Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 24, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
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 | $ 69,240,768 | ||
Entity Common Stock, Shares Outstanding | 21,248,195 | ||
Auditor Firm ID | 726 | ||
Auditor Name | Whitley Penn LLP | ||
Auditor Location | Dallas, Texas |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 3,015 | $ 4,100 |
Accounts receivable | 530 | 1,034 |
Prepaid expenses and other assets | 1,877 | 356 |
Total current assets | 5,422 | 5,490 |
Property and equipment: | ||
Equipment | 2,865 | 2,517 |
Capitalized software development | 1,380 | 0 |
Furniture and fixtures | 43 | 43 |
Leasehold improvements | 78 | 67 |
Property and equipment, gross | 4,366 | 2,627 |
Accumulated depreciation and amortization | (2,208) | (1,567) |
Property and equipment, net | 2,158 | 1,060 |
Finance leases, right-of-use assets, net | 1,048 | 1,709 |
Operating leases, right-of-use assets, net | 504 | 808 |
Other assets | 143 | 166 |
Total noncurrent assets | 3,853 | 3,743 |
TOTAL ASSETS | 9,275 | 9,233 |
Current Liabilities: | ||
Accounts payable, trade | 1,273 | 718 |
Accrued expenses | 446 | 534 |
Finance lease liabilities, current portion | 667 | 644 |
Operating lease liabilities, current portion | 294 | 935 |
Notes payable | 10,114 | 0 |
Deferred revenue | 455 | 560 |
Total current liabilities | 13,249 | 3,391 |
Noncurrent Liabilities: | ||
Finance lease liabilities, noncurrent portion | 10 | 673 |
Operating lease liabilities, noncurrent portion | 231 | 1,250 |
Total noncurrent liabilities | 241 | 1,923 |
Commitments and Contingencies – (See Note 7) | ||
Stockholders’ Equity (Deficit): | ||
Common stock $0.01 par value: Authorized shares — 80,000 Issued shares — 21,198 in 2022 and 19,135 in 2021 Outstanding shares — 21,188 in 2022 and 19,125 in 2021 | 212 | 191 |
Common stock held in treasury, at cost – 10 shares | (362) | (362) |
Additional paid-in capital | 92,304 | 84,230 |
Accumulated deficit | (96,326) | (80,097) |
Accumulated other comprehensive loss | (43) | (43) |
Total stockholders’ equity (deficit) | (4,215) | 3,919 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ 9,275 | $ 9,233 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 80,000 | 80,000 |
Common Stock, Shares, Issued | 21,198 | 19,135 |
Common Stock, Shares, Outstanding | 21,188 | 19,125 |
Common stock held in treasury, at cost, shares (in shares) | 10 | 10 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 7,529 | $ 7,277 |
Cost of Revenue | 3,354 | 3,621 |
Gross Profit | 4,175 | 3,656 |
Operating Expenses: | ||
Sales and marketing | 6,510 | 10,935 |
Research and development | 6,465 | 6,328 |
General and administrative | 7,483 | 5,896 |
Operating Loss | (16,283) | (19,503) |
Interest and Other Income | 2,028 | 722 |
Interest Expense | (2,359) | (21) |
Gain on Lease Termination | 385 | 0 |
Loss Before Income Taxes | (16,229) | (18,802) |
Income Tax | 0 | 0 |
Net Loss | $ (16,229) | $ (18,802) |
Net Loss Per Share: | ||
Basic | $ (0.82) | $ (1.05) |
Diluted | $ (0.82) | $ (1.05) |
Weighted Average Common Shares Outstanding: | ||
Basic | 19,791 | 17,992 |
Diluted | 19,791 | 17,992 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Treasury Stock, Common [Member] | AOCI Attributable to Parent [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 174 | $ (362) | $ (43) | $ 77,187 | $ (61,295) | $ 15,661 |
Beginning Balance, shares at Dec. 31, 2020 | 17,428 | 10 | ||||
Restricted stock awards | $ 1 | (1) | ||||
Restricted Stock Awards, shares | 149 | |||||
Tax withholdings related to stock-based compensation awards | 0 | |||||
Public stock offering, net of fees | $ 13 | 5,543 | 5,556 | |||
Public stock offering, net of fees, shares | 1,302 | |||||
Stock-based compensation expense | 1,260 | 1,260 | ||||
Exercise of stock options | $ 3 | 241 | 244 | |||
Exercise of stock options, shares | 256 | |||||
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 | 10 | ||||
Restricted stock awards | $ 1 | (1) | ||||
Restricted Stock Awards, shares | 103 | |||||
Tax withholdings related to stock-based compensation awards | (9) | (9) | ||||
Registered direct offering proceeds, net of fees | $ 12 | 4,284 | 4,296 | |||
Registered direct offering proceeds, net of fees, shares | 1,213 | |||||
Issuance of common stock to terminate operating lease | $ 1 | 199 | 200 | |||
Issuance of common stock to terminate operating lease, shares | 75 | |||||
Nonregistered private placement | 100 | 100 | ||||
Nonregistered private placement, shares | 32 | |||||
Public stock offering, net of fees | $ 6 | 1,979 | 1,985 | |||
Public stock offering, net of fees, shares | 541 | |||||
Stock-based compensation expense | 1,456 | 1,456 | ||||
Exercise of stock options | $ 1 | 66 | 67 | |||
Exercise of stock options, shares | 99 | |||||
Net loss | (16,229) | (16,229) | ||||
Ending balance, value at Dec. 31, 2022 | $ 212 | $ (362) | $ (43) | $ 92,304 | $ (96,326) | $ (4,215) |
Ending Balance, shares at Dec. 31, 2022 | 21,198 | 10 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Activities: | ||
Net Loss | $ (16,229) | $ (18,802) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,308 | 780 |
Bad debt expense | 0 | 27 |
Stock-based compensation | 1,456 | 1,260 |
Non-cash lease costs | 304 | 243 |
Amortization of debt issuance costs | 861 | 0 |
Non-cash interest on notes payable | 1,463 | 0 |
Gain on termination/modification of operating lease | (385) | (17) |
Gain on extinguishment of debt | 0 | (635) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 504 | 172 |
Prepaid expenses and other assets | (1,533) | 7 |
Accounts payable and accrued expenses | 206 | 218 |
Operating lease liabilities | (1,040) | (193) |
Deferred revenue | (105) | 383 |
Net cash used in operating activities | (13,190) | (16,557) |
Investing Activities: | ||
Purchases of property and equipment | (307) | (1,063) |
Capitalized software development | (1,172) | 0 |
Purchases of intangible assets – domain name | 0 | (85) |
Net cash used in investing activities | (1,479) | (1,148) |
Financing Activities: | ||
Proceeds from note payable, net of original issue discount | 10,000 | 0 |
Payments of debt issuance costs | (710) | 0 |
Principal payments on notes payable | (1,500) | 0 |
Reduction of finance lease liability | (645) | (699) |
Proceeds from public stock offering, net of fees | 1,985 | 5,556 |
Proceeds from registered direct offering, net of fees | 4,296 | 0 |
Proceeds from non-registered private placement | 100 | 0 |
Proceeds from stock options exercised | 67 | 244 |
Tax withholdings related to stock-based compensation awards | (9) | 0 |
Net cash provided by financing activities | 13,584 | 5,101 |
Net decrease in cash and cash equivalents | (1,085) | (12,604) |
Cash and cash equivalents at beginning of year | 4,100 | 16,704 |
Cash and cash equivalents at end of year | 3,015 | 4,100 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES: | ||
Cash paid for interest | 35 | 20 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Capitalized assets and capitalized software included in accounts payable | 261 | 0 |
Common stock issued for lease termination | 200 | 0 |
Assets acquired under a Right of Use (“ROU”) operating lease | 0 | 489 |
Assets acquired under a ROU finance lease | $ 5 | $ 1,995 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
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. The Company develops, sells, and supports 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. The Company markets and distributes its solutions through a direct sales force and value-added resellers. The Company’s 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. TraceCop (“TraceCop™”) Savant “Savant™ INTRUSION Shield |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements include its accounts and those of its wholly owned subsidiary 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. Going Concern As of December 31, 2022, the Company had cash and cash equivalents of $ 3.0 7.8 9.3 million 6.4 million 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 The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may at times exceed federally insured limits. The Company’s cash balances are maintained at a high-quality financial institution, and the Company believes the credit risk related to these cash balances is minimal. As of December 31, 2022, and 2021, the Company had approximately $ 3 4.1 Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its 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 the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and an increase to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance. The Company’s accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2022, and 2021, and January 1, 2021, the Company had accounts receivable balances of $ 0.5 1 1.2 no Risk Concentration Financial instruments, which potentially subject the Company 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, the Company places its investments in U.S. government obligations, corporate securities, and money market funds. Substantially all the Company’s cash, cash equivalents and investments are maintained with one major U.S. financial institution. The Company does not believe that it is subject to any unusual financial risk with the Company’s banking arrangements. The Company has not experienced any significant losses on its cash and cash equivalents. The Company sells its products to customers primarily in the U.S. In the future, the Company may sell the Company’s products internationally. Fluctuations in currency exchange rates and adverse economic developments in foreign countries could adversely affect the Company’s operating results. The Company performs ongoing credit evaluations of