expense of approximately $ 237,000 The 2005 Stock Incentive Plan (the “2005 Plan”) On March 17, 2005, the Board approved the 2005 Stock Incentive Plan (the “2005 Plan”), which was approved by the stockholders on June 14, 2005. The 2005 Plan provided for the issuance of up to 750,000 shares of common stock upon exercise of options granted pursuant to the 2005 Plan. On May 30, 2007, the stockholders approved an Amendment to the 2005 Plan that increased this amount by 750,000 for a total of 1,500,000 3,700,000 2,093,062 260,273 3,892,000 1,538,665 no Stock Incentive Plan Summary A summary of our stock option activity and related information for the years ended December 31, 2021 and 2020 is as follows: Schedule of option activity 2021 2020 Number of Weighted Number of Weighted Outstanding at beginning of year 1,035 $ 2.87 975 $ 0.96 Granted at price – market value 606 12.99 403 5.56 Exercised (257 ) 0.97 (343 ) 0.61 Forfeited (634 ) 9.81 – – Expired (133 ) 2.82 – – Outstanding at end of year 617 $ 6.47 1,035 $ 2.87 Options exercisable at end of year 317 $ 1.56 601 $ 1.03 Stock Options Outstanding and Exercisable Information related to stock options outstanding at December 31, 2021, is summarized below: Schedule of stock options by exercise price Options Outstanding Options Exercisable Range of Exercise Prices Outstanding at Weighted Weighted Exercisable at Weighted $ 0.40 0.65 183 0.96 $ 0.55 183 $ 0.55 $ 1.15 1.725 8 6.38 $ 1.15 8 $ 1.15 $ 1.80 2.70 93 2.23 $ 1.84 93 $ 1.84 $ 3.78 5.67 88 8.92 $ 4.07 21 $ 4.43 $ 8.72 13.08 215 9.29 $ 12.31 12 $ 10.23 $ 23.52 35.28 30 9.17 $ 23.52 – $ – 617 5.65 $ 6.47 317 $ 1.56 Summarized information about outstanding stock options as of December 31, 2021, that are fully vested and those that are expected to vest in the future as well as stock options that are fully vested and currently exercisable, are as follows: Other information regarding stock options Outstanding Stock Options that are As of December 31, 2021 Number of outstanding options (in thousands) 617 317 Weighted average remaining contractual life 5.65 2.19 Weighted average exercise price per share $ 6.47 $ 1.56 Intrinsic value (in thousands) $ 733 $ 733 Common shares reserved for future issuance, including outstanding options, unvested RSAs and options available for future grant under all of the stock option plans totaled 3,290,000 Schedule of common shares reserved for future issuance (In thousands) Common Shares 2021 Plan 2,500 2015 Plan 530 2005 Plan 260 Total 3,290 The Compensation Committee of our Board of Directors determines for all employee options, the term of each option, option exercise price within limits set forth in the plans, number of shares for which each option is granted and the rate at which each option is exercisable (generally ratably over one, three or five years from grant date). However, the exercise price of any incentive stock option may not be less than the fair market value of the shares on the date granted (or less than 110% of the fair market value in the case of optionees holding more than 10% of our voting stock of the Company), and the term cannot exceed ten years (five years for incentive stock options granted to holders of more than 10% of our voting stock). As of December 31, 2021, the total unrecognized compensation cost related to non-vested options not yet recognized in the statement of operations totaled approximately $ 1,220,000 2.30 |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Common Stock | 11. Common Stock ATM Offering In August of 2021, we engaged B. Riley Securities, Inc. to act as sales agent under our at-the-market program, which allows us to potentially sell up to $50.0 million of our common stock on a delayed or continuous basis through the use of a shelf registration statement on Form S-3, which we initially filed on August 5, 2021. The shelf registration became effective on August 16, 2021. As of December 31, 2021, we have received proceeds of approximately $5.6 million net of fees from the sale of 1,302,033 shares of our common stock pursuant to the program. As of the date hereof, we have we have received proceeds of approximately $ 1,000,000 2,478,690 Secondary Public Offering of Common Stock In October of 2020, we completed a secondary public offering of 3,565,000 8.00 2,000,000 1,100,000 465,000 19,720,000 18,171,000 INTRUSION Shield On October 9, 2020, and in connection with the closing of our Secondary Public Offering, our stock began trading on the Nasdaq Capital Market (“Nasdaq”) under the symbol “INTZ”. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Preferred Stock | 12. Preferred Stock In August 2020, all current shares of issued and outstanding preferred stock were voluntarily converted, resulting in the issuance of a total of 1,067,443 Dividends Payable During the year ended December 31, 2020, we accrued $ 30,000 32,000 17,000 |
Subsequent Events.
