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What changed in INTRUSION INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of INTRUSION INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+160 added−153 removedSource: 10-K (2026-03-25) vs 10-K (2025-02-27)

Top changes in INTRUSION INC's 2025 10-K

160 paragraphs added · 153 removed · 111 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Code of Conduct The Company’s directors and employees, including executive officers, are required to abide by the Company’s Code of Business Conduct and Ethics (the “Code”) to ensure that the Company’s business is conducted in a consistently legal and ethical manner and to avoid instances of insider trading.
Biggest changeWe believe that our future success will depend in part on our continued ability to hire, motivate and retain qualified management, sales, marketing, and technical personnel. 4 Our Code of Conduct The Company’s directors and employees, including executive officers, are required to abide by the Company’s Code of Business Conduct and Ethics (the “Code”) to ensure that the Company’s business is conducted in a consistently legal and ethical manner and to avoid instances of insider trading.
The Code covers areas of professional conduct that include conflicts of interest, fair dealing and the strict adherence to all laws and regulations applicable to the conduct of the Company’s business. 4 The Code is published on the Company’s website under the investor relations tab at www.intrusion.com.
The Code covers areas of professional conduct that include conflicts of interest, fair dealing and the strict adherence to all laws and regulations applicable to the conduct of the Company’s business. The Code is published on the Company’s website under the investor relations tab at www.intrusion.com.
In September 2022, we expanded the INTRUSION Shield product line to include the Shield Cloud and Shield End-Point solutions. The initial INTRUSION Shield offering released in early 2021, the Shield On-Premise solution, utilizes hardware and is placed behind a firewall in a data center.
In September 2022, we expanded the INTRUSION Shield product line to include the Shield Cloud and Shield End-Point solutions. The initial INTRUSION Shield offering was released in early 2021. The Shield On-Premise solution utilizes hardware and is placed behind a firewall in a data center.
Our principal competitors in the data mining and advanced persistent threat market include Darktrace, Trellix, and Recorded Futures. 2 There are numerous companies competing in various segments of the data security market. At this time, we have little or no competitors for TraceCop ; however, we believe competitors could emerge in the future.
Our principal competitors in the data mining and advanced persistent threat markets include Darktrace, Trellix, and Recorded Future. 2 There are numerous companies competing in various segments of the data security market. At this time, we have little or no competitors for TraceCop ; however, we believe competitors could emerge in the future.
These competitors currently perform only a portion of the functions that we can perform with TraceCop . We have been continuously collecting the TraceCop data for more than twenty years, and we believe that none of our current or future competitors will have the ability to provide and reference this historical data.
These competitors currently perform only a portion of the functions that we can perform with TraceCop . We have been continuously collecting the TraceCop data for more than 20 years, and we believe that none of our current or future competitors will have the ability to provide and reference this historical data.
We believe the INTRUSION Shield product line is novel and unique in our industry because of our proprietary threat-enriched big data. We believe that our INTRUSION Shield family of solutions complement our customer’s existing cybersecurity processes and third-party solutions.
We believe the INTRUSION Shield product line is novel and unique in our industry because of our proprietary threat-enriched big data. We believe that our INTRUSION Shield family of solutions complement our customers’ existing cybersecurity processes and third-party solutions.
All such filings on our website are available free of charge. Additionally, filings are available on the SEC’s website (www.sec.gov). In this report, references to the “Company,” “we,” “us,” “our”, or “Intrusion” refer to Intrusion Inc. and its subsidiaries. TraceCop and Savant are registered trademarks of the Company. We have also applied for trademark protection for INTRUSION Shield.
All such filings on our website are available free of charge. Additionally, filings are available on the SEC’s website (www.sec.gov). In this report, references to the “Company,” “we,” “us,” “our,” or “Intrusion” refer to Intrusion Inc. and its subsidiary. TraceCop and Savant are registered trademarks of the Company. We have also applied for trademark protection for INTRUSION Shield.
Extended warranty services are separately invoiced on a time and materials basis or under an annual maintenance contract. Employees As of December 31, 2024, we employed a total of fifty people, five of which were part-time. None of our employees are represented by a labor organization, and we are not a party to any collective bargaining agreement.
Extended warranty services are separately invoiced on a time and materials basis or under an annual maintenance contract. Employees As of December 31, 2025, we employed a total of 52 people, four of which were part-time. None of our employees are represented by a labor organization, and we are not a party to any collective bargaining agreement.
Item 1. Business. Our Corporate Information We were 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.
Item 1. Business. Our Corporate Information We were 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 (888) 637-7770. Our website URL is www.intrusion.com.
Export sales accounted for 4.7% and 0.8% of revenue in 2024 and 2023, respectively. Marketing. We have implemented several methods to market our solutions, including participation in trade shows and seminars, distribution of sales literature and solution specifications and ongoing communication with our resellers and installed base of end-user customers. Customers.
Export sales accounted for 2.9% and 4.7% of revenue in 2025 and 2024, respectively. Marketing. We have implemented several methods to market our solutions, including participation in trade shows and seminars, distribution of sales literature and solution specifications and ongoing communication with our resellers and installed base of end-user customers. Customers.
In 2024, 83.8% of our revenue was derived from a variety of U.S. government entities through direct sales and indirectly through system integrators and resellers. These sales are attributable to eight U.S. government customers through direct and indirect channels; three U.S. government customers individually exceeded 10% of total revenue in 2024.
In 2025, 94.6% of our revenue was derived from a variety of U.S. government entities through direct sales and indirectly through system integrators and resellers. These sales are attributable to four U.S. government customers through direct and indirect channels; three U.S. government customers individually exceeded 10% of total revenue in 2025.
Our Customers: Government Sales Sales to U.S. government customers accounted for 83.8% of our revenues for the year ended December 31, 2024, compared to 46.2% of our revenues in 2023.
Our Customers: Government Sales Sales to U.S. government customers accounted for 94.6% of our revenues for the year ended December 31, 2025, compared to 83.8% of our revenues in 2024.
After years of gathering global internet intelligence and working exclusively with government entities, the company released its first commercial product in 2021. Our Solutions INTRUSION Shield™ INTRUSION Shield , our newest cybersecurity solution is a Zero Trust reputation-based Software as a Service (“SaaS”) solution that inspects and kills dangerous network (in and outbound) connections.
Our Solutions INTRUSION Shield™ INTRUSION Shield , is a Zero Trust reputation-based Software as a Service (“SaaS”) solution that inspects and kills dangerous network (in and outbound) connections.
Competition in the recruiting of personnel in the networking and data security industry is intense. We believe that our future success will depend in part on our continued ability to hire, motivate and retain qualified management, sales, marketing, and technical personnel.
Competition in the recruiting of personnel in the networking and data security industry is intense.
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After years of gathering global internet intelligence and working exclusively with government entities, the company released its first commercial product in 2021. Our platform combines threat intelligence, malicious traffic identification, and automated threat response, and is designed to help organizations proactively identify and stop malicious activity in their networks.
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For the fiscal years ended December 31, 2025 and 2024, we generated revenues of approximately $7.1 million and $5.8 million, respectively, and reported net loss of approximately $9.1 million and $7.8 million, respectively, and cash flow used in operating activities of approximately $6.8 million and $6.3 million, respectively.