its customers’ financial condition and generally require no collateral. The Company maintains reserves for potential credit losses, and such losses, in the aggregate, have historically been minimal. The Company’s operations are concentrated in one area - security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled 65.8 71.4 10 10 Prepaid Expenses and Other Assets The Company’s prepaid expenses and other assets 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 During 2022, the Company began the capitalization of internally developed software due to implementing the Agile software development methodology which allowed the Company to accurately track, and record costs associated with new software development and enhancements. Pursuant to ASC Topic 350-40 Internal Use Software Accounting Capitalization, certain development costs related to the Company’s products during the application development stage are capitalized as part of property and equipment. Costs incurred in the preliminary stages of development are expensed as incurred. The preliminary stage includes such activities as conceptual formulation of alternatives, evaluation of alternatives, determination of existence of needed technology, and the final selection of alternatives. Once the application development stage is reached, internal and external costs are capitalized until the software is complete and ready for its intended use. Capitalized internal use software is amortized on a straight-line basis over its estimated useful life, which is generally three years. Depreciation and amortization are recorded as operating expenses in the Consolidated Statement of Operations. Depreciation and amortization related to the Company’s property and equipment balances totaled approximately $ 0.6 million 0.5 million Long-Lived Assets The Company reviews 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, 2022, and 2021, there was no Leases The Company accounts for leases using the guidance in FASB ASC 842. The Company evaluates new contracts at inception to determine if the contract conveys the right to control the use of an identified asset for a period in exchange for periodic payments. A lease exists if the Company obtains substantially all the economic benefits of an asset, and the Company has the right to direct the use of that asset. When a lease exists, the Company records a right-of-use asset that represents its right to use the asset over the lease term and a lease liability that represents its obligation to make payments over the lease term. Lease liabilities are recorded at the sum of future lease payments discounted by the collateralized rate the Company 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. The Company does not recognize leases with initial terms 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 7 – Commitments and Contingencies 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 The Company calculates the fair value of its 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 approximate their carrying amounts due to the relatively short maturity of these instruments. Notes payable and financing and operating leases approximate fair value as they bear market rates of interest. None of these instruments are held for trading purposes. Revenue Recognition The Company recognizes product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, software subscriptions and consulting services. Most of the Company’s sales are from consulting services. The Company also offers software on a subscription basis subject to software as a service (”SaaS”). Warranty costs and sales returns have not been material. The Company recognize sales of its consulting services 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) identification of the contract with a customer; ii) identification of the performance obligations in the contract; iii) determination of the transaction price; iv) allocation of the transaction price to the separate performance obligations; and v) Recognition of revenue upon satisfaction of a performance obligation. Consulting services generally include reporting and 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 product offering and service offering market values are readily determined based on current and prior stand-alone sales. The Company defers and recognize maintenance, updates, and support revenue over the term of the contract period, which is generally one year. Normal payment terms offered to customers, distributors and resellers are net 30 days domestically. The Company does not offer payment terms that extend beyond one year and rarely does it extend payment terms beyond its normal terms. If certain customers do not meet its credit standards, the Company does require payments in advance to limit its 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. The Company has elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. With the Company’s newest product, INTRUSION Shield INTRUSION Shield The Company utilizes 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 Intrusion’s proprietary software and database to detect and prevent unauthorized access to its clients’ information networks; · Use of all software, associated media, printed materials, data, files, online documentation, and any equipment that Intrusion provides for customers to access the INTRUSION Shield · Tech support, post contract customer support (PCS) includes daily program releases or corrections provided by Intrusion without additional charge. INTRUSION Shield The Company satisfies its performance obligation when its INTRUSION Shield The Company’s accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current assets. As of December 31, 2022, and 2021, the Company had accounts receivable balance of $ 0.5 1.0 no The Company classifies its contract assets as receivables because the Company generally has an unconditional right to payment for its sales or services performed at the end of the reporting period. As a result, the Company had no Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies contract liabilities as deferred revenue. The following table presents changes in the Company’s contract liability during the years ended December 31, 2022, and 2021 (in thousands): Schedule of contract liabilities December 31, 2022 December 31, 2021 Balance at beginning of year $ 560 $ 177 Additions 1,877 1,953 Revenue recognized (1,982 ) (1,570 ) Balance at end of year $ 455 $ 560 Accounting for Stock-based Compensation Awards The Company accounts for share-based compensation awards using the guidance in FASB ASC Topic 718, Compensation-Stock Compensation Research and Development Costs The Company’s research and development of new software products are expensed until the application development stage is obtained. Once the application development stage is reached, internal and external costs are capitalized until the software is complete and ready for its intended use. The company incurs 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 sales and related benefit expenses, contract labor and prototype and other expenses incurred during research and development efforts. Pursuant to ASC Topic 350-40 Internal Use Software Accounting-Capitalization, software development costs related to the Company’s products during the application development stage are capitalized. 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 $ 0.5 million 1.3 million 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. The Company files income tax returns in the U.S. federal jurisdiction. On December 31, 2022, tax returns related to fiscal years ended December 31, 2019 through December 31, 2021 remain open to possible examination by most tax authorities while tax returns in a few states remaining open related to fiscal years ended December 31, 2018 through December 31, 2021. No tax returns are currently under examination by any tax authorities. Net Loss Per Share The Company reports two separate net loss per shares 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. The common stock equivalents include all common stock issuable upon the exercise of outstanding options and vesting of restricted stock awards. The aggregate number of common stock equivalents excluded from the diluted loss per share calculated for the year ended December 31, 2022 totaled 1,317,973 901,388 Recent Accounting Pronouncements None. |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses And Other Assets | |
Prepaid Expenses and Other Assets | 3. Prepaid Expenses and Other Assets Prepaid expenses and other assets included the following (dollars in thousands): Schedule of prepaid expenses December 31, 2022 2021 Prepaid insurance $ 107 $ 105 Prepaid licenses 98 80 Employee retention credit receivable 1,363 – Prepaid other 309 171 Total prepaid expenses and other assets $ 1,877 $ 356 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 4. Accrued Expenses Accrued expenses consisted of the following (dollars in thousands): Schedule of accrued liabilities December 31, 2022 2021 Accrued legal and professional fees $ 189 $ 254 Accrued payroll 195 211 Employee benefits payable 36 22 Other 26 47 Total accrued expenses $ 446 $ 534 |
Right-of-use Asset and Leasing
Right-of-use Asset and Leasing Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Right-of-use Asset And Leasing Liabilities | |