Subsequent Events. | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events. | 13. Subsequent Events. On March 10, 2022, Intrusion Inc. entered into an unsecured loan agreement with Streeterville Capital, LLC whereby the Company can draw up to $10,000,000 in two separate tranches of $5,000,000 through our issuance of two separate promissory notes with an initial interest rate of 7%, subject to some increases in the case of, among other things, an event of default. Upon closing, we received funds from the first tranche on pursuant to a promissory note executed contemporaneously with the execution of the loan agreement. We will have the ability to draw the remaining funds in the second tranche provided we have met certain conditions under a second promissory note within 180 days of the execution of the loan agreement. Each notes has (or will have) an 18 month maturity, may be prepaid subject to varying prepayment premiums, and may be redeemed at any time after six months into the term of such note in amounts up to $500,000 per calendar month upon the noteholder’s election. The Company has the option, in its sole discretion, to satisfy any redemption demands in cash, shares of its common stock that will be issued in an amount equal to the dollar amount of the redemption demand divided by the number that represents 85% of the lowest daily volume weighted average price of the common stock over a ten-day trailing period. The loan agreement and accompanying notes are subject to standard and customary events of default, including, without limitation, the Company’s continued listing on the Nasdaq or New York Stock Exchange. One of the prerequisites for our drawing on the second tranche is the approval by our stockholders of the issuance of stock to satisfy any redemption demand, even if the shares issued in connection with all such redemptions exceeds 20% of our issued and outstanding shares of common stock. While the notes remain outstanding, we will be subject to certain conditions and restrictions, including, without limitation the following: the noteholder’s right to consent to any future variable rate transactions (excluding ATMs, equity offerings, or private placements without market adjustable features) and any debt (excluding bank loans, lines of credit, mortgagees, leases, or asset backed loans); the noteholder’s right to participate in any debt or equity financings, excluding (ATMS, loans, lines of credit, mortgagees, leases, or asset backed loans); a prohibition on the Company’s’ ability to extend or enter into any agreement restricting our ability to issue common stock under the notes; as well as a prohibition on our ability to permit any other lender to participate alongside the noteholder via any debt financing structures. Under our at-the-market offering, since January 1, 2022, we have received proceeds of approximately $1,000,000 net of fees from the sale of our common stock related to this program. Since the inception of the program in 2021, we have received proceeds of approximately $6,600,000 net of fees from the sale of our common stock related to this program. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our consolidated financial statements include our accounts and those of our wholly owned subsidiaries and are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are used for, but not limited to, the accounting for doubtful accounts, sales discounts, sales returns, revenue recognition, warranty costs, depreciation, income taxes and stock-based compensation. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We maintain cash balances that may at times exceed federally insured limits. Our cash balances are maintained at high-quality financial institutions, and we believe the credit risk related to these cash balances is minimal. As of December 31, 2021 and 2020, the Company had approximately $ 4,100,000 16,704,000 |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of our customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, we provide for estimated uncollectible amounts through a charge to earnings and an increase to a valuation allowance. Balances that remain outstanding after we have used reasonable collection efforts are written off through a charge to the valuation allowance. Our accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2021 and 2020, we had accounts receivable balance of $ 1,034,000 1,233,000 no |
Risk Concentration | Risk Concentration Financial instruments, which potentially subject us to concentrations of credit risk, consists primarily of cash and cash equivalents, investments and accounts receivable. Cash and cash equivalent deposits are at risk to the extent that they exceed Federal Deposit Insurance Corporation insured amounts. To minimize risk, we place our investments in U.S. government obligations, corporate securities and money market funds. Substantially all of our cash, cash equivalents and investments are maintained with two major U.S. financial institutions. We do not believe that we are subject to any unusual financial risk with our banking arrangements. We have not experienced any significant losses on our cash and cash equivalents. We sell our products to customers primarily in the United States. In the future, we may sell our products internationally. Fluctuations in currency exchange rates and adverse economic developments in foreign countries could adversely affect our operating results. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral. We maintain reserves for potential credit losses, and such losses, in the aggregate, have historically been minimal. Our operations are concentrated in one area—security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled 71.4 86.3 10 10 |
Prepaid Expenses | Prepaid Expenses Our prepaid expenses balance is primarily related to prepaid insurance, prepaid software, and other subscription services, which represents the unamortized balance of insurance premiums, or other prepaid services and products. These payments are amortized on a straight-line basis over the policy or service term. |