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As a result of our historically recurring losses from operations, negative cash flows from operations, as well as our dependence on equity and debt financings, there is substantial doubt regarding our ability to continue as a going concern.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe development of technologically advanced network security products and solutions is a complex and uncertain process requiring high levels of innovation, rapid response, and accurate anticipation of technological and market trends. We cannot assure you that we will be able to identify, develop, manufacture, market or support new or enhanced solutions successfully in a timely manner.
Biggest changeAs a result, our success depends upon our ability to develop and introduce timely upgrades, enhancements, and new solutions to meet evolving customer requirements and industry standards. The development of technologically advanced network security products and solutions is a complex and uncertain process requiring high levels of innovation, rapid response, and accurate anticipation of technological and market trends.
The factors that could cause us to lose these U.S. government customers or otherwise materially harm our business, prospects, financial condition, or results of operations include: · budget constraints affecting government spending generally, or specific departments or agencies, and changes in fiscal policies or a reduction of available funding; · re-allocation of government resources; · disruptions in our customers’ ability to access funding from capital markets; · curtailment of governments’ use of outsourced service providers and governments’ in-sourcing of certain services; · the adoption of new laws or regulations pertaining to government procurement; · government appropriations delays or blanket reductions in departmental budgets; · suspension or prohibition from contracting with the government or any significant agency with which we conduct business; · increased use of shorter duration awards, which increases the frequency we may need to recompete for work; · impairment of our reputation or relationships with any significant government agency with which we conduct business; · decreased use of small business set asides or changes to the definition of small business by government agencies; 6 · increased use of lowest-priced, technically acceptable contract award criteria by government agencies; · increased aggressiveness by the government in seeking rights in technical data, computer software, and computer software documentation that we deliver under a contract, which may result in “leveling the playing field” for competitors on follow-on procurements; · delays in the payment of our invoices by government payment offices; and · national or international health emergencies, such as the COVID-19 public health pandemic.
The factors that could cause us to lose these U.S. government customers or otherwise materially harm our business, prospects, financial condition, or results of operations include: · budget constraints affecting government spending generally, or specific departments or agencies, and changes in fiscal policies or a reduction of available funding; · re-allocation of government resources; · disruptions in our customers’ ability to access funding from capital markets; · curtailment of governments’ use of outsourced service providers and governments’ in-sourcing of certain services; · the adoption of new laws or regulations pertaining to government procurement; · government appropriations delays or blanket reductions in departmental budgets; · suspension or prohibition from contracting with the government or any significant agency with which we conduct business; · increased use of shorter duration awards, which increases the frequency we may need to recompete for work; · impairment of our reputation or relationships with any significant government agency with which we conduct business; · decreased use of small business set asides or changes to the definition of small business by government agencies; · increased use of lowest-priced, technically acceptable contract award criteria by government agencies; · increased aggressiveness by the government in seeking rights in technical data, computer software, and computer software documentation that we deliver under a contract, which may result in “leveling the playing field” for competitors on follow-on procurements; · delays in the payment of our invoices by government payment offices; and · national or international health emergencies, such as the COVID-19 public health pandemic.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention. In addition, if our business liability insurance coverage is inadequate or future coverage is unavailable on acceptable terms or at all, our financial condition could be harmed. 11 Item 1B. Unresolved Staff Comments. None.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention. In addition, if our business liability insurance coverage is inadequate or future coverage is unavailable on acceptable terms or at all, our financial condition could be harmed. Item 1B. Unresolved Staff Comments. None.
Any errors or security vulnerabilities discovered in our solutions after commercial release could result in loss of revenues or delay in revenue recognition, loss of customers and increased service and warranty cost, any of which could adversely affect our business and results of operations. In addition, we could face claims for product liability, tort, or breach of warranty.
Any errors or security vulnerabilities discovered in our solutions after commercial release could result in loss of revenue or delay in revenue recognition, loss of customers and increased service and warranty cost, any of which could adversely affect our business and results of operations. In addition, we could face claims for product liability, tort, or breach of warranty.
We need to increase current revenue levels from the sales of our solutions if we are to regain profitability, and our new INTRUSION Shield suite of products may take time to achieve market penetration, which could negatively impact future revenues and results of operations.
We need to increase current revenue levels from the sales of our solutions if we are to regain profitability, and our INTRUSION Shield suite of products may take time to achieve market penetration, which could negatively impact future revenues and results of operations.
This could hurt our operating results, damage our reputation, and seriously harm our business and prospects. 8 We face intense competition from both start-up and established companies that may have significant advantages over us and our solutions. The market for our solutions is intensely competitive.
This could hurt our operating results, damage our reputation, and seriously harm our business and prospects. 9 We face intense competition from both start-up and established companies that may have significant advantages over us and our solutions. The market for our solutions is intensely competitive.
Our compliance with Section 404 of the Sarbanes-Oxley Act could require that we incur substantial accounting expense and expend significant management efforts including the potential of hiring additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
Our compliance with Section 404 of the Sarbanes-Oxley Act could require that we incur substantial accounting expenses and expend significant management efforts including the potential of hiring additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
Our success depends upon the continued contributions of our key management, sales, marketing, research and development and operational personnel, including Anthony Scott, our President, and Chief Executive Officer; T. Joe Head, our Chief Technology Officer; Kimberly Pinson, our Chief Financial Officer; and other key technical personnel.
Our success depends upon the continued contributions of our key management, sales, marketing, research and development and operational personnel, including Anthony Scott, our President, and Chief Executive Officer (“CEO”); T. Joe Head, our Chief Technology Officer; Kimberly Pinson, our Chief Financial Officer (“CFO”); and other key technical personnel.
Business and Operational Risks Most of our current revenues are generated from one family of solutions with a limited number of customers, and the decrease of revenue from sales of this family of solutions could materially harm our business and prospects. Approximately 50.4% of our existing revenues result from sales of TraceCop, a cybersecurity solution.
Business and Operational Risks Most of our current revenues are generated from one family of solutions with a limited number of customers, and the decrease of revenue from sales of this family of solutions could materially harm our business and prospects. Approximately 43.2% of our existing revenues result from sales of TraceCop, a cybersecurity solution.
We are highly dependent on sales of our current solutions through indirect channels, the loss of which would materially adversely affect our operations. For the years ended December 31, 2024, and 2023, we derived 35.4% and 2.6% of our revenues from sales through indirect sales channels, such as distributors, value-added resellers, system integrators, original equipment manufacturers and managed service providers.
We are highly dependent on sales of our current solutions through indirect channels, the loss of which would materially adversely affect our operations. For the years ended December 31, 2025 and 2024, we derived 55.0% and 35.4% of our revenues from sales through indirect sales channels, such as distributors, value-added resellers, system integrators, original equipment manufacturers, and managed service providers.
If our public float as measured pursuant to General Instruction I.B.6 to Form S-3 falls below $75 million, we will be subject to the restrictions set forth in General Instruction I.B.6 to Form S-3 that limit our ability to conduct primary offerings under a Form S-3 registration statement.
Unless our public float as measured pursuant to General Instruction I.B.6 to Form S-3 exceeds $75 million, we will be subject to the restrictions set forth in General Instruction I.B.6 to Form S-3 that limit our ability to conduct primary offerings under a Form S-3 registration statement.
We can offer no assurances that our new INTRUSION Shield solution will reduce our dependence on this single solution and in the absence of a shift in solution mix, we may continue to face risks if sales of this key solution to these limited customers were to decrease. 5 We may not be successful in our efforts to broaden the marketing and sale of the INTRUSION Shield.