Right-of-use Asset and Leasing Liabilities | 5. Right-of-use Asset and Leasing Liabilities The Company has operating, and finance leases and records right-of-use assets and related lease liabilities 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 the Company’s lease agreements are designed to terminate with the last scheduled payment. The Company leases are for the following types of assets: · Computer hardware and copy machines – The Company’s 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 – The Company’s operating lease right-of-use assets include rental agreements for its 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 ten months as of December 31, 2022. The data service center operating lease liability has a life of two years and ten months as of December 31, 2022. Lease balances are recorded on the consolidated balance sheet as follows (in thousands): Schedule of lease information December 31, 2022 2021 Assets: Finance leases, right-of-use assets, net $ 1,048 $ 1,709 Operating leases, right-of-use assets, net 504 808 Total lease assets 1,552 2,517 Liabilities: Current: Finance leases liabilities, current portion 667 644 Operating leases liabilities, current portion 294 935 Non-current: Finance leases liability, noncurrent portion 10 673 Operating lease liability, noncurrent portion 231 1,250 Total lease liabilities $ 1,202 $ 3,502 Weighted average remaining lease term – Finance leases 1.58 2.66 Weighted average remaining lease term – Operating leases 2.20 2.94 Weighted average discount rate – Finance leases 3.37 3.35 Weighted average discount rate – Operating leases 3.42 4.70 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 federal reserves’ prime rate. The gross amount of assets recorded under finance leases was $ 3.2 million Certain of the Company’s lease agreements have options to extend the lease after the expiration of the initial term. The Company recognizes the cost of a lease over the expected total term of the lease, including optional renewal periods that the Company can reasonably expect to exercise. The Company does not have material obligations whereby the Company guarantees a residual value on assets the Company leases, nor do the Company’s lease agreements impose restrictions or covenants that could affect its ability to make distributions. Schedule of Items Appearing on the Statement of Operations (in thousands): Lease cost table Year Ended December 30, 2022 December 31, 2021 Operating expense: Amortization expense – Finance ROU $ 665 $ 306 Lease expense – Operating ROU 304 341 Other expense: Interest expense – Finance ROU 35 20 Total Lease Expense $ 1,004 $ 667 Other supplemental information related to the Company’s leases are as follows: Schedule of other supplemental information related to our leases Year Ended December 30, 2022 December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ (1,085 ) $ 33 Operating cash flows for finance leases 665 306 Financing cash flows for finance leases (645 ) (699 ) Future minimum lease obligations consisted of the following as of December 31, 2022 (in thousands): Future minimum lease obligations Operating Finance Year ending December 31, ROU Leases ROU Leases Total 2023 $ 307 $ 680 $ 987 2024 123 8 131 2025 115 3 118 $ 545 $ 691 $ 1,236 Less Interest* (20 ) (14 ) $ 525 $ 677 * 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. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Notes Payable | 6. Notes Payable On March 10, 2022, Intrusion Inc. entered into an unsecured loan agreement with Streeterville Capital, LLC whereby the Company could draw up to $10.0 million in two separate tranches of $5.0 million through the issuance of two separate promissory notes of $5.4 million each, with an initial interest rate of 7%, subject to some increases in the case of, among other things, an event of default. On March 10, 2022, the Company received $ 4.6 million 4.7 million 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. While the notes remain outstanding, the Company 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 its ability to issue common stock under the notes; as well as a prohibition on its ability to permit any other lender to participate alongside the noteholder via any debt financing structures. The Company evaluated both the First and Second Note in accordance with ASC 480 “ Distinguishing Liabilities from Equity The lender does not benefit if the fair value of the Company’s Common Stock increases and does not bear the risk that the fair value of the Company’s Common Stock might decrease. In accordance with ASC 480, the promissory notes have been recorded as a liability and the company is recording interest expense over the term of the promissory note, using the interest method from ASC 835-30, to accrete the carrying amount of the promissory note up to the redemption common stock settlement amount. On March 10, 2022, the Company recorded debt issue costs of $ 0.7 million 0.7 million 0.5 million 0.9 million For the year ended December 31, 2022, the Company recorded $ 1.5 million On January 11, 2023, the Company amended the promissory notes issued pursuant to the unsecured loan agreement with Streeterville Capital, LLC whereby the noteholder agreed to waive their redemption rights through March 31, 2023, in exchange for a fee equal to 3.75% of the outstanding principal balance which was added to the outstanding indebtedness. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Change of Control and Severance Agreements Certain members of the Company’s 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 The Company is periodically involved in various litigation claims arising in the normal course of business. The Company believes these actions are routine and incidental to the business. While the outcome of these actions cannot be predicted with certainty, the Company does not believe that any will have a material adverse impact on the Company’s business. Class Action Litigation On April 16, 2021, a 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 now-former 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 claimed compensatory damages and legal fees. On May 14, 2021, a related 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 now-former chief financial officer, and now-former chief executive officer. The Neely lawsuit alleged the same violations under the federal securities laws as those alleged in the Celeste lawsuit. The Neely lawsuit also sought 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, the current chief technology officer, and a former director; and Mr. James Gero, a current director and chair of the compensation committee. The parties to the consolidated action held a mediation on April 5, 2022, at the conclusion of which the parties executed a settlement term sheet setting forth the material terms associated with the resolution of the action, subject to the preparation of formal documents and a plan of distribution approved by the Court. The settlement agreement was subject to certain terms and conditions and received final approval by the Court on December 16, 2022. At that time, a final judgment was entered dismissing the case, with the Court retaining jurisdiction over the action for purposes of enforcing the terms of the class settlement agreement. The $ 3.3 million The lead plaintiff in the class action filed a motion for distribution of settlement funds on February 21, 2023. The Court approved the parties’ class action settlement and plan of allocation on March 22, 2023 and cancelled the previously-rescheduled March 31, 2023, hearing on the motion for distribution, all remaining matters in the class action then-pending having been fully and finally adjudicated. Securities Investigation On August 8, 2021, the Company received a notification from the Securities and Exchange Commission, Division of Enforcement, that it was investigating 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 are 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. Stockholder Derivative Claim On June 3, 2022, a verified stockholder derivative complaint was filed in U.S. District Court, District of Delaware by plaintiff Nathan Prawitt (the “Plaintiff Stockholder”) on behalf of Intrusion against certain of the Company’s current and former officers and directors (the “Defendants”). Plaintiff alleges that Defendants through various actions breached their fiduciary duties, wasted corporate assets, and unjustly enriched Defendants by (a) incurring costs and expenses in connection with the ongoing SEC investigation, (b) incurring costs and expenses to defend the Company with respect to the consolidated class action, (c) settling class-wide liability with respect to the consolidated class action, as well as ancillary claims regarding sales of the Company’s common stock by certain of the Defendants. The Plaintiff is seeking remedial actions including improvements in the Company’s corporate governance and internal control policies and reimbursement of legal costs. While the Company is not a named defendant, but a nominal plaintiff in the stockholder derivative claim, the Company will be providing the financial and other assistance for each of the Defendants that the Company is obligated to provide under the Company’s Articles of Incorporation, the Company’s Bylaws, as well as individual indemnifications agreements that are in effect between, the Company and each of the Defendants. In addition to these legal proceedings, the Company is subject to various other claims that may arise in the ordinary course of business. The Company does not believe that any claims exist where the outcome of such matters would have a material adverse effect on the Company’s condensed consolidated financial position, operating results, or cash flows. However, there can be no assurance such legal proceedings will not have a material impact on the Company’s future results. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Common Stock | 8. Common Stock ATM Offering In August of 2021, the Company engaged B. Riley Securities, Inc. to act as sales agent under the Company’s at-the-market program, which allows us to potentially sell up to $50.0 million of its common stock on a delayed or continuous basis using a shelf registration statement on Form S-3, which the Company initially filed on August 5, 2021. The shelf registration became effective on August 16, 2021. For the year ended December 31, 2022, the Company has received proceeds of approximately $2.0 million net of fees from the sale of common stock pursuant to the program. Since the program was initiated, the Company has received proceeds of approximately $ 7.5 million 1,843 Registered Direct Offering On September 12, 2022, the Company entered in a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers to issue and sell to the purchasers an aggregate of 1,378,677 5.22 September 14, 2027 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 9. Stock-Based Compensation The Company accounts for equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation The Company had three stock-based compensation plans on December 31, 2022, and 2021. These plans which are described below, were developed to retain, and attract key employees and directors. The 2021 Omnibus Incentive Plan (the “2021 Plan”) During 2021, the Company added a new incentive 2021 Omnibus Incentive 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 the Company’s 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 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. 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 $ 0.2 million 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 The Compensation Committee of the Company’s 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 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 its 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 the Company’s voting stock). Common shares reserved for future issuance, including outstanding options, unvested restricted stock and shares available for future grant under all the stock options plans are as follows: Schedule of common shares reserved for future issuance (In thousands) Common Shares 2021 Plan 2,403 2015 Plan 530 2005 Plan 162 Total 3,095 Total compensation expense in operating expense on the statement of operations of $ 1.5 1.3 Restricted Stock Awards During the year ended December 31, 2022, the Company issued new Restricted Stock Awards (RSAs) under the 2021 Plan in the amount of $ 0.4 million 131,580 The following table summarizes the activities for the Company’s unvested RSAs in Intrusion Inc. stock for the year ended December 31, 2022: Schedule of unvested RSAs Unvested Restricted Stock Awards Number of Shares (in thousands) Weighted-Average Unvested as of December 31, 2021 149 $ 5.54 Granted 132 2.66 Vested (97 ) 6.41 Forfeited/canceled (26 ) 3.85 Unvested as of December 31, 2022 158 $ 2.88 The Company recognized compensation expense related to its RSAs of $ 0.6 million 0.2 million 0.7 Stock Option Awards The Company also granted option awards under the 2015 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 during the year ended December 31, 2022. A summary of the Company’s stock option activity and related information for the years ended December 31, 2022, and 2021 is as follows: Schedule of option activities 2022 2021 Number of Weighted Number of Weighted Outstanding at beginning of year 617 $ 6.47 1,035 $ 2.87 Granted 334 3.63 606 12.99 Exercised (99 ) 0.67 (257 ) 0.97 Forfeited (156 ) 8.16 (634 ) 9.81 Expired (28 ) 13.47 (133 ) 2.82 Outstanding at end of year 668 $ 5.22 617 $ 6.47 Options exercisable at end of year 281 $ 4.13 317 $ 1.56 Information related to stock options outstanding on December 31, 2022, 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 0.48 88 0.81 $ .47 88 $ .47 $ 1.15 2.80 98 1.57 $ 1.78 98 $ 1.78 $ 3.45 4.75 331 9.17 $ 3.72 35 $ 4.38 $ 8.72 12.71 135 8.27 $ 12.21 53 $ 11.87 $ 23.52 23.52 17 8.17 $ 23.52 7 $ 23.52 $ 0.40 23.52 668 6.73 $ 5.22 281 $ 4.13 Summarized information about outstanding stock options as of December 31, 2022, 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, 2022 Number of outstanding options (in thousands) 688 281 Weighted average remaining contractual life 6.73 3.39 Weighted average exercise price per share $ 5.22 $ 4.13 Intrinsic value (in thousands) $ 372 $ 372 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, 2022, and 2021, respectively: Valuation assumptions for stock-based compensation 2022 2021 Weighted average grant date fair value $ 3.32 $ 8.09 Weighted average assumptions used: Expected dividend yield 0.00 0.00 Risk-free interest rate 2.17 0.70 Expected volatility 129.54 66.72 Expected life (in years) 6.76 4.29 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. The Company recognized compensation expense related to its stock options of $ 0.9 million 0.8 million 2.12 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | 10. Employee Benefit Plan Employee 401(k) Plan The Company has a plan known as the Intrusion Inc. 401(k) Savings Plan (the “Plan”) to provide retirement and incidental benefits for the Company’s 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 (“IRS”), the Plan provides tax deferred salary deductions for eligible employees. Employees may contribute the lesser of 1% to 90% of their annual compensation to the Plan, limited to a maximum amount as set by the IRS. Participants who are over the age of 50 may contribute an additional amount of their salary per year, as defined annually by the IRS. The Company matches employee contributions at the rate of 0.25% per each 1% of contribution on the first 4% of compensation. Matching contributions to the Plan were approximately $ 0.1 million |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions During 2022, the Company retained legal services of a third-party law firm for which the Company’s Chief Executive Officer is a senior advisor. The Company recognized $ 0.3 0 0.1 0 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. 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 the Company’s deferred tax assets (liabilities) as of December 31, 2022, and 2021 are as follows (in thousands): Schedule of deferred tax assets and liabilities December 31 2022 2021 Net operating loss carryforwards $ 15,994 $ 22,497 Net operating loss carryforwards of foreign subsidiaries 56 56 Depreciation expense (73 ) (94 ) Stock-based compensation expense 349 52 Other 830 544 Net deferred tax assets 17,156 23,055 Valuation allowance for net deferred tax assets (17,156 ) (23,055 ) 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 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 2022 and 2021. The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended December 31, 2022, and 2021 are as follows (in thousands): Schedule of effective income tax rate reconciliation 2022 2021 Reconciliation of income tax benefit to statutory rate: Income benefit at statutory rate $ (3,409 ) $ (3,948 ) State income taxes (benefit), net of federal income tax benefit (107 ) (331 ) Permanent differences 89 (206 ) Change in valuation allowance (5,899 ) 2,458 Expiring federal net operating losses 9,745 – Other (419 ) 2,027 Income tax provision $ – $ – On December 31, 2022, the Company had federal net operating loss carryforwards of approximately $ 76.1 million |
Cares Act Employee Retention Cr
Cares Act Employee Retention Credit Receivable and SBA Paycheck Protection Program Loan | 12 Months Ended |
Dec. 31, 2022 | |
Cares Act Employee Retention Credit Receivable And Sba Paycheck Protection Program Loan | |
Cares Act Employee Retention Credit Receivable and SBA Paycheck Protection Program Loan | 13. Cares Act Employee Retention Credit Receivable and SBA Paycheck Protection Program Loan Interest and other income include $ 2 1.4 million 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 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, the Company entered into a PPP Loan with Silicon Valley Bank, pursuant to the PPP under CARES Act for a principal amount of $ 0.6 million April 30, 2022 1.0 The Company 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, the Company 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 $ 0.6 million |
Correction of Immaterial Errors
Correction of Immaterial Errors | 12 Months Ended |
Dec. 31, 2022 | |
Correction Of Immaterial Errors | |
Correction of Immaterial Errors | 14. Correction of Immaterial Errors During the year ending December 31, 2022, management identified and corrected certain immaterial errors in the Company’s historical financial statements associated with the cost of revenues provided by a subcontractor. The errors understated the cost of revenue and overstated the sales and marketing operating expenses by equal amounts in the Consolidated Statement of Operations. The error had no impact on operating losses, net losses, and net loss per share nor any other financial statement amount. Further these errors had no impact on the consolidated balance sheets, statements of changes in stockholders’ equity (deficit), and statement of cash flows. These corrections do not affect any of the metrics used to calculate and evaluate management’s compensation and had no impact on bonuses, commissions, stock-based compensation, or any other employee renumeration. Historical amounts have been corrected and are presented on a comparable basis. The below table presents the effect of the correction for the year ended December 31, 2021: Schedule of effect of the correction Year Ended December 31, 2021 As Reported Adjustments As Corrected Revenue $ 7,277 $ – $ 7,277 Cost of Revenue 2,625 996 3,621 Gross Profit 4,652 (996 ) 3,656 Operating Expenses Sales and marketing 11,931 (996 ) 10,935 Research and development 6,328 – 6,328 General and administrative 5,896 – 5,896 Operating Loss $ (19,503 ) $ – $ (19,503 ) |
Subsequent Events.