Property and Equipment | Property and Equipment Equipment, furniture and fixtures are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets. Such lives vary from 1 5 2 5 470,000 188,000 |
Long-Lived Assets | Long-Lived Assets We review long-lived assets, including property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows to be generated by the asset. If the carrying value exceeds the future undiscounted cash flows, the assets are written down to fair value. During the years ended December 31, 2021 and 2020, there was no |
Leases | Leases We account for leases using the guidance in FASB ASC 842. We evaluate new contracts at inception to determine if the contract conveys the right to control the use of an identified asset for a period of time in exchange for periodic payments. A lease exists if we obtain substantially all of the economic benefits of an asset, and we have the right to direct the use of that asset. When a lease exists, we record a right-of-use asset that represents our right to use the asset over the lease term and a lease liability that represents our obligation to make payments over the lease term. Lease liabilities are recorded at the sum of future lease payments discounted by the collateralized rate we could obtain to lease a similar asset over a similar period, and right-of-use assets are recorded equal to the corresponding lease liability, plus any prepaid or direct costs. At the time of adoption of ASC 842, we elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, we elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less. |
Commitments and Contingencies | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, or other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonable estimated. The Company is involved in various lawsuits, claims and administrative proceedings arising in the normal course of business. For additional information, see Note 9 – Commitments and Contingencies |
Accounting for Share-based Compensation Awards | Accounting for Share-based Compensation Awards We account for share-based compensation awards using the guidance in FASB ASC Topic 718, Compensation-Stock Compensation |
Valuation Assumptions | Valuation Assumptions The fair values of option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions for fiscal years ended December 31, 2021 and 2020, respectively: Schedule of Share-based payment award, stock options, valuation assumptions 2021 2020 Weighted average grant date fair value $ 8.09 $ 3.50 Weighted average assumptions used: Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 0.70 % 0.41 % Expected volatility 66.72 % 75.70 % Expected life (in years) 4.29 5.93 Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award. |
Net Loss Per Share | Net Loss Per Share We report two separate net loss per share numbers, basic and diluted. Basic net loss attributable to common stockholders per share is computed by dividing net loss attributable to common stockholders for the year by the weighted average number of common shares outstanding for the year. Diluted net loss attributable to common stockholders per share is computed by dividing the net loss attributable to common stockholders for the year by the weighted average number of common shares and dilutive common stock equivalents outstanding for the year. Our common stock equivalents include all common stock issuable upon conversion of convertible preferred stock and the exercise of outstanding options. The aggregate number of common stock equivalents excluded from the diluted loss per share calculation for the years ended December 31, 2021 and 2020 totaled 901,388 976,284 |
Revenue Recognition | Revenue Recognition We generally recognize revenue upon shipment or after meeting certain performance obligations. Our products can include hardware, perpetual software licenses and data sets. Data set updates are the majority of our sales. Warranty costs and sales returns have not been material. We recognize sales of our data sets in accordance with FASB ASC Topic 606 whereby revenue from contracts with customers are recognized once the criteria under the five steps below are met: i) identify the contract with a customer; ii) identify the performance obligations in the contract; iii) determine the transaction price; iv) allocate the transaction price to the separate performance obligations; and v) recognize revenue upon satisfaction of a performance obligation. Data updates are typically done monthly and revenue is matched accordingly. Product sales may include maintenance and customer support allocated revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy using the relative selling price method. All of our product offering and service offering market values are readily determined based on current and prior stand-alone sales. We may defer and recognize maintenance, updates and support revenue over the term of the contract period, which is generally one year. Our normal payment terms offered to customers, distributors and resellers are net 30 days domestically and net 45 days internationally. We do not offer payment terms that extend beyond one year and rarely do we extend payment terms beyond our normal terms. If certain customers do not meet our credit standards, we do require payment in advance on some of our smaller sized customers, to limit our credit exposure. Shipping and handling costs are billed to the customer and included in revenue. Shipping and handling expenses are included in cost of revenue. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. With our newest product, INTRUSION Shield INTRUSION Shield We utilize the five-step process, mentioned above, per FASB ASC Topic 606 to recognize sales and will follow that directive, also, to define revenue items as individual and distinct. INTRUSION Shield · Access to our proprietary software and database to detect and prevent unauthorized access to our clients’ information networks; · Use of all software, associated media, printed materials, data, files, online documentation, and any equipment that we provide for customers to access the INTRUSION Shield · Tech support, post contract customer support (PCS) includes daily program releases or corrections provided by us without additional charge. The contract provided for no other services, and our customers have no rebates or return rights, nor are any such rights anticipated to be offered as part of this service. We satisfy our performance obligation when our INTRUSION Shield Our accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2021 and 2020, we had accounts receivable balance of $ 1,034,000 1,233,000 no We classify our contract assets as receivables because we generally have an unconditional right to payment for our sales or services performed at the end of the reporting period. As a result, we had no Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies deferred revenue as a contract liability. The following table presents changes in the Company’s contract liability during the years ended December 31, 2021 and 2020 (in thousands): Schedule of contract liability December 31, 2021 December 31, 2020 Balance at beginning of period $ 177 $ 516 Additions 1,953 353 Revenue recognized (1,570 ) (692 ) Balance at end of period $ 560 $ 177 |
Advertising Expenses | Advertising Expenses The cost of advertising is expensed as incurred or deferred until first use of advertising and expensed ratably over the applicable periods. Advertising expense was $ 1.8 1.3 |
Research and Development Costs | Research and Development Costs Costs incurred in the research and development of new software products are expensed as incurred until technological feasibility is established. We incur research and development costs that relate primarily to the development of new security software, appliances and integrated solutions, and major enhancements to existing services and products. Research and development costs are comprised primarily of salaries and related benefits expenses, contract labor and prototype and other expenses incurred during research and development efforts. Software development costs are included in research and development and are expensed as incurred. FASB ASC Topic 985 Software |
Foreign Currency | Foreign Currency All assets and liabilities in the balance sheets of foreign subsidiaries whose functional currency is other than the U.S. dollar are translated at year-end exchange rates. All revenues and expenses in the statement of operations of these foreign subsidiaries are translated at average exchange rates for the year. Translation gains and losses are not included in determining net income but are shown in accumulated other comprehensive loss in the stockholders’ deficit section of the consolidated balance sheet. Foreign currency transaction gains and losses are included in determining net loss and were not significant. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We calculate the fair value of our assets and liabilities which qualify as financial instruments and include additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Financing leases and PPP loan approximate fair value as they bear market rates of interest. None of these instruments are held for trading purposes. |
Income Taxes | Income Taxes Deferred income taxes are determined using the liability method in accordance with FASB ASC 740, Accounting for Income Taxes FASB ASC 740 creates a single model to address accounting for uncertainty in tax positions by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. FASB ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. There are no unrecognized tax benefits to disclose in the notes to the consolidated financial statements. We file income tax returns in the United States federal jurisdiction. At December 31, 2021, tax returns related to fiscal years ended December 31, 2018 through December 31, 2020 remain open to possible examination by the tax authorities. No tax returns are currently under examination by any tax authorities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2021, we adopted ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which amends ASC 350-40, Internal-Use Software (“ASC 350-40”) to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350-40 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. To the extent costs incurred in a cloud computing arrangement are capitalizable, the corresponding amortization will be included in “Operating expenses” or “General and administrative” in the consolidated statements of operations, rather than “Depreciation and amortization.” The amortization related to cloud computing arrangements was not material for the year ended December 31, 2021. Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). The updates in ASU 2016-13 provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Because our receivables are typically paid within 30 days, and because we closely monitor the credit-worthiness of all our counterparties, adopting ASU 2016-13 did not have a material effect on our financial statements. However, in the event we foresee further or sustained deterioration in the current market environment, or other factors indicating an increased likelihood of defaults by our customers, we may recognize additional losses. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Share-based payment award, stock options, valuation assumptions | Schedule of Share-based payment award, stock options, valuation assumptions 2021 2020 Weighted average grant date fair value $ 8.09 $ 3.50 Weighted average assumptions used: Expected dividend yield 0.00 % 0.00 % Risk-free interest rate 0.70 % 0.41 % Expected volatility 66.72 % 75.70 % Expected life (in years) 4.29 5.93 |
Schedule of contract liability | Schedule of contract liability December 31, 2021 December 31, 2020 Balance at beginning of period $ 177 $ 516 Additions 1,953 353 Revenue recognized (1,570 ) (692 ) Balance at end of period $ 560 $ 177 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Prepaid Expenses | |