We can offer no assurances that our INTRUSION Shield solution will reduce our dependence on this single solution and in the absence of a shift in solution mix, we may continue to face risks if sales of this key solution to these limited customers were to decrease.
Our principal competitors in the data mining and advanced persistent threat market include Darktrace, Trellix, and Recorded Futures.
Our principal competitors in the data mining and advanced persistent threat markets include Darktrace, Trellix, and Recorded Future.
We experience significant shifts in the market value of our common stock as it trades on the Nasdaq Capital Market (“Nasdaq") as well as volatility in the trading volume of our shares on that market. For example, the market price of our common stock fluctuated between $7.34 and $0.35 during the year ended December 31, 2024.
We experience significant shifts in the market value of our common stock as it trades on the Nasdaq Capital Market (“Nasdaq”) as well as volatility in the trading volume of our shares on that market. For example, the market price of our common stock fluctuated between $5.20 and $0.71 during the year ended December 31, 2025.
TraceCop revenues were $2.9 million for the year ended December 31, 2024, compared to $2.5 million for the year ended December 31, 2023.
TraceCop revenues were $3.1 million for the year ended December 31, 2025, compared to $2.9 million for the year ended December 31, 2024.
As a result, any shares issued or granted under the plans may be freely tradable in the public market. If equity securities are issued under the plans, if implemented, and it is perceived that they will be sold in the public market, then the price of our common stock could decline substantially.
If equity securities are issued under the plans, if implemented, and it is perceived that they will be sold in the public market, then the price of our common stock could decline substantially. 11 You may experience dilution as a result of future equity offerings.
While we expect that developing relationships with non-governmental customers will mitigate or eliminate this dependence on, and risk from, serving governmental entities, we can offer no assurances that we will be able to sufficiently diversify our customer portfolio in a time and manner to adequately mitigate this risk.
While we expect that developing relationships with non-governmental customers will mitigate or eliminate this dependence on, and risk from, serving governmental entities, we can offer no assurances that we will be able to sufficiently diversify our customer portfolio in a time and manner to adequately mitigate this risk. 7 A decline in federal, state, or local government spending would likely negatively affect our product revenues and earnings.
Should any of the component parts required for the hardware interface our customers use to access and to utilize the INTRUSION Shield product become scarce, we may have to delay or cancel our fulfillment of orders that could defer potential revenues or even result in customer cancellations, which would have a negative effect on our financial position and results of operations. 9 We incur significantly increased costs because of operating as a public company, and our management is required to devote substantial time to compliance matters and initiatives.
Should any of the component parts required for the hardware interface our customers use to access and to utilize the INTRUSION Shield product become scarce, we may have to delay or cancel our fulfillment of orders that could defer potential revenues or even result in customer cancellations, which would have a negative effect on our financial position and results of operations.
We have never paid dividends on our common stock and have no plans to do so in the future. Holders of shares of our common stock are entitled to receive such dividends as may be declared by our Board.
Holders of shares of our common stock are entitled to receive such dividends as may be declared by our Board of Directors (our “Board”). To date, we have paid no cash dividends on our shares of common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future.
Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. Risks Related to our Financial Position and Liquidity Certain regulatory limitations may affect our ability to consummate future financings.
Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results.
We have and must continue to introduce upgrades to our current solutions rapidly in response to changing circumstances and customer needs such as the creation and introduction of new computer viruses or other novel external attacks on computer networks.
We have and must continue to introduce upgrades to our current solutions rapidly in response to changing circumstances and customer needs such as the creation and introduction of new computer viruses or other novel external attacks on computer networks. Further, our INTRUSION Shield solution represents our efforts to continue to provide state-of-the art first-in-time innovation for our customers’ cybersecurity solutions.
A decline in federal, state, or local government spending would likely negatively affect our product revenues and earnings. The success of the cybersecurity solutions we sell depends substantially on the amount of funds budgeted by federal, state, and local government agencies that make up our current and potential customers.
The success of the cybersecurity solutions we sell depends substantially on the amount of funds budgeted by federal, state, and local government agencies that make up our current and potential customers.
If we were to lose one or more of these customers, our revenues could decline, and our business and prospects may be materially harmed.
A substantial percentage of our current revenues result from sales to U.S. government entities. If we were to lose one or more of these customers, our revenues could decline, and our business and prospects may be materially harmed.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. We report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.
We report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.
Any reputational damage could result in a decrease in orders for all our solutions, the loss of current customers, and a decrease in our overall revenues which could in turn have a material adverse effect on our results of operations.
Any reputational damage could result in a decrease in orders for all our solutions, the loss of current customers, and a decrease in our overall revenues which could in turn have a material adverse effect on our results of operations. 8 If we fail to respond to rapid technological changes in the network security industry, we may lose customers, or our solutions may become obsolete.
A large percentage of our current revenues are received from U.S. government entities, and the loss of these customers or our failure to widen the scope of our customer base to include general commercial enterprises could negatively affect our revenues. A substantial percentage of our current revenues result from sales to U.S. government entities.
These uncertainties could depress the interest or the ability of companies and governmental entities to test, evaluate, and deploy our INTRUSION Shield in their network environments. 6 A large percentage of our current revenues are received from U.S. government entities, and the loss of these customers or our failure to widen the scope of our customer base to include general commercial enterprises could negatively affect our revenues.
We believe that we must expand our sales and marketing efforts for INTRUSION Shield to achieve marketplace acceptance and to generate revenue for the Company. However, these efforts depend, in large part, on the success of our channel partners as they market and sell INTRUSION Shield , which may not be successful.
However, these efforts depend, in large part, on the success of our channel partners as they market and sell INTRUSION Shield , which may not be successful.
Our solutions are highly technical and if they contain undetected errors, our business could be adversely affected, and we might have to defend lawsuits or pay damages in connection with any alleged or actual failure of our solutions and services.
Moreover, a successful claim of product infringement against us or our failure or inability to license the infringed or similar technology on commercially reasonable terms could seriously harm our business. 12 Our solutions are highly technical and if they contain undetected errors, our business could be adversely affected, and we might have to defend lawsuits or pay damages in connection with any alleged or actual failure of our solutions and services.
We also could become subject to investigations by the stock exchange on which our securities are listed, the Securities Exchange Commission (“SEC”), or other regulatory authorities, which could require additional financial and management resources, and could have a material adverse effect on the market price of our common stock.
We could also become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources, and could have a material adverse effect on the market price of our common stock. 10 Scarcity of products and materials in the supply chain could hinder or prevent the deployment of our INTRUSION Shield for our customers who elect to use the wired version of our solution.
Shares eligible for future sale may adversely affect the market. Our equity incentive plans allow us to issue stock options and award shares of our common stock.
Additionally, a requirement to issue shares at the then-current market prices to fund operations would result in significant dilution to existing shareholders. Shares eligible for future sale may adversely affect the market. Our equity incentive plans allow us to issue stock options and award shares of our common stock.
The threat of cyber-attacks requires additional time and money to be expended in efforts to prevent any breaches of our information security protocols.
We must expend time and resources addressing potential cybersecurity risks, and any breach of our information security safeguards could have a material adverse effect on the Company. The threat of cyber-attacks requires additional time and money to be expended in efforts to prevent any breaches of our information security protocols.