Subsequent Events. | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events. | 15. Subsequent Events. On January 11, 2023, the Company amended the promissory notes issued pursuant to the unsecured loan agreement with Streeterville Capital, LLC whereby the noteholder agreed to waive their redemption rights through March 31, 2023, in exchange for a fee equal to 3.75% of the outstanding principal balance which was added to the outstanding indebtedness. On February 23, 2023, the Company entered into a note purchase agreement with Streeterville Capital, LLC (“Streeterville”), pursuant to which, among other things, Streeterville purchased from the Company a promissory note (the “Note”) in the aggregate principal amount of $1.4 million plus certain reimbursed expenses in exchange for $1.3 million to the Company. Under the Note, the Company shall make principal payments to Streeterville in the amount of $50 thousand per week each week prior to its maturity on March 31, 2023. No interest accrues on the balance of the Note prior to its maturity. In connection with the issuance of the Note, the Company and Streeterville also entered into a security agreement, which provides, according to its term, a security interest in all employee retention credits or other funds still owed or otherwise payable to the Company under the Cares Act. The Company received payment for the ERC owed to Intrusion on March 13, 2023, and on March 14, 2023, the Company repaid in full and in advance of the maturity date the secured promissory note with Streeterville. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements include its accounts and those of its wholly owned subsidiary 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. |
Going Concern | Going Concern As of December 31, 2022, the Company had cash and cash equivalents of $ 3.0 7.8 9.3 million 6.4 million |
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 The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances that may at times exceed federally insured limits. The Company’s cash balances are maintained at a high-quality financial institution, and the Company believes the credit risk related to these cash balances is minimal. As of December 31, 2022, and 2021, the Company had approximately $ 3 4.1 |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its 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 the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and an increase to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance. The Company’s accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current. As of December 31, 2022, and 2021, and January 1, 2021, the Company had accounts receivable balances of $ 0.5 1 1.2 no |
Risk Concentration | Risk Concentration Financial instruments, which potentially subject the Company 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, the Company places its investments in U.S. government obligations, corporate securities, and money market funds. Substantially all the Company’s cash, cash equivalents and investments are maintained with one major U.S. financial institution. The Company does not believe that it is subject to any unusual financial risk with the Company’s banking arrangements. The Company has not experienced any significant losses on its cash and cash equivalents. The Company sells its products to customers primarily in the U.S. In the future, the Company may sell the Company’s products internationally. Fluctuations in currency exchange rates and adverse economic developments in foreign countries could adversely affect the Company’s operating results. The Company performs ongoing credit evaluations of its customers’ financial condition and generally require no collateral. The Company maintains reserves for potential credit losses, and such losses, in the aggregate, have historically been minimal. The Company’s operations are concentrated in one area - security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled 65.8 71.4 10 10 |
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets The Company’s prepaid expenses and other assets 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 During 2022, the Company began the capitalization of internally developed software due to implementing the Agile software development methodology which allowed the Company to accurately track, and record costs associated with new software development and enhancements. Pursuant to ASC Topic 350-40 Internal Use Software Accounting Capitalization, certain development costs related to the Company’s products during the application development stage are capitalized as part of property and equipment. Costs incurred in the preliminary stages of development are expensed as incurred. The preliminary stage includes such activities as conceptual formulation of alternatives, evaluation of alternatives, determination of existence of needed technology, and the final selection of alternatives. Once the application development stage is reached, internal and external costs are capitalized until the software is complete and ready for its intended use. Capitalized internal use software is amortized on a straight-line basis over its estimated useful life, which is generally three years. Depreciation and amortization are recorded as operating expenses in the Consolidated Statement of Operations. Depreciation and amortization related to the Company’s property and equipment balances totaled approximately $ 0.6 million 0.5 million |
Long-Lived Assets | Long-Lived Assets The Company reviews 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, 2022, and 2021, there was no |
Leases | Leases The Company accounts for leases using the guidance in FASB ASC 842. The Company evaluates new contracts at inception to determine if the contract conveys the right to control the use of an identified asset for a period in exchange for periodic payments. A lease exists if the Company obtains substantially all the economic benefits of an asset, and the Company has the right to direct the use of that asset. When a lease exists, the Company records a right-of-use asset that represents its right to use the asset over the lease term and a lease liability that represents its obligation to make payments over the lease term. Lease liabilities are recorded at the sum of future lease payments discounted by the collateralized rate the Company 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. The Company does not recognize leases with initial terms 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 7 – Commitments and Contingencies |
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 The Company calculates the fair value of its 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 approximate their carrying amounts due to the relatively short maturity of these instruments. Notes payable and financing and operating leases approximate fair value as they bear market rates of interest. None of these instruments are held for trading purposes. |
Revenue Recognition | Revenue Recognition The Company recognizes product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, software subscriptions and consulting services. Most of the Company’s sales are from consulting services. The Company also offers software on a subscription basis subject to software as a service (”SaaS”). Warranty costs and sales returns have not been material. The Company recognize sales of its consulting services 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) identification of the contract with a customer; ii) identification of the performance obligations in the contract; iii) determination of the transaction price; iv) allocation of the transaction price to the separate performance obligations; and v) Recognition of revenue upon satisfaction of a performance obligation. Consulting services generally include reporting and 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 product offering and service offering market values are readily determined based on current and prior stand-alone sales. The Company defers and recognize maintenance, updates, and support revenue over the term of the contract period, which is generally one year. Normal payment terms offered to customers, distributors and resellers are net 30 days domestically. The Company does not offer payment terms that extend beyond one year and rarely does it extend payment terms beyond its normal terms. If certain customers do not meet its credit standards, the Company does require payments in advance to limit its 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. The Company has elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods. With the Company’s newest product, INTRUSION Shield INTRUSION Shield The Company utilizes 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 