Schedule of prepaid expenses | Schedule of prepaid expenses December 31, 2021 2020 Prepaid insurance $ 105 $ 47 Prepaid rent 14 33 Prepaid licenses 80 3 Prepaid maintenance – 1 Prepaid other 157 286 Prepaid expenses $ 356 $ 370 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Schedule of accrued liabilities December 31, 2021 2020 Accrued legal and professional fees $ 254 $ – Accrued payroll 211 228 Accrued vacation 22 278 Employee benefits payable – 31 Other 47 91 Total accrued expenses $ 534 $ 628 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | Schedule of deferred tax assets and liabilities December 31 2021 2020 Net operating loss carryforwards $ 22,497 $ 19,965 Net operating loss carryforwards of foreign subsidiaries 56 374 Depreciation expense (94 ) (99 ) Stock-based compensation expense 52 53 Other 544 304 Net deferred tax assets 23,055 20,597 Valuation allowance for net deferred tax assets (23,055 ) (20,597 ) Net deferred tax assets, net of allowance $ – $ – |
Schedule of effective income tax rate reconciliation | Schedule of effective income tax rate reconciliation 2021 2020 Reconciliation of income tax benefit to statutory rate: Income benefit at statutory rate $ (3,948 ) $ (1,369 ) State income taxes (benefit), net of federal income tax benefit (331 ) (121 ) Permanent differences (206 ) 60 Change in valuation allowance 2,458 1,425 Other 2,027 5 Income tax provision $ – $ – |
Right-of-use Asset and Leasin_2
Right-of-use Asset and Leasing Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Right-of-use Asset And Leasing Liabilities | |
Schedule of lease information | Schedule of lease information December 31, 2021 2020 Assets: Finance leases, right-of-use assets, net $ 1,709 $ 20 Operating leases, right-of-use assets, net 808 1,010 Total lease assets 2,517 1,030 Liabilities: Current: Finance leases liabilities, current portion 644 21 Operating leases liabilities, current portion 935 487 Non-current: Finance leases liability, noncurrent portion 673 – Operating lease liability, noncurrent portion 1,250 1,867 Total lease liabilities $ 3,502 $ 2,375 Weighted average remaining lease term – Finance leases 2.66 0.62 Weighted average remaining lease term – Operating leases 2.94 3.86 Weighted average discount rate – Finance leases 3.35 4.55 Weighted average discount rate – Operating leases 4.70 4.31 |
Lease cost table | Lease cost table Year Ended December 30, 2021 December 31, 2020 Operating expense: Amortization expense – Finance ROU $ 306 $ 43 Lease expense – Operating ROU 341 380 Other expense: Interest expense – Finance ROU 20 2 Loss on abandoned lease – Operating ROU – 1,092 Total Lease Expense $ 667 $ 1,517 |
Schedule of other supplemental information related to our leases | Schedule of other supplemental information related to our leases Year Ended December 30, 2021 December 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 33 $ 1,092 Operating cash flows for finance leases 306 43 Financing cash flows for finance leases (699 ) (43 ) |
Future minimum lease obligations | Future minimum lease obligations Operating Finance Period ending December 31, ROU Leases ROU Leases Total 2022 $ 1,005 $ 679 $ 1,684 2023 705 679 1,384 2024 486 6 492 2025 115 1 116 2026 – – – $ 2,311 $ 1,365 $ 3,676 Less Interest* (126 ) (48 ) $ 2,185 $ 1,317 ____________________ * Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying consolidated statements of operations. |
Employee Incentive Plans (Table
Employee Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Employee Incentive Plans | |
Schedule of unvested RSAs | Schedule of unvested RSAs Unvested Restricted Stock Awards Number of Shares (in thousands) Weighted-Average Unvested as of December 31, 2020 – $ – Granted 175 5.29 Vested – – Forfeited/canceled (26 ) 3.85 Unvested as of December 31, 2021 149 $ 5.54 |
Schedule of option activity | Schedule of option activity 2021 2020 Number of Weighted Number of Weighted Outstanding at beginning of year 1,035 $ 2.87 975 $ 0.96 Granted at price – market value 606 12.99 403 5.56 Exercised (257 ) 0.97 (343 ) 0.61 Forfeited (634 ) 9.81 – – Expired (133 ) 2.82 – – Outstanding at end of year 617 $ 6.47 1,035 $ 2.87 Options exercisable at end of year 317 $ 1.56 601 $ 1.03 |
Schedule of stock options by exercise price | Schedule of stock options by exercise price Options Outstanding Options Exercisable Range of Exercise Prices Outstanding at Weighted Weighted Exercisable at Weighted $ 0.40 0.65 183 0.96 $ 0.55 183 $ 0.55 $ 1.15 1.725 8 6.38 $ 1.15 8 $ 1.15 $ 1.80 2.70 93 2.23 $ 1.84 93 $ 1.84 $ 3.78 5.67 88 8.92 $ 4.07 21 $ 4.43 $ 8.72 13.08 215 9.29 $ 12.31 12 $ 10.23 $ 23.52 35.28 30 9.17 $ 23.52 – $ – 617 5.65 $ 6.47 317 $ 1.56 |
Other information regarding stock options | Other information regarding stock options Outstanding Stock Options that are As of December 31, 2021 Number of outstanding options (in thousands) 617 317 Weighted average remaining contractual life 5.65 2.19 Weighted average exercise price per share $ 6.47 $ 1.56 Intrinsic value (in thousands) $ 733 $ 733 |
Schedule of common shares reserved for future issuance | Schedule of common shares reserved for future issuance (In thousands) Common Shares 2021 Plan 2,500 2015 Plan 530 2005 Plan 260 Total 3,290 |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Cash and Cash Equivalents, at Carrying Value | $ 4,100,000 | $ 16,704,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 18,802,000 | $ 6,518,000 |
Paycheck Protection Program CARES Act [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Debt and Equity Securities, Gain (Loss) | $ 10,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details - Valuation Assumptions) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Weighted average grant date fair value | $ 8.09 | $ 3.50 |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 0.70% | 0.41% |
Expected volatility | 66.72% | 75.70% |
Expected life (in years) | 4 years 3 months 14 days | 5 years 11 months 4 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details - Contract liability) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Beginning Balance | $ 177 | $ 516 |
Additions | 1,953 | 353 |
Revenue recognized | (1,570) | (692) |
Ending Balance | $ 560 | $ 177 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||