If we fail to respond to rapid technological changes in the network security industry, we may lose customers, or our solutions may become obsolete. The network security industry is characterized by frequent product and service introductions, rapidly changing technology, and continued evolution of new industry standards.
The network security industry is characterized by frequent product and service introductions, rapidly changing technology, and continued evolution of new industry standards.
Further, these entities may also determine not to deploy their cash reserves in the face of such uncertainty. These uncertainties could depress the interest or the ability of companies and governmental entities to test, evaluate, and deploy our INTRUSION Shield in their network environments.
Further, these entities may also determine not to deploy their cash reserves in the face of such uncertainty.
Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. Risks Related to our Intellectual Property We must adequately protect our intellectual property to prevent loss of valuable proprietary information.
We intend to retain future earnings, if any, to provide funds for the operations of our business. Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.
Failure to attract and retain a sufficient number of qualified technical personnel, including software engineers, or retain our key personnel could have a material adverse effect on our operating results. 7 We could experience damage to our reputation in the cybersecurity industry in the event that our INTRUSION Shield solution fails to meet our customers’ needs or to achieve market acceptance.
We could experience damage to our reputation in the cybersecurity industry in the event that our INTRUSION Shield solution fails to meet our customers’ needs or to achieve market acceptance.
The market for hiring and retaining certain technical personnel, including software engineers, has become more competitive and intense in recent years.
The market for hiring and retaining certain technical personnel, including software engineers, has become more competitive and intense in recent years. Failure to attract and retain a sufficient number of qualified technical personnel, including software engineers, or retain our key personnel could have a material adverse effect on our operating results.
Our management and other personnel devote a substantial amount of time to these compliance initiatives. We cannot predict or estimate the amount of additional costs we will incur to meet our additional disclosure obligations under the Exchange Act or the timing of such costs.
We cannot predict or estimate the amount of additional costs we will incur to meet our additional disclosure obligations under the Exchange Act or the timing of such costs. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
As a public company with an obligation to file reports with the SEC under the Exchange Act, we incur significant legal, accounting, and other expenses that we would not incur as a private company. In addition, the Sarbanes-Oxley Act imposes various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls.
We incur significantly increased costs because of operating as a public company, and our management is required to devote substantial time to compliance matters and initiatives. As a public company with an obligation to file reports with the SEC under the Exchange Act, we incur significant legal, accounting, and other expenses that we would not incur as a private company.
For the year ended December 31, 2024, we had a net loss of $7.8 million and had an accumulated deficit of approximately $118.0 million as of December 31, 2024.
We must increase revenue levels in order to finance our current operations and to implement our business strategies. For the year ended December 31, 2025, we had a net loss of $9.1 million and had an accumulated deficit of approximately $127.1 million as of December 31, 2025.
Further, we or our competitors may introduce new solutions or enhancements that shorten the life cycle of our existing solutions or cause our existing solutions to become obsolete. We must expend time and resources addressing potential cybersecurity risk, and any breach of our information security safeguards could have a material adverse effect on the Company.
We cannot assure you that we will be able to identify, develop, manufacture, market or support new or enhanced solutions successfully in a timely manner. Further, we or our competitors may introduce new solutions or enhancements that shorten the life cycle of our existing solutions or cause our existing solutions to become obsolete.
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As of February 25, 2025, our public float calculated in accordance with General Instruction I.B.6 of Form S-3 was $112.9 million. We must increase revenue levels in order to finance our current operations and to implement our business strategies.
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Risks Related to our Financial Position and Liquidity The Company’s ability to implement its current business plan is dependent on our ability to raise additional funds through additional public or private financings, which raises substantial doubt that the Company may not be able to continue as a going concern.
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Further, our new INTRUSION Shield solution represents our efforts to continue to provide state-of-the art first-in-time innovation for our customers’ cybersecurity solutions. As a result, our success depends upon our ability to develop and introduce timely upgrades, enhancements, and new solutions to meet evolving customer requirements and industry standards.
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As of December 31, 2025, we had cash and cash equivalents of $3.6 million.
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Scarcity of products and materials in the supply chain could hinder or prevent the deployment of our INTRUSION Shield for our customers who elect to use the wired version of our solution.
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Our primary source of cash for funding operations in 2025 has come from net proceeds received from a registered direct offering of $7.0 million and $1.5 million in proceeds from the sale of common stock pursuant to a standby equity purchase agreement (“SEPA”), recorded as a receivable at December 31, 2024.
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Nasdaq may delist our common stock from trading on its exchange, which could limit stockholders’ ability to trade our common stock. Our common stock is listed for trading on the Nasdaq Capital Market, which requires us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis to continue the listing of our common stock.
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Our independent registered public accounting firm’s report on our audited financial statements for fiscal year ended December 31, 2025, includes an explanatory paragraph stating that our historically recurring losses from operations, negative cash flows from operations, and dependence on equity and debt financing raise substantial doubt about our ability to continue as a going concern.
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If we fail to meet these continued listing requirements, our common stock may be subject to delisting. On October 28, 2024, Intrusion, Inc.
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Our ability to continue as a going concern is dependent upon our ability to raise additional funds through public or private financing, including the utilization of our ATM program.
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(the “Company”) received a written notice (the “Bid Price Notice”) from the Listing Qualifications department (the “Nasdaq Staff”) of The Nasdaq Stock Market (“Nasdaq”) indicating that the Company is not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on the Nasdaq Capital Market.
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We can provide no assurances that we will be able to raise additional funds through any future equity or debt financings, and the terms of those financings, if available at all, may be on terms, which are not favorable to us and, in the case of equity financings, will result in dilution to our stockholders.
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The notification of noncompliance had no immediate effect on the listing or trading of the Company’s common stock on The Nasdaq Capital Market under the symbol “INTZ,” and the Company is currently monitoring the closing bid price of its common stock and evaluating its alternatives, if appropriate, to resolve the deficiency and regain compliance with this rule.
Added
The inclusion of a going concern explanatory paragraph may also make it more difficult for us to secure additional financing or enter into strategic partnerships, as it signals a high degree of financial risk to potential investors and creditors.
Removed
The Nasdaq rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the last thirty consecutive business days as of October 25, 2024, the Company no longer met this requirement.
Added
Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. 5 We are subject to certain regulatory limitations that may affect our ability to consummate future financings.
Removed
The Bid Price Notice indicated that the Company has been provided 180 calendar days, or until April 28, 2025, in which to regain compliance.
Added
Under such limitations, we may not sell, during any 12-month period, securities on Form S-3 having an aggregate market value of more than one-third of our public float. As of March 24, 2026, our public float calculated in accordance with General Instruction I.B.6 of Form S-3 was $20.1 million.
Removed
If at any time during this period the closing bid price of the Company’s common stock is at least $1.00 per share for a minimum of ten consecutive business days, the Nasdaq Staff will provide the Company with a written confirmation of compliance and the matter will be closed.
Added
We may not be successful in our efforts to broaden the marketing and sale of the INTRUSION Shield. We believe that we must expand our sales and marketing efforts for INTRUSION Shield to achieve marketplace acceptance and to generate revenue for the Company.
Removed
On January 29, 2025, the Company received notification from the Nasdaq Staff that it had met the minimum bid price requirement and, accordingly, had regained compliance with the listing requirement. 10 There can be no assurance that we will be able to meet the financial, public float, bid price and liquidity standards on an ongoing basis to for continued listing of our common stock on the Nasdaq Capital Market.