Intrusion’s proprietary software and database to detect and prevent unauthorized access to its clients’ information networks; · Use of all software, associated media, printed materials, data, files, online documentation, and any equipment that Intrusion provides for customers to access the INTRUSION Shield · Tech support, post contract customer support (PCS) includes daily program releases or corrections provided by Intrusion without additional charge. INTRUSION Shield The Company satisfies its performance obligation when its INTRUSION Shield The Company’s accounts receivable represents unconditional contract billings for sales per contracts with customers and are classified as current assets. As of December 31, 2022, and 2021, the Company had accounts receivable balance of $ 0.5 1.0 no The Company classifies its contract assets as receivables because the Company generally has an unconditional right to payment for its sales or services performed at the end of the reporting period. As a result, the Company had no Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies contract liabilities as deferred revenue. The following table presents changes in the Company’s contract liability during the years ended December 31, 2022, and 2021 (in thousands): Schedule of contract liabilities December 31, 2022 December 31, 2021 Balance at beginning of year $ 560 $ 177 Additions 1,877 1,953 Revenue recognized (1,982 ) (1,570 ) Balance at end of year $ 455 $ 560 |
Accounting for Stock-based Compensation Awards | Accounting for Stock-based Compensation Awards The Company accounts for share-based compensation awards using the guidance in FASB ASC Topic 718, Compensation-Stock Compensation |
Research and Development Costs | Research and Development Costs The Company’s research and development of new software products are expensed until the application development stage is obtained. Once the application development stage is reached, internal and external costs are capitalized until the software is complete and ready for its intended use. The company incurs 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 sales and related benefit expenses, contract labor and prototype and other expenses incurred during research and development efforts. Pursuant to ASC Topic 350-40 Internal Use Software Accounting-Capitalization, software development costs related to the Company’s products during the application development stage are capitalized. |
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 $ 0.5 million 1.3 million |
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. The Company files income tax returns in the U.S. federal jurisdiction. On December 31, 2022, tax returns related to fiscal years ended December 31, 2019 through December 31, 2021 remain open to possible examination by most tax authorities while tax returns in a few states remaining open related to fiscal years ended December 31, 2018 through December 31, 2021. No tax returns are currently under examination by any tax authorities. |
Net Loss Per Share | Net Loss Per Share The Company reports two separate net loss per shares 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. The common stock equivalents include all common stock issuable upon the exercise of outstanding options and vesting of restricted stock awards. The aggregate number of common stock equivalents excluded from the diluted loss per share calculated for the year ended December 31, 2022 totaled 1,317,973 901,388 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements None. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of contract liabilities | Schedule of contract liabilities December 31, 2022 December 31, 2021 Balance at beginning of year $ 560 $ 177 Additions 1,877 1,953 Revenue recognized (1,982 ) (1,570 ) Balance at end of year $ 455 $ 560 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses And Other Assets | |
Schedule of prepaid expenses | Schedule of prepaid expenses December 31, 2022 2021 Prepaid insurance $ 107 $ 105 Prepaid licenses 98 80 Employee retention credit receivable 1,363 – Prepaid other 309 171 Total prepaid expenses and other assets $ 1,877 $ 356 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Schedule of accrued liabilities December 31, 2022 2021 Accrued legal and professional fees $ 189 $ 254 Accrued payroll 195 211 Employee benefits payable 36 22 Other 26 47 Total accrued expenses $ 446 $ 534 |
Right-of-use Asset and Leasin_2
Right-of-use Asset and Leasing Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Right-of-use Asset And Leasing Liabilities | |
Schedule of lease information | Schedule of lease information December 31, 2022 2021 Assets: Finance leases, right-of-use assets, net $ 1,048 $ 1,709 Operating leases, right-of-use assets, net 504 808 Total lease assets 1,552 2,517 Liabilities: Current: Finance leases liabilities, current portion 667 644 Operating leases liabilities, current portion 294 935 Non-current: Finance leases liability, noncurrent portion 10 673 Operating lease liability, noncurrent portion 231 1,250 Total lease liabilities $ 1,202 $ 3,502 Weighted average remaining lease term – Finance leases 1.58 2.66 Weighted average remaining lease term – Operating leases 2.20 2.94 Weighted average discount rate – Finance leases 3.37 3.35 Weighted average discount rate – Operating leases 3.42 4.70 |
Lease cost table | Lease cost table Year Ended December 30, 2022 December 31, 2021 Operating expense: Amortization expense – Finance ROU $ 665 $ 306 Lease expense – Operating ROU 304 341 Other expense: Interest expense – Finance ROU 35 20 Total Lease Expense $ 1,004 $ 667 |
Schedule of other supplemental information related to our leases | Schedule of other supplemental information related to our leases Year Ended December 30, 2022 December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ (1,085 ) $ 33 Operating cash flows for finance leases 665 306 Financing cash flows for finance leases (645 ) (699 ) |
Future minimum lease obligations | Future minimum lease obligations Operating Finance Year ending December 31, ROU Leases ROU Leases Total 2023 $ 307 $ 680 $ 987 2024 123 8 131 2025 115 3 118 $ 545 $ 691 $ 1,236 Less Interest* (20 ) (14 ) $ 525 $ 677 * 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. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of common shares reserved for future issuance | Schedule of common shares reserved for future issuance (In thousands) Common Shares 2021 Plan 2,403 2015 Plan 530 2005 Plan 162 Total 3,095 |
Schedule of unvested RSAs | Schedule of unvested RSAs Unvested Restricted Stock Awards Number of Shares (in thousands) Weighted-Average Unvested as of December 31, 2021 149 $ 5.54 Granted 132 2.66 Vested (97 ) 6.41 Forfeited/canceled (26 ) 3.85 Unvested as of December 31, 2022 158 $ 2.88 |
Schedule of option activities | Schedule of option activities 2022 2021 Number of Weighted Number of Weighted Outstanding at beginning of year 617 $ 6.47 1,035 $ 2.87 Granted 334 3.63 606 12.99 Exercised (99 ) 0.67 (257 ) 0.97 Forfeited (156 ) 8.16 (634 ) 9.81 Expired (28 ) 13.47 (133 ) 2.82 Outstanding at end of year 668 $ 5.22 617 $ 6.47 Options exercisable at end of year 281 $ 4.13 317 $ 1.56 |
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 0.48 88 0.81 $ .47 88 $ .47 $ 1.15 2.80 98 1.57 $ 1.78 98 $ 1.78 $ 3.45 4.75 331 9.17 $ 3.72 35 $ 4.38 $ 8.72 12.71 135 8.27 $ 12.21 53 $ 11.87 $ 23.52 23.52 17 8.17 $ 23.52 7 $ 23.52 $ 0.40 23.52 668 6.73 $ 5.22 281 $ 4.13 |
Other information regarding stock options | Other information regarding stock options Outstanding Stock Options that are As of December 31, 2022 Number of outstanding options (in thousands) 688 281 Weighted average remaining contractual life 6.73 3.39 Weighted average exercise price per share $ 5.22 $ 4.13 Intrinsic value (in thousands) $ 372 $ 372 |
Valuation assumptions for stock-based compensation | Valuation assumptions for stock-based compensation 2022 2021 Weighted average grant date fair value $ 3.32 $ 8.09 Weighted average assumptions used: Expected dividend yield 0.00 0.00 Risk-free interest rate 2.17 0.70 Expected volatility 129.54 66.72 Expected life (in years) 6.76 4.29 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | Schedule of deferred tax assets and liabilities December 31 2022 2021 Net operating loss carryforwards $ 15,994 $ 22,497 Net operating loss carryforwards of foreign subsidiaries 56 56 Depreciation expense (73 ) (94 ) Stock-based compensation expense 349 52 Other 830 544 Net deferred tax assets 17,156 23,055 Valuation allowance for net deferred tax assets (17,156 ) (23,055 ) Net deferred tax assets, net of allowance $ – $ – |