Cash and cash equivalents | $ 4,100,000 | $ 16,704,000 |
Accounts receivable | 1,034,000 | 1,233,000 |
Allowance for Doubtful Accounts | 0 | 0 |
Property and equipment | 470,000 | 188,000 |
Impairment of long-lived assets | $ 0 | $ 0 |
Anti-dilutive securities | 901,388 | 976,284 |
Accounts Receivable | $ 1,034,000 | $ 1,233,000 |
Contract assets | 0 | 0 |
Advertising expenses | $ 1,800,000 | $ 1,300,000 |
Equipment And Furniture And Fixtures [Member] | Minimum [Member] | ||
Product Information [Line Items] | ||
Property and equipment, useful lives | 1 year | 5 years |
Leasehold Improvements [Member] | Minimum [Member] | ||
Product Information [Line Items] | ||
Property and equipment, useful lives | 2 years | 5 years |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Seven Government Customers [Member] | ||
Product Information [Line Items] | ||
Percentage of revenues | 71.40% | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Five Government Customers [Member] | ||
Product Information [Line Items] | ||
Percentage of revenues | 86.30% | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Government Customers And One Commercial Customer [Member] | ||
Product Information [Line Items] | ||
Percentage of revenues | 10.00% | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Government Customers [Member] | ||
Product Information [Line Items] | ||
Percentage of revenues | 10.00% |
Prepaid expenses (Details - Pre
Prepaid expenses (Details - Prepaid Expenses) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Prepaid Expenses | ||
Prepaid insurance | $ 105 | $ 47 |
Prepaid rent | 14 | 33 |
Prepaid licenses | 80 | 3 |
Prepaid maintenance | 0 | 1 |
Prepaid other | 157 | 286 |
Prepaid expenses | $ 356 | $ 370 |
Accrued Expenses (Details - Acc
Accrued Expenses (Details - Accrued Expenses) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued legal and professional fees | $ 254 | $ 0 |
Accrued payroll | 211 | 228 |
Accrued vacation | 22 | 278 |
Employee benefits payable | 0 | 31 |
Other | 47 | 91 |
Total accrued expenses | $ 534 | $ 628 |
SBA Paycheck Protection Progr_2
SBA Paycheck Protection Program Loan (Details Narrative) - USD ($) | 4 Months Ended | 12 Months Ended | |
Apr. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Proceeds from PPP Loan | $ 0 | $ 629,000 | |
Gain on extinguishment of debt | 635,000 | $ 0 | |
Paycheck Protection Program CARES Act [Member] | |||
Debt Instrument [Line Items] | |||
Proceeds from PPP Loan | $ 629,000 | ||
Debt maturity date | Apr. 30, 2022 | ||
Interest rate | 1.00% | ||
Gain on extinguishment of debt | $ 635,000 |
Employee Benefit Plan (Details
Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Contribution Plan, Employer Matching Contribution Rate | $ 0.0025 | |
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 4.00% | |
Defined Contribution Plan, Cost | $ 65,000 | $ 36,000 |
Minimum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Define Contribution Plan, Percentage of Contribution by Employees | 1.00% | |
Maximum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Define Contribution Plan, Percentage of Contribution by Employees | 25.00% |
Income Taxes (Details - Deferre
Income Taxes (Details - Deferred Tax Assets and Liabilities) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 22,497 | $ 19,965 |
Net operating loss carryforwards of foreign subsidiaries | 56 | 374 |
Depreciation expense | (94) | (99) |
Stock-based compensation expense | 52 | 53 |
Other | 544 | 304 |
Net deferred tax assets | 23,055 | 20,597 |
Valuation allowance for net deferred tax assets | (23,055) | (20,597) |
Net deferred tax assets, net of allowance | $ 0 | $ 0 |
Income Taxes (Details - Income
Income Taxes (Details - Income Tax Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of income tax benefit to statutory rate: | ||
Income benefit at statutory rate | $ (3,948) | $ (1,369) |
State income taxes (benefit), net of federal income tax benefit | (331) | (121) |
Permanent differences | (206) | 60 |
Change in valuation allowance | 2,458 | 1,425 |
Other | 2,027 | 5 |
Income tax provision | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) $ in Thousands | Dec. 31, 2021USD ($) |
Income Tax Disclosure [Abstract] | |
Operating loss carryforwards | $ 107,100 |
Right-of-use Asset and Leasin_3
Right-of-use Asset and Leasing Liabilities (Details - Consolidated Balance Sheet) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Right-of-use Asset And Leasing Liabilities | ||
Finance leases, right-of-use assets, net | $ 1,709 | $ 20 |
Operating leases, right-of-use assets, net | 808 | 1,010 |
Total lease assets | 2,517 | 1,030 |
Finance leases liabilities, current portion | 644 | 21 |
Operating leases liabilities, current portion | 935 | 487 |
Finance leases liability, noncurrent portion | 673 | 0 |
Operating lease liability, noncurrent portion | 1,250 | 1,867 |
Total lease liabilities | $ 3,502 | $ 2,375 |
Weighted average remaining lease term - Finance leases | 2 years 7 months 28 days | 7 months 13 days |
Weighted average remaining lease term - Operating leases | 2 years 11 months 8 days | 3 years 10 months 9 days |
Weighted average discount rate - Finance leases | 3.35% | 4.55% |
Weighted average discount rate - Operating leases | 4.70% | 4.31% |
Right-of-use Asset and Leasin_4
Right-of-use Asset and Leasing Liabilities (Details - Income Statement) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Right-of-use Asset And Leasing Liabilities | ||
Amortization expense – Finance ROU | $ 306 | $ 43 |
Lease expense – Operating ROU | 341 | 380 |
Interest expense – Finance ROU | 20 | 2 |
Loss on abandoned lease – Operating ROU | 0 | 1,092 |
Total Lease Expense | $ 667 | $ 1,517 |
Right-of-use Asset and Leasin_5
Right-of-use Asset and Leasing Liabilities (Details - Other supplemental information) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Right-of-use Asset And Leasing Liabilities | ||
Operating cash flows for operating leases | $ 33 | $ 1,092 |
Operating cash flows for finance leases | 306 | 43 |
Financing cash flows for finance leases | $ (699) | $ (43) |
Right-of-use Asset and Leasin_6