Added
In addition, the Sarbanes-Oxley Act imposes various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel devote a substantial amount of time to these compliance initiatives.
Removed
If our common stock is delisted and we are not able to list our common stock on another national securities exchange, we expect our securities would be quoted on an over-the-counter market.
Added
As a result, any shares issued or granted under the plans may be freely tradable in the public market.
Removed
If this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future.
Added
In the future, we may issue additional shares of common stock and/or securities convertible into, or exchangeable for, or that represent the right to receive, shares of common stock.
Removed
To date, we have paid no cash dividends on our shares of common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for the operations of our business.
Added
We may sell shares or other securities at a price per share that is less than the prices per share paid by stockholders, and stockholders purchasing shares or other securities in the future could have rights superior to existing stockholders.
Removed
Moreover, a successful claim of product infringement against us or our failure or inability to license the infringed or similar technology on commercially reasonable terms could seriously harm our business.
Added
The price per share at which we sell additional shares of common stock, or securities convertible into, exercisable for, or exchangeable for shares of common stock, in future transactions may be higher or lower than the prices per share paid by stockholders.
Added
Additional equity offerings may dilute the holdings of existing stockholders or reduce the market price of our common stock, or both. Any of these events may dilute the ownership interests of current stockholders, reduce earnings per share, or have an adverse effect on our stock price.
Added
Further, sales of substantial amounts of our common stock, or the perception that these sales could occur, could have a material adverse effect on the price of our common stock. We have never paid dividends on our common stock and have no plans to do so in the future.
Added
We are a “smaller reporting company,” and reduced disclosure requirements may make our common stock less attractive. We qualify, and may qualify for the foreseeable future, as a “smaller reporting company.” As a result, we may provide reduced public disclosure compared to larger reporting companies, including fewer years of audited financial statements and scaled executive compensation and other disclosures.
Added
Investors may view our securities as less attractive as a result, which could adversely affect the market price and liquidity of our common stock. Risks Related to our Intellectual Property We must adequately protect our intellectual property to prevent loss of valuable proprietary information.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity . We recognize the importance of securing our data and information systems and have a process for assessing, mitigating, and managing cybersecurity and related risks. Our VP of Engineering, who reports to the CEO, leads our cybersecurity function and is responsible for managing our cybersecurity risk and the protection of our networks, systems, and data.
Biggest changeItem 1C. Cybersecurity. Cybersecurity Risk Management Strategy We recognize the importance of securing our data and information systems and have a process for assessing, mitigating, and managing cybersecurity and related risks.
Governance Our Board of Directors is responsible for overseeing our enterprise risk management activities. The CEO reports to the Board of Directors regarding cybersecurity risks, incidents, and mitigation strategies at least annually.
Governance Our Board is responsible for overseeing our enterprise risk management activities. The CEO reports to the Board regarding cybersecurity risks, incidents, and mitigation strategies at least annually.
Added
Our Vice President (“VP”) of Engineering, who reports to the CEO, leads our cybersecurity function and is responsible for managing our cybersecurity risk and the protection of our networks, systems, and data.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters is currently located in 10,705 square feet of space at 101 East Park Blvd, Suite 1200, Plano Texas. This facility houses our corporate administration, engineering, sales, and marketing operations. The lease for this facility extends until March 2035.
Biggest changeItem 2. Properties. Our corporate headquarters is currently located in 10,705 square feet of space at 101 East Park Blvd, Suite 1200, Plano Texas. This facility houses our corporate administration, engineering, sales, and marketing operations. The lease for this facility expires in April 2035.
See Note 5 – Right-of-use Assets and Leasing Liabilities to our Consolidated Financial Statements for additional information regarding our obligations under leases.
See Note 5 – ROU Assets and Leasing Liabilities to our Consolidated Financial Statements for additional information regarding our obligations under leases.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe do not believe that any claims exist where the outcome of such matters would have a material adverse effect on our consolidated financial position, operating results, or cash flows. However, there can be no assurance such legal proceedings will not have a material impact on our future results.
Biggest changeItem 3. Legal Proceedings. We may be subject to various claims that arise in the ordinary course of business. We do not believe that any claims exist where the outcome of such matters would have a material adverse effect on our consolidated financial position, operating results, or cash flows.
Removed
Item 3. Legal Proceedings. Stockholder Derivative Claim On June 3, 2022, a verified stockholder derivative complaint was filed in U.S. District Court, District of Delaware (the “Court”) by the Plaintiff Stockholder on behalf of Intrusion against certain of the Company’s Defendants.
Added
However, there can be no assurance such legal proceedings will not have a material impact on our future results.
Removed
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.
Removed
On September 28, 2023, the Company agreed to settle the claim. On October 2, 2023, public notice of the settlement was given.
Removed
The settlement agreement provides in part for (i) an amendment to the Company’s Bylaws, committee Charters, and other applicable corporate policies to implement certain measures set forth more fully therein, to remain in effect for no less than three years; (ii) attorneys’ fees and expenses to plaintiff’s counsel of $0.3 million; and (iii) the dismissal of all claims against the Defendants, including the Company, in connection with the action.
Removed
The $0.3 million settlement payment was made by the Company’s insurance provider under its insurance policy since the Company’s $0.5 million retention was previously exhausted. On April 3, 2024, the Court approved the settlement. In addition to these legal proceedings, we are subject to various other claims that may arise in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides summary information as of December 31, 2024, for all our equity compensation plans (in thousands, except per share data). See Note 10 – Stock-Based Compensation to our Consolidated Financial Statements for additional discussion.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans All equity compensation plans under which our common stock is reserved for issuance have previously been approved by our stockholders. The following table provides summary information as of December 31, 2025, for all our equity compensation plans (in thousands, except per share data). See Item 12.
Number of shares of common stock to be issued upon exercise of outstanding options (1) 43 Weighted average exercise price of outstanding options $61.26 Number of shares unvested restricted stock units 203 Weighted average grant date fair value $1.38 No. of shares of common stock remaining available for future issuance under equity compensation plans 2,258 (1) Included in the outstanding options are nineteen from the 2015 Stock Option Plan and twenty-four from the 2021 Omnibus Incentive Plan.
Number of shares of common stock to be issued upon exercise of outstanding options (1) 54 Weighted average exercise price of outstanding options $ 46.28 Number of shares unvested restricted stock units 573 Weighted average grant date fair value $ 2.02 No. of shares of common stock remaining available for future issuance under equity compensation plans 1,663 (1) Included in the outstanding options are 16 from the 2015 Stock Option Plan and 38 from the 2021 Omnibus Incentive Plan.
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock trades on the Nasdaq Capital Market, where it is currently listed under the symbol “INTZ.” As of February 26, 2025, there were approximately sixty-four record holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq, where it is currently listed under the symbol “INTZ.” As of March 24, 2026, there were 20,369,066 shares of common stock outstanding and there were approximately 55 record holders of record of our common stock.
The Company does not have a history of paying dividends on its common stock and has no present intention of declaring any dividends in the foreseeable future. All equity compensation plans under which our common stock is reserved for issuance have previously been approved by our stockholders.