Schedule of effective income tax rate reconciliation | Schedule of effective income tax rate reconciliation 2022 2021 Reconciliation of income tax benefit to statutory rate: Income benefit at statutory rate $ (3,409 ) $ (3,948 ) State income taxes (benefit), net of federal income tax benefit (107 ) (331 ) Permanent differences 89 (206 ) Change in valuation allowance (5,899 ) 2,458 Expiring federal net operating losses 9,745 – Other (419 ) 2,027 Income tax provision $ – $ – |
Correction of Immaterial Erro_2
Correction of Immaterial Errors (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Correction Of Immaterial Errors | |
Schedule of effect of the correction | Schedule of effect of the correction Year Ended December 31, 2021 As Reported Adjustments As Corrected Revenue $ 7,277 $ – $ 7,277 Cost of Revenue 2,625 996 3,621 Gross Profit 4,652 (996 ) 3,656 Operating Expenses Sales and marketing 11,931 (996 ) 10,935 Research and development 6,328 – 6,328 General and administrative 5,896 – 5,896 Operating Loss $ (19,503 ) $ – $ (19,503 ) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details - Contract liability) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Beginning Balance | $ 560 | $ 177 |
Beginning Balance | 1,877 | 1,953 |
Beginning Balance | (1,982) | (1,570) |
Beginning Balance | $ 455 | $ 560 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jan. 01, 2021 | |
Product Information [Line Items] | |||
Cash and cash equivalents | $ 3,015,000 | ||
Working capital | 7,800,000 | ||
Proceeds from Notes Payable | 10,000,000 | $ 0 | |
Cash and cash equivalents | 3,015,000 | 4,100,000 | |
Accounts Receivable | 500,000 | 1,000,000 | $ 1,200,000 |
Allowance for Doubtful Accounts | 0 | 0 | |
Property and equipment | 600,000 | 500,000 | |
Impairment of long-lived assets | 0 | 0 | |
Contract assets | 0 | 0 | |
Advertising expenses | $ 500,000 | $ 1,300,000 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,317,973 | 901,388 | |
Minimum [Member] | Equipment And Furniture And Fixtures [Member] | |||
Product Information [Line Items] | |||
Property and equipment, useful lives | 1 year | 5 years | |
Minimum [Member] | Leasehold Improvements [Member] | |||
Product Information [Line Items] | |||
Property and equipment, useful lives | 2 years | 5 years | |
Seven Government Customers [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Percentage of revenues | 65.80% | ||
Five Government Customers [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Percentage of revenues | 71.40% | ||
Three Government Customers And One Commercial Customer [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Percentage of revenues | 10% | ||
Three Government Customers [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Percentage of revenues | 10% | ||
Sale And Issuance Of Common Stock And Warrants [Member] | |||
Product Information [Line Items] | |||
Proceeds from Issuance or Sale of Equity | $ 6,400,000 | ||
Two Streeterville Notes [Member] | |||
Product Information [Line Items] | |||
Proceeds from Notes Payable | $ 9,300,000 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets (Details - Prepaid Expenses) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Prepaid Expenses And Other Assets | ||
Prepaid insurance | $ 107 | $ 105 |
Prepaid licenses | 98 | 80 |
Employee retention credit receivable | 1,363 | 0 |
Prepaid other | 309 | 171 |
Total prepaid expenses and other assets | $ 1,877 | $ 356 |
Accrued Expenses (Details - Acc
Accrued Expenses (Details - Accrued Expenses) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued legal and professional fees | $ 189 | $ 254 |
Accrued payroll | 195 | 211 |
Employee benefits payable | 36 | 22 |
Other | 26 | 47 |
Total accrued expenses | $ 446 | $ 534 |
Right-of-use Asset and Leasin_3
Right-of-use Asset and Leasing Liabilities (Details - Consolidated Balance Sheet) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Right-of-use Asset And Leasing Liabilities | ||
Finance leases, right-of-use assets, net | $ 1,048 | $ 1,709 |
Operating leases, right-of-use assets, net | 504 | 808 |
Total lease assets | 1,552 | 2,517 |
Finance leases liabilities, current portion | 667 | 644 |
Operating leases liabilities, current portion | 294 | 935 |
Finance leases liability, noncurrent portion | 10 | 673 |
Operating lease liability, noncurrent portion | 231 | 1,250 |
Total lease liabilities | $ 1,202 | $ 3,502 |
Weighted average remaining lease term - Finance leases | 1 year 6 months 29 days | 2 years 7 months 28 days |
Weighted average remaining lease term - Operating leases | 2 years 2 months 12 days | 2 years 11 months 8 days |
Weighted average discount rate - Finance leases | 3.37% | 3.35% |
Weighted average discount rate - Operating leases | 3.42% | 4.70% |
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, 2022 | Dec. 31, 2021 | |
Operating expense: | ||
Amortization expense – Finance ROU | $ 665 | $ 306 |
Lease expense – Operating ROU | 304 | 341 |
Other expense: | ||
Interest expense – Finance ROU | 35 | 20 |
Total Lease Expense | $ 1,004 | $ 667 |
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, 2022 | Dec. 31, 2021 | |
Right-of-use Asset And Leasing Liabilities | ||
Operating cash flows for operating leases | $ (1,085) | $ 33 |
Operating cash flows for finance leases | 665 | 306 |
Financing cash flows for finance leases | $ (645) | $ (699) |
Right-of-use Asset and Leasin_6
Right-of-use Asset and Leasing Liabilities (Details - Minimum obligation) $ in Thousands | Dec. 31, 2022 USD ($) | |
Operating and Finance total lease minimum obligation - Remaining 2022 | $ 987 | |
Operating and Finance total lease minimum obligation - 2023 | 131 | |
Operating and Finance total lease minimum obligation - 2024 | 118 | |
Operating and Finance total lease minimum obligation liability, | 1,236 | |
Operating ROU Leases [Member] | ||
Remaining 2022 | 307 | |
Operating ROU Leases, 2023 | 123 | |
Operating ROU Leases, 2024 | 115 | |
Operating ROU Leases Undiscounted Obligation | 545 | |
Operating ROU Leases, Less Interest | (20) | [1] |
Operating ROU Leases | 525 | |
Finance ROU Leases [Member] | ||
Remaining 2022 | 680 | |
Finance ROU Leases, 2023 | 8 | |
Finance ROU Leases, 2024 | 3 | |
Finance ROU Leases Undiscounted Obligation | 691 | |
Finance ROU Leases, Less Interest | (14) | [1] |
Finance ROU Leases | $ 677 | |
[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, 2022 | Dec. 31, 2021 | |
Right-of-use Asset And Leasing Liabilities | ||
Finance leases | $ 3,200,000 | $ 3,200,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 29, 2022 | Mar. 10, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | $ 500,000 | ||
Amortization of debt discounts | 900,000 | ||
Interest expenses | $ 1,500,000 | ||
Streeterville Capital [Member] | |||
Debt Instrument [Line Items] | |||
Proceeds from issuance of notes | $ 4,700,000 | $ 4,600,000 | |
Unamortized debt issuance costs | $ 700,000 | $ 700,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Apr. 05, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Payments for Legal Settlements | $ 3,300,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 12, 2022 | Dec. 31, 2022 | |
ATM Offering [Member] | ||
Class of Warrant or Right [Line Items] | ||
Proceeds from Issuance of Common Stock | $ 7,500,000 | |
Stock Issued During Period, Shares, New Issues | 1,843,000 | |
Registered Direct Offering [Member] | ||
Class of Warrant or Right [Line Items] | ||
Stock Issued During Period, Shares, New Issues | 1,378,677 | |
Registered Direct Offering [Member] | Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 5.22 | |
Warrants and Rights Outstanding, Maturity Date | Sep. 14, 2027 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details - Future Stock Option Plans) shares in Thousands | Dec. 31, 2022 shares |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 3,095 |
2021 Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 2,403 |
2015 Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 530 |
2005 Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Common shares reserved for future issuance (in shares) | 162 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details - Unvested Restricted Stock Awards) shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Share-Based Payment Arrangement [Abstract] | |
Number of Shares, Beginning Balance | shares | 149 |
Weighted-Average Grant-Date Fair Value, Beginning Balance | $ / shares | $ 5.54 |
Number of Shares Granted | shares | 132 |
Weighted-Average Grant-Date Fair Value Granted | $ / shares | $ 2.66 |
Number of Shares Vested | shares | (97) |
Weighted-Average Grant-Date Fair Value Vested | $ / shares | $ 6.41 |
Number of Shares Forfeited/canceled | shares | (26) |
Weighted-Average Grant-Date Fair Value Forfeited/canceled | $ / shares | $ 3.85 |
Number of Shares, Ending balance | shares | 158 |