Right-of-use Asset and Leasing Liabilities (Details - Future Minimum Lease Obligations) $ in Thousands | Dec. 31, 2021USD ($) | |
Operating ROU Leases 2022 | $ 1,005 | |
Finance ROU Leases 2022 | 679 | |
Total 2022 | 1,684 | |
Total 2023 | 1,384 | |
Total 2024 | 492 | |
Total 2025 | 116 | |
Total 2026 | 0 | |
Total | 3,676 | |
Finance Leases [Member] | ||
Finance ROU Leases 2023 | 679 | |
Finance ROU Leases 2024 | 6 | |
Finance ROU Leases 2025 | 1 | |
Finance ROU Leases 2026 | 0 | |
Finance ROU Leases Due | 1,365 | |
Less: Finance ROU Leases, Interest | (48) | [1] |
Finance ROU Leases | 1,317 | |
Operating Leases [Member] | ||
Operating ROU Leases 2023 | 705 | |
Operating ROU Leases 2024 | 486 | |
Operating ROU Leases 2025 | 115 | |
Operating ROU Leases 2026 | 0 | |
Operating ROU Leases Due | 2,311 | |
Operating ROU Leases Interest | (126) | [1] |
Operating ROU Leases | $ 2,185 | |
[1] | Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying consolidated statements of operations. |
Right-of-use Asset and Leasin_7
Right-of-use Asset and Leasing Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Right-of-use Asset And Leasing Liabilities | ||
Finance leases | $ 3,200,000 | $ 1,200,000 |
Lease abandonment charges | $ 1,000,000 | $ 1,100,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Lease abandonment charges | $ 1,000,000 | $ 1,100,000 |
Rent paid | 229,000 | |
Duty to mitigate damages | $ 2,000,000 |
Employee Incentive Plans (Detai
Employee Incentive Plans (Details - Unvested Restricted Stock Awards) shares in Thousands | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Employee Incentive Plans | |
Number of Shares, Beginning Balance | shares | 0 |
Weighted-Average Grant-Date Fair Value, Beginning Balance | $ / shares | $ 0 |
Number of Shares Granted | shares | 175 |
Weighted-Average Grant-Date Fair Value Granted | $ / shares | $ 5.29 |
Number of Shares Vested | shares | 0 |
Weighted-Average Grant-Date Fair Value Vested | $ / shares | $ 0 |
Number of Shares Forfeited/canceled | shares | (26) |
Weighted-Average Grant-Date Fair Value Forfeited/canceled | $ / shares | $ 3.85 |
Number of Shares, Ending balance | shares | 149 |
Weighted-Average Grant-Date Fair Value, Ending balance | $ / shares | $ 5.54 |
Employee Incentive Plans (Det_2
Employee Incentive Plans (Details - Stock Options Activity) - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Incentive Plans | ||
Number of Options Outstanding, Beginning | 1,035 | 975 |
Weighted Average Exercise Price, Beginning | $ 2.87 | $ 0.96 |
Number of Options Outstanding, Granted at price = market value | 606 | 403 |
Weighted Average Exercise Price, Granted at price = market value | $ 12.99 | $ 5.56 |
Number of Options Outstanding, Exercised | (257) | (343) |
Weighted Average Exercise Price, Exercised | $ 0.97 | $ 0.61 |
Number of Options Outstanding, Forfeited | (634) | 0 |
Weighted Average Exercise Price, Forfeited | $ 9.81 | $ 0 |
Number of Options Outstanding, Expired | (133) | 0 |
Weighted Average Exercise Price, Expired | $ 2.82 | $ 0 |
Number of Options Outstanding, Expired | 133 | 0 |
Number of Options Outstanding, Ending | 617 | 1,035 |
Weighted Average Exercise Price, Ending | $ 6.47 | $ 2.87 |
Number of Options Exercisable | 317 | 601 |
Weighted Average Exercise Price, Exercisable | $ 1.56 | $ 1.03 |
Employee Incentive Plans (Det_3
Employee Incentive Plans (Details - Disclosure - 9. Stock Options (Details - Exercise Price) shares in Thousands | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Options Outstanding | shares | 617 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 5 years 7 months 24 days |
Options Outstanding Weighted Average Exercise Price | $ 6.47 |
Options Exercisable | shares | 317 |
Options Exercisable Weighted Average Exercise Price | $ 1.56 |
Range 1 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 0.40 |
Exercise price, high end of range | $ 0.65 |
Options Outstanding | shares | 183 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 11 months 15 days |
Options Outstanding Weighted Average Exercise Price | $ 0.55 |
Options Exercisable | shares | 183 |
Options Exercisable Weighted Average Exercise Price | $ 0.55 |
Range 2 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 1.15 |
Exercise price, high end of range | $ 1.725 |
Options Outstanding | shares | 8 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 6 years 4 months 17 days |
Options Outstanding Weighted Average Exercise Price | $ 1.15 |
Options Exercisable | shares | 8 |
Options Exercisable Weighted Average Exercise Price | $ 1.15 |
Range 3 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 1.80 |
Exercise price, high end of range | $ 2.70 |
Options Outstanding | shares | 93 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 2 years 2 months 23 days |
Options Outstanding Weighted Average Exercise Price | $ 1.84 |
Options Exercisable | shares | 93 |
Options Exercisable Weighted Average Exercise Price | $ 1.84 |
Range 4 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 3.78 |
Exercise price, high end of range | $ 5.67 |
Options Outstanding | shares | 88 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 8 years 11 months 1 day |
Options Outstanding Weighted Average Exercise Price | $ 4.07 |
Options Exercisable | shares | 21 |
Options Exercisable Weighted Average Exercise Price | $ 4.43 |
Range 5 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 8.72 |
Exercise price, high end of range | $ 13.08 |
Options Outstanding | shares | 215 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 9 years 3 months 14 days |
Options Outstanding Weighted Average Exercise Price | $ 12.31 |
Options Exercisable | shares | 12 |
Options Exercisable Weighted Average Exercise Price | $ 10.23 |
Range 6 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 23.52 |
Exercise price, high end of range | $ 35.28 |
Options Outstanding | shares | 30 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 9 years 2 months 1 day |
Options Outstanding Weighted Average Exercise Price | $ 23.52 |
Options Exercisable | shares | 0 |
Options Exercisable Weighted Average Exercise Price | $ 0 |