Dividend Policy The Company does not have a history of paying dividends on its common stock and has no present intention of declaring any dividends in the foreseeable future. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
Added
The number of record holders does not include beneficial owners whose shares are held through banks, brokers, nominees, or other fiduciaries. On March 24, 2026, the closing price of our common stock on Nasdaq was $1.04 per share.
Added
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters —Securities Authorized for Issuance under Equity Compensation Plans and Note 10 – Stock-Based Compensation to our Consolidated Financial Statements for additional discussion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe feel that the progress made with our reseller and channel community along with refining our product messaging will help to shorten the sales cycle and grow revenues in future periods. 13 Results of Operations Comparison of the Years ended December 31, 2024, and December 31, 2023 Year Ended December 31, Change (in thousands) 2024 2023 $ % Revenue $ 5,771 $ 5,611 160 2.9% Cost of Revenue 1,341 1,257 84 6.7% Gross Profit 4,430 4,354 76 1.7% Operating Expenses: Sales and marketing 4,736 5,670 (934 ) -16.5% Research and development 4,435 5,556 (1,121 ) -20.2% General and administrative 3,705 5,174 (1,469 ) -28.4% Operating Loss (8,446 ) (12,046 ) 3,600 -29.9% Interest expense (328 ) (958 ) 630 -65.8% Interest accretion and amortization of debt issuance costs, net 990 (930 ) 1,920 -206.5% Other (expense) income, net (6 ) 43 (49 ) -114.0% Net Loss $ (7,790 ) $ (13,891 ) 6,101 -43.9% Revenues Revenue for the year ended December 31, 2024, totaled $5.8 million an increase of $0.2 million or 2.9% from $5.6 million in 2023.
Biggest changeResults of Operations Comparison of the Years ended December 31, 2025, and December 31, 2024 Year Ended December 31, Change (in thousands) 2025 2024 $ % Revenue $ 7,095 $ 5,771 1,324 22.9% Cost of Revenue 1,715 1,341 374 27.9% Gross Profit 5,380 4,430 950 21.4% Operating Expenses: Sales and marketing 5,266 4,736 530 11.2% Research and development 5,172 4,435 737 16.6% General and administrative 4,106 3,705 401 10.8% Operating Loss (9,164 ) (8,446 ) (718 ) 8.5% Interest expense (81 ) (328 ) 247 -75.3% Interest accretion and amortization of debt issuance costs, net – 990 (990 ) -100.0% Other income (expense), net 186 (6 ) 192 -3200.0% Net Loss $ (9,059 ) $ (7,790 ) (1,269 ) 16.3% 15 Revenues Revenue for the year ended December 31, 2025, totaled $7.1 million, representing an increase of $1.3 million or 22.9% from $5.8 million in 2024.
Interest Accretion and Amortization of Debt Issuance Costs During March 2024, the Company entered into exchange agreements to convert $9.5 million in Streeterville debt to $9.3 million of Series A preferred stock and $0.2 million to common stock and, as a result, the Company reversed the interest accretion associated with the ability to stock-settle principal redemptions and wrote-off the remaining deferred debt issue costs resulting in a net credit to interest expense of $1.0 million.
Interest Accretion and Amortization of Debt Issuance Costs, Net During March 2024, the Company entered into exchange agreements to convert $9.5 million in Streeterville debt to $9.3 million of Series A preferred stock and $0.2 million to common stock and, as a result, the Company reversed the interest accretion associated with the ability to stock-settle principal redemptions and wrote-off the remaining deferred debt issue costs resulting in a net credit to interest expense of $1.0 million.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was ($1.8) million of which $1.2 million was the capitalization of internally developed software, $0.5 million was the purchase of equipment and $0.1 million was the deposit on financed equipment.
For the year ended December 31, 2024, net cash used in investing activities was ($1.8) million, of which $1.2 million was the capitalization of internally developed software, $0.5 million was the purchase of equipment and $0.1 million was the deposit on financed equipment.
Upfront payment of fees is deferred and amortized into income over the period covered by the contract. Allowances for Credit Losses We maintain allowances for credit losses for estimated losses resulting from the inability of our customers to make the required payments. Our receivables are uncollateralized, and we expect to continue this policy in the future.
Upfront payment of fees is deferred and amortized into income over the period covered by the contract. 21 Allowances for Credit Losses We maintain allowances for credit losses for estimated losses resulting from the inability of our customers to make the required payments. Our receivables are uncollateralized, and we expect to continue this policy in the future.
Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
As of February 25, 2025, our public float calculated in accordance with General Instruction I.B.1 of Form S-3,was $112.9 million based on 19,342,776 shares of common stock outstanding of which 17,861,513 shares are held by non-affiliates, and a per share price of $6.32 based on the average of the bid and asked prices of our common stock on the Nasdaq Capital Market on December 30, 2024.
As of February 25, 2025, our public float calculated in accordance with General Instruction I.B.1 of Form S-3, was $112.9 million based on 19,342,776 shares of common stock outstanding of which 17,861,513 shares are held by non-affiliates, and a per share price of $6.32 based on the average of the bid and asked prices of our common stock on the Nasdaq on December 30, 2024.
We filed a replacement shelf registration on Form S-3 on January 30, 2025 with an effective date of February 10, 2025, pursuant to which we can sell up to $50.0 million of our common stock.
We filed a replacement shelf registration on Form S-3 in January 2025, with an effective date of February 2025, pursuant to which we can sell up to $50.0 million of our common stock.
Recent Accounting Pronouncements See Note 2 to the Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Not applicable.
Recent Accounting Pronouncements See Note 2 to the Consolidated Financial Statements (Part II, Item 8 of this Annual Report on Form 10-K). Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion and analysis include information management believes is relevant to understand and assess our consolidated financial condition and results of operations. This section should be read in conjunction with our Consolidated Financial Statements, accompanying notes and the risk factors contained in this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion and analysis include information management believes is relevant to understanding and assessing our consolidated financial condition and results of operations. This section should be read in conjunction with our Consolidated Financial Statements, accompanying notes and the risk factors contained in this report.
The gross profit margin remained relatively flat year-over-year as Shield revenues represented 26% and 28% of revenues in each of 2024 and 2023, respectively. To the extent Shield revenues become a larger percentage of revenues, we anticipate we will see favorable growth in gross profit margins.
The gross profit margin remained relatively flat year-over-year as Shield revenues represented 25% and 26% of revenues in each of 2025 and 2024, respectively. To the extent Shield revenues become a larger percentage of revenues, we anticipate we will see favorable growth in gross profit margins.
On April 19, 2024, Scott entered into a private placement subscription agreement to convert the aggregate remaining outstanding balance of $1.1 million for both notes in exchange for common stock and common stock purchase warrants.
Scott entered into a private placement subscription agreement to convert the aggregate remaining outstanding balance of $1.1 million for both notes in exchange for common stock and common stock purchase warrants.
The Company’s similar product and service offerings are not viewed as individual segments, as its management analyzes the business as a whole and expenses are not allocated to each product offering. Gross Profit Gross profit for the 12-months ended December 31, 2024, and 2023 totaled $4.4 million or 76.8% and $4.4 million or 77.6%, respectively.
The Company’s similar product and service offerings are not viewed as individual segments, as its management analyzes the business as a whole and expenses are not allocated to each product offering. Gross Profit Gross profit for the 12-months ended December 31, 2025 and 2024 totaled $5.4 million or 75.8% and $4.4 million or 76.8%, respectively.