Weighted-Average Grant-Date Fair Value, Ending balance | $ / shares | $ 2.88 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details - Stock Options Activities) - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of Options Outstanding, Beginning | 617 | 1,035 |
Weighted Average Exercise Price, Beginning | $ 6.47 | $ 2.87 |
Number of Options Outstanding, Granted at price = market value | 334 | 606 |
Weighted Average Exercise Price, Granted at price = market value | $ 3.63 | $ 12.99 |
Number of Options Outstanding, Exercised | (99) | (257) |
Weighted Average Exercise Price, Exercised | $ 0.67 | $ 0.97 |
Number of Options Outstanding, Forfeited | (156) | (634) |
Weighted Average Exercise Price, Forfeited | $ 8.16 | $ 9.81 |
Number of Options Outstanding, Expired | (28) | (133) |
Weighted Average Exercise Price, Expired | $ 13.47 | $ 2.82 |
Number of Options Outstanding, Ending | 668 | 617 |
Weighted Average Exercise Price, Ending | $ 5.22 | $ 6.47 |
Number of Options Exercisable | 281 | 317 |
Weighted Average Exercise Price, Exercisable | $ 4.13 | $ 1.56 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details - Exercise Price) shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
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 | $ 0.48 |
Options Outstanding | shares | 88 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 9 months 21 days |
Options Outstanding Weighted Average Exercise Price | $ 0.47 |
Options Exercisable | shares | 88 |
Options Exercisable Weighted Average Exercise Price | $ 0.47 |
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 | $ 2.80 |
Options Outstanding | shares | 98 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 1 year 6 months 25 days |
Options Outstanding Weighted Average Exercise Price | $ 1.78 |
Options Exercisable | shares | 98 |
Options Exercisable Weighted Average Exercise Price | $ 1.78 |
Range 3 [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Exercise price, high end of range | 3.45 |
Exercise price, high end of range | $ 4.75 |
Options Outstanding | shares | 331 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 9 years 2 months 1 day |
Options Outstanding Weighted Average Exercise Price | $ 3.72 |
Options Exercisable | shares | 35 |
Options Exercisable Weighted Average Exercise Price | $ 4.38 |
Range 4 [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 | $ 12.71 |
Options Outstanding | shares | 135 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 8 years 3 months 7 days |
Options Outstanding Weighted Average Exercise Price | $ 12.21 |
Options Exercisable | shares | 53 |
Options Exercisable Weighted Average Exercise Price | $ 11.87 |
Range 5 [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 | $ 23.52 |
Options Outstanding | shares | 17 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 8 years 2 months 1 day |
Options Outstanding Weighted Average Exercise Price | $ 23.52 |
Options Exercisable | shares | 7 |
Options Exercisable Weighted Average Exercise Price | $ 23.52 |
Range 6 [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 | $ 23.52 |
Options Outstanding | shares | 668 |
Options Outstanding, Weighted Aaverage Rremaining Ccontractual Life (Year) | 6 years 8 months 23 days |
Options Outstanding Weighted Average Exercise Price | $ 5.22 |
Options Exercisable | shares | 281 |
Options Exercisable Weighted Average Exercise Price | $ 4.13 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details - Outstanding) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of outstanding options, Vested and expected to vest | 688 | |
Number of outstanding options, Exercisable | 281 | 317 |
Weighted average remaining contractual life, Vested and expected to vest | 6 years 8 months 23 days | |
Weighted average remaining contractual life, Exercisable | 3 years 4 months 20 days | |
Weighted average exercise price per share, Vested and expected to vest | $ 5.22 | |
Weighted average exercise price per share, Exercisable | $ 4.13 | $ 1.56 |
Intrinsic value, Vested and expected to vest | $ 372 | |
Intrinsic value, Exercisable | $ 372 |
Stock-Based Compensation (Det_6
Stock-Based Compensation (Details - Valuation Assumptions) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Weighted average grant date fair value | $ 3.32 | $ 8.09 |
Expected dividend yield | 0% | 0% |
Risk-free interest rate | 2.17% | 0.70% |
Expected volatility | 129.54% | 66.72% |
Expected life (in years) | 6 years 9 months 3 days | 4 years 3 months 14 days |
Stock-Based Compensation (Det_7
Stock-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 19, 2015 | May 17, 2012 | Mar. 17, 2005 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock compensation expense | $ 1,456,000 | $ 1,260,000 | |||
Restricted Stock Awards [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock compensation expense | 600,000 | ||||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ 400,000 | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 131,580 | ||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 200,000 | ||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 8 months 12 days | ||||
Equity Option [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock compensation expense | $ 900,000 | ||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 1 month 13 days | ||||
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 800,000 | ||||
Omnibus Incentive Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of Shares Authorized | 2,500,000 | ||||
2015 Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of Shares Authorized | 600,000 | ||||
Stock compensation expense | $ 200,000 | ||||
2005 Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of Shares Authorized | 3,700,000 | 1,500,000 |
Employee Benefit Plan (Details
Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Employer matching contribution to 401K plan | $ 100,000 | $ 100,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Accrued legal fees | $ 189,000 | $ 254,000 |
Third-party law firm related to CEO [Member] | ||
Related Party Transaction [Line Items] | ||
Legal Fees | 300,000 | 0 |
Accrued legal fees | $ 100,000 | $ 0 |
Income Taxes (Details - Deferre
Income Taxes (Details - Deferred Tax Assets and Liabilities) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 15,994 | $ 22,497 |
Net operating loss carryforwards of foreign subsidiaries | 56 | 56 |
Depreciation expense | (73) | (94) |
Stock-based compensation expense | 349 | 52 |
Other | 830 | 544 |
Net deferred tax assets | 17,156 | 23,055 |
Valuation allowance for net deferred tax assets | (17,156) | (23,055) |
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, 2022 | Dec. 31, 2021 | |
Reconciliation of income tax benefit to statutory rate: | ||
Income benefit at statutory rate | $ (3,409) | $ (3,948) |
State income taxes (benefit), net of federal income tax benefit | (107) | (331) |
Permanent differences | 89 | (206) |
Change in valuation allowance | (5,899) | 2,458 |
Expiring federal net operating losses | 9,745 | 0 |
Other | (419) | 2,027 |
Income tax provision | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Dec. 31, 2022 USD ($) |
Income Tax Disclosure [Abstract] | |
Operating loss carryforwards | $ 76,100,000 |
Cares Act Employee Retention _2
Cares Act Employee Retention Credit Receivable and SBA Paycheck Protection Program Loan (Details Narrative) - USD ($) | 4 Months Ended | 12 Months Ended |
Apr. 30, 2020 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Employee retention credit | $ 2,000,000 | |
ERC receivable | 1,400,000 | |
Paycheck Protection Program CARES Act [Member] [Default Label] | ||
Debt Instrument [Line Items] | ||
Proceeds from PPP Loan | $ 600,000 | |
Debt maturity date | Apr. 30, 2022 | |
Interest rate | 1% | |
Gain on extinguishment of debt | $ 600,000 |
Correction of Immaterial Erro_3
Correction of Immaterial Errors (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Gross Profit | $ 4,175 | $ 3,656 |
Operating Expenses | ||
Sales and marketing | 6,510 | 10,935 |
Research and development | 6,465 | 6,328 |
General and administrative | 7,483 | 5,896 |
Operating Loss | $ (16,283) | (19,503) |
Previously Reported [Member] | ||
Revenue | 7,277 | |
Cost of Revenue | 2,625 | |
Gross Profit | 4,652 | |
Operating Expenses | ||
Sales and marketing | 11,931 | |
Research and development | 6,328 | |
General and administrative | 5,896 | |
Operating Loss | (19,503) | |
Revision of Prior Period, Adjustment [Member] | ||
Revenue | 0 | |
Cost of Revenue | 996 | |
Gross Profit | (996) | |
Operating Expenses | ||
Sales and marketing | (996) | |
Research and development | 0 | |
General and administrative | 0 | |
Operating Loss | 0 | |
As Corrected [Member] | ||
Revenue | 7,277 | |
Cost of Revenue | 3,621 | |
Gross Profit | 3,656 | |
Operating Expenses | ||
Sales and marketing | 10,935 | |
Research and development | 6,328 | |
General and administrative | 5,896 | |
Operating Loss | $ (19,503) |