Employee Incentive Plans (Det_4
Employee Incentive Plans (Details - Outstanding) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Incentive Plans | ||
Number of outstanding options, Vested and expected to vest | 617 | |
Number of outstanding options, Exercisable | 317 | 601 |
Weighted average remaining contractual life, Vested and expected to vest | 5 years 7 months 24 days | |
Weighted average remaining contractual life, Exercisable | 2 years 2 months 8 days | |
Weighted average exercise price per share, Vested and expected to vest | $ 6.47 | |
Weighted average exercise price per share, Exercisable | $ 1.56 | $ 1.03 |
Intrinsic value, Vested and expected to vest | $ 733 | |
Intrinsic value, Exercisable | $ 733 |
Employee Incentive Plans (Det_5
Employee Incentive Plans (Details - Future Stock Option Plans) | Dec. 31, 2021shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 3,290,000 |
2021 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 2,500,000 |
2015 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 530,000 |
2005 Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 260,000 |
Employee Incentive Plans (Det_6
Employee Incentive Plans (Details Narrative) - USD ($) | 12 Months Ended | 81 Months Ended | 201 Months Ended | |||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2019 | Mar. 19, 2015 | May 17, 2012 | Mar. 17, 2005 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock compensation expense | $ 1,260,000 | $ 322,000 | ||||||
RSA's expected to vest | 0 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 26,000 | |||||||
Options outstanding | 617,000 | 1,035,000 | 617,000 | 617,000 | 975,000 | |||
Common stock, options and RSA's available for future issuance | 3,290,000 | 3,290,000 | 3,290,000 | |||||
2021 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Authorized | 2,500,000 | 2,500,000 | 2,500,000 | |||||
Common stock, options and RSA's available for future issuance | 2,500,000 | 2,500,000 | 2,500,000 | |||||
2015 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock compensation expense | $ 237,000 | |||||||
Number of Shares Authorized | 600,000 | |||||||
Common stock, options and RSA's available for future issuance | 530,000 | 530,000 | 530,000 | |||||
2005 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Authorized | 3,700,000 | 1,500,000 | ||||||
Common stock, options and RSA's available for future issuance | 260,000 | 260,000 | 260,000 | |||||
Equity Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock compensation expense | $ 985,000 | |||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 3 months 18 days | |||||||
Forfeited shares | 315,000 | |||||||
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 1,220,000 | $ 1,220,000 | $ 1,220,000 | |||||
Equity Option [Member] | 2021 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options granted | 541,000 | |||||||
Equity Option [Member] | 2015 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options exercised | 70,000 | |||||||
Options outstanding | 131,000 | 131,000 | 131,000 | |||||
Options granted | 622,000 | |||||||
Options cancelled | 421,000 | |||||||
Options available for grant | 399,000 | 399,000 | 399,000 | |||||
Equity Option [Member] | 2005 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options exercised | 2,093,062 | |||||||
Options outstanding | 260,273 | 260,273 | 260,273 | |||||
Options granted | 3,892,000 | |||||||
Options cancelled | 1,538,665 | |||||||
Options available for grant | 0 | 0 | 0 | |||||
Restricted Stock Awards [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock compensation expense | $ 275,000 | |||||||
RSA issued during period, value | $ 925,000 | |||||||
RSA's issued during period, shares | 174,811 | |||||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 550,000 | $ 550,000 | $ 550,000 | |||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 1 year 6 months 7 days | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 25,974 | |||||||
Restricted Stock Awards [Member] | Vests Within One Year [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
RSA's expected to vest | 79,488 | |||||||
Restricted Stock Awards [Member] | Vests Within Two Years [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
RSA's expected to vest | 17,401 | |||||||
Restricted Stock Awards [Member] | Vests Within Three Years [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
RSA's expected to vest | 77,922 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Oct. 31, 2020 | Dec. 31, 2021 | |
ATM Offering [Member] | ||
Securities Financing Transaction [Line Items] | ||
Proceeds from Issuance of Common Stock | $ 1,000,000 | |
Common stock shares issued under public offering | 2,478,690 | |
Secondary Public Offering [Member] | ||
Securities Financing Transaction [Line Items] | ||
Proceeds from Issuance of Common Stock | $ 18,171,000 | |
Common stock shares issued under public offering | 3,565,000 | |
Sale of stock, price per share | $ 8 | |
Gross proceeds from issuance of common stock | $ 19,720,000 | |
Secondary Public Offering [Member] | Selling Shareholders [Member] | ||
Securities Financing Transaction [Line Items] | ||
Common stock shares issued under public offering | 1,100,000 | |
Secondary Public Offering [Member] | Underwriter Over Allotment Shares [Member] | ||
Securities Financing Transaction [Line Items] | ||
Common stock shares issued under public offering | 465,000 | |
Secondary Public Offering [Member] | Richardson Property [Member] | ||
Securities Financing Transaction [Line Items] | ||
Common stock shares issued under public offering | 2,000,000 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) | 8 Months Ended |
Aug. 31, 2020USD ($)shares | |
Common Stock [Member] | |
Class of Stock [Line Items] | |
Preferred stock converted, Common stock issued | shares | 1,067,443 |
5% Preferred Stock [Member] | |
Class of Stock [Line Items] | |
Dividends | $ 30,000 |
2.5% Series Preferred Stock [Member] | |
Class of Stock [Line Items] | |
Dividends | 32,000 |
3.5% Series Preferred Stock [Member] | |
Class of Stock [Line Items] | |
Dividends | $ 17,000 |