We recognize sales of its consulting services in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.
We recognize sales of its consulting services in accordance with the 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.
On January 2, 2024, Scott purchased a note payable in the principal amount of $1.1 million in exchange for $1.0 million in cash. The note called for weekly payments of $40,000 until maturity on June 15, 2024. Interest accrued on the balance of the note at 7% per annum compounding daily.
Scott, our President, CEO and member of our Board. In January 2024, Mr. Scott purchased a note payable in the principal amount of $1.1 million in exchange for $1.0 million in cash. The note called for weekly payments of $40 thousand until maturity in June 2024. Interest accrued on the balance of the note at 7% per annum compounding daily.
Certain discretionary marketing spends inclusive of participation in trade shows, utilization of third-party contractors for content and product messaging and travel, are likely to vary over time based on savings initiatives that may be necessary. Research and Development Research and development expenses decreased to $4.4 million in 2024 compared to $5.6 million in 2023.
Certain discretionary marketing spends inclusive of participation in trade shows, utilization of third-party contractors for content and product messaging and travel, are likely to vary over time based on savings initiatives that may be necessary.
INTRUSION Shield is a hosted arrangement subject to SaaS guidance under ASC Topic 606. SaaS arrangements are accounted for as subscription services not arrangements that transfer a license of intellectual property. We utilize the five-step process mentioned above, per ASC Topic 606, to recognize sales and will follow that directive, also, to define revenue items as individual and distinct.
SaaS arrangements are accounted for as subscription services not arrangements that transfer a license of intellectual property. We utilize the five-step process mentioned above, to recognize sales and will follow that directive, also, to define revenue items as individual and distinct.
Our principal sources of cash for funding operations in 2024 have been net proceeds received from sales of common stock using our ATM program of $9.8 million, a private placement offering completed in April 2024 of $2.6 million, and $0.8 million from the exercise of warrants.
Our principal sources of cash for funding operations in 2024 were net proceeds received from sales of common stock using our ATM program of $9.8 million, a private placement offering completed in April 2024 of $2.6 million, and $0.8 million from the exercise of warrants. ATM Program In June 2025, we terminated our At Market Sales Agreement with B.
INTRUSION Shield services provided to our customers for a fixed monthly subscription fee include: · access to Intrusion’s proprietary software and database to detect and prevent unauthorized access to our clients’ information networks; · use of all software, associated media, printed materials, data, files, online documentation, and any equipment that Intrusion provides for customers to access the INTRUSION Shield ; and · tech support, post contract customer support (“PCS”) including daily program releases or corrections provided by Intrusion without additional charge. 19 Our contract provides for no other services, and our customers have no rebates or return rights, nor are any such rights anticipated to be offered as part of this service.
INTRUSION Shield services provided to our customers for a fixed monthly subscription fee include: · access to Intrusion’s proprietary software and database to detect and prevent unauthorized access to our clients’ information networks; · use of all software, associated media, printed materials, data, files, online documentation, and any equipment that Intrusion provides for customers to access the INTRUSION Shield ; and · tech support, post contract customer support (“PCS”) includes daily program releases or corrections provided by Intrusion without additional charge.
For the year ended December 31, 2023, net cash used in investing activities was ($1.4) million, which was principally the capitalization of internally developed software. 16 Financing Activities For year ended December 31, 2024, net cash provided by financing activities was $12.8 million which consisted principally of proceeds from sales of common stock using our ATM program of $9.8 million, a private placement in April 2024 of $2.6 million and proceeds from the sale of common stock and warrants pursuant to warrant inducement offerings of $0.8 million offset partially by principal payments on equipment finance leases of $0.5 million.
For year ended December 31, 2024, net cash provided by financing activities was $12.8 million, which consisted principally of proceeds from sales of common stock using our ATM program of $9.8 million, a private placement in April 2024 of $2.6 million and proceeds from the sale of common stock and warrants pursuant to warrant inducement offerings of $0.8 million, offset partially by principal payments on equipment finance leases of $0.5 million. 18 Liquidity and Capital Resources As of December 31, 2025, we had cash and cash equivalents of $3.6 million and $2.4 million in working capital.
Standby Equity Purchase Agreement On July 3, 2024, we entered into a $10 million Standby Equity Purchase Agreement (“SEPA”) with Streeterville Capital, LLC (“Streeterville”) pursuant to which the Company has the right to direct Streeterville during the 24-month term of the agreement to purchase common stock subject to certain limitations and conditions set forth in the SEPA.
SEPA In July 2024, we entered into a $10 million SEPA with Streeterville pursuant to which the Company has the right, during the 24-month term of the agreement and subject to certain limitations and conditions to direct Streeterville to purchase shares of our common stock.
Consolidated Statements of Cash Flows Our cash flows for the years ended December 31, 2024, and 2023 (in thousands) were: Year Ended December 31, 2024 December 31, 2023 Net cash used in operating activities $ (6,293 ) $ (7,767 ) Net cash used in investing activities (1,809 ) (1,448 ) Net cash provided by financing activities 12,814 6,339 Change in cash and cash equivalents $ 4,712 $ (2,876 ) Operating Activities Net cash used in operations for the year ended December 31, 2024, was ($6.3) million due to a net loss of ($7.8) million, offset by 1) adjustments for non-cash items of $1.7 million which are mostly comprised of depreciation, stock-based compensation, and interest related to Streeterville notes and 2) ($0.2) million used for working capital.
Other income (expense) was negligible in 2024. 17 Consolidated Statements of Cash Flows Our cash flows for the years ended December 31, 2025 and 2024 (in thousands) were: Year Ended December 31, 2025 2024 Net cash used in operating activities $ (6,759 ) $ (6,293 ) Net cash used in investing activities (2,549 ) (1,809 ) Net cash provided by financing activities 8,081 12,814 Change in cash and cash equivalents $ (1,227 ) $ 4,712 Operating Activities Net cash used in operations for the year ended December 31, 2025, was ($6.8) million due to a net loss of ($9.1) million, offset by (i) adjustments for non-cash items of $3.2 million which are mostly comprised of depreciation and stock-based compensation, and (ii) ($0.9) million used for working capital.
Revenues from sales to various U.S. government entities totaled $4.8 million, or 83.8% of revenues, for the year ended December 31, 2024, compared to $2.6 million, or 46.2% of revenues, for the same period in 2023. In 2024 we had three government entities that individually accounted for over 10% of our revenues compared to two in 2023.
Revenues from sales to various U.S. government entities totaled $6.7 million, or 94.6% of revenues, for the year ended December 31, 2025, compared to $4.8 million, or 83.8% of revenues, for the same period in 2024. In both 2025 and 2024 three government entities each individually accounted for over 10% of our revenues.
On April 2, 2024, we reduced the principal balance due under the note by $101 thousand which reflected the amount due from Scott for the exercise of common stock purchase warrants.
In April 2024, we reduced the principal balance due under the note by $0.1 million, which reflected the amount due from Mr. Scott for the exercise of common stock purchase warrants. In April 2024, Mr.
During the quarter ended March 31, 2024, we made $200 thousand in principal payments. On March 20, 2024, Scott purchased a second note payable in the principal amount of $343 thousand in exchange for $340 thousand in cash. The note was non-interest bearing and matured on April 19, 2024.
During the quarter ended March 31, 2024, we made $0.2 million in principal payments. In March 2024, Mr. Scott purchased a second note payable in the principal amount of $0.3 million in exchange for $0.3 million in cash. The note was non-interest bearing and matured in April 2024.
Net cash used in operations for the year ended December 31, 2023, was ($7.8) million due to a net loss of ($13.9) million, offset by 1) adjustments for non-cash items of $4.7 million which are mostly comprised of depreciation, stock-based compensation, and interest related to Streeterville notes and 2) $1.4 million provided from working capital principally relating to the cash receipt of amounts due relating to ERC.
Net cash used in operations for the year ended December 31, 2024, was ($6.3) million due to a net loss of ($7.8) million, offset by (i) adjustments for non-cash items of $1.7 million which are mostly comprised of depreciation, stock-based compensation, and interest related to Streeterville notes, and (ii) $(0.2) million used for working capital.
In the event the note was not repaid on the maturity date, weekly payments would increase to $50 thousand. The note bore no interest. This note was repaid in full in December 2024. During 2024, we entered into two separate note purchase agreements with our Chief Executive Officer, Anthony Scott.
The note called for weekly payments of $25 thousand until the maturity in November 2024. In the event the note was not repaid on the maturity date, weekly payments would increase to $50 thousand. The note bore no interest. This note was repaid in full in November 2024. During 2024, we entered into two separate note purchase agreements with Mr.
In September 2024, we entered into a note purchase agreement with Streeterville where Streeterville purchased a note payable in the principal amount of $0.6 million in exchange for $0.5 million in cash after redemption of $0.1 million of Series A preferred stock. The note called for weekly payments of $25 thousand until the maturity on November 18, 2024.
This transaction eliminated all the Streeterville debt with no material cash outflow during 2024 or 2025. In September 2024, we entered into a note purchase agreement with Streeterville where Streeterville purchased a note payable in the principal amount of $0.6 million in exchange for $0.5 million in cash after redemption of $0.1 million of Series A preferred stock.
We do not offer payment terms that extend beyond one year and rarely extend payment terms beyond our normal terms. If certain customers do not meet our credit standards, we require payment in advance to limit our credit exposure. With our newest product, INTRUSION Shield , we began offering software on a subscription basis.
If certain customers do not meet our credit standards, we require payment in advance to limit our credit exposure. With our newest product, INTRUSION Shield , we began offering software on a subscription basis. INTRUSION Shield is a hosted arrangement subject to SaaS guidance under ASC Topic 606.
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. Revenue Recognition We recognize product revenue upon shipment or after meeting certain performance obligations.
Capitalized internal use software is amortized on a straight-line basis over its estimated useful life, which is generally three years. 20 Revenue Recognition We recognize product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, software subscriptions, and consulting services. Most of our sales are from consulting services.
The shares of common stock purchased pursuant to SEPA will be at a purchase price equal to 95% of the lowest daily VWAP of the shares of Common Stock during the three consecutive trading days commencing on the date of the delivery of an advance notice.
Shares of common stock issued pursuant to SEPA will be purchased at a price equal to 95% of the lowest daily volume-weighted average price of our common on the Nasdaq Stock Market during the three consecutive trading days during regular trading hours, as reported by Bloomberg L.P. beginning on the date we deliver an advance notice.
During 2024, pursuant to the SEPA, Streeterville purchased 1.2 million shares of common stock resulting in aggregate net proceeds of $1.8 million of which $0.1 million was received in 2024 and the remaining $1.7 million was received on January 2 nd and 3 rd , 2025. 17 Notes Payable We entered into a securities purchase agreement (“SPA”) with Streeterville on March 10, 2022, pursuant to which Streeterville purchased two promissory notes with substantively identical terms.
During 2024, pursuant to the SEPA, Streeterville purchased 1.2 million shares of common stock resulting in aggregate net proceeds of $1.8 million of which $0.1 million was received in 2024 and the remaining proceeds of $1.7 million were received in January 2025.
Costs incurred in the preliminary stages of development are expensed as incurred. The preliminary stage includes activities such as conceptual formulation of alternatives, evaluation of alternatives, determination of existence of needed technology, and the final selection of alternatives.
The preliminary stage includes activities such 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.
These products can include hardware, software subscriptions and consulting services. Most of our sales are from consulting services. We also offer software on a subscription basis subject to SaaS. Warranty costs have not been material.
We also offer software on a subscription basis subject to SaaS. Warranty costs have not been material.
All product offering and service offering market values are readily determined based on current and prior stand-alone sales. We defer 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 defers and recognizes 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. We do not offer payment terms that extend beyond one year and rarely extend payment terms beyond our normal terms.
Sales to commercial customers totaled $0.9 million or 16.2% of total revenue for the year ended December 31, 2024, compared to $3.0 million or 53.8% of total revenue for the same period in 2023. Two commercial customers individually accounted for over 10% of total revenues in 2023. No commercial customers accounted for 10% or greater of total revenues in 2024.
Sales to commercial customers totaled $0.4 million or 5.4% of total revenue for the year ended December 31, 2025, compared to $0.9 million or 16.2% of total revenue for the same period in 2024. During 2025, we expanded the number of Shield resellers and referral partners.
The savings in 2024 are a result of cost reduction measures implemented in late March 2023 which included the reduction of 13 FTEs and the reduced use of contractors. Research and development costs may vary over time as we determine the frequency of new releases, improved functionality and enhancements needed to be competitive with our product offering.
Research and development costs may vary over time as we determine the frequency of new releases, improved functionality and enhancements needed to be competitive with our product offering. General and Administrative General and administrative expenses totaled $4.1 million in 2025 compared to $3.7 million in 2024.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Capitalized Software Development We capitalize internally developed software using the Agile software development methodology which allows us to accurately track, and record costs associated with new software development and enhancements.
We anticipate that sales to government customers, while comprising a significant portion of our revenues in future periods, will represent a lower percentage of our revenue base as we gain traction selling our Shield products into commercial markets. 14 Sales to the government present risks in addition to those involved in sales to commercial customers which could adversely affect our revenues, including, without limitation, potential disruption to appropriation and spending patterns and the government’s reservation of the right to cancel contracts and purchase orders for its convenience.
We anticipate our concentration of revenues will vary among customers in future periods depending upon the timing of certain sales. We anticipate that sales to government customers, while comprising a significant portion of our revenues in future periods, will represent a lower percentage of our revenue base as we gain traction selling our Shield products into commercial markets.
Capitalized Software Development We capitalize internally developed software using the Agile software development methodology which allows us to accurately track, and record costs associated with new software development and enhancements. 18 Pursuant to ASC Topic 350-40 Internal Use Software Accounting Capitalization, certain development costs related to our products during the application development stage are capitalized as part of property and equipment.
Pursuant to the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 350-40 Internal Use Software Accounting Capitalization, certain development costs related to our 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.
In 2023 and 2022 we made $0.4 million and $1.5 million in principal payments, respectively. In the fourth quarter 2023 through 3 separate transactions, we exchanged $0.6 million in aggregate principal on the First Note for 93.6 thousand shares of our common stock. In March 2024, we exchanged $0.2 million in principal for 52.2 thousand shares of common stock.
In the fourth quarter of 2023 and the first quarter 2024, we exchanged $0.8 million of principal for 146 thousand shares of common stock. In March 2024, the remaining $9.3 million principal was exchanged for 9,275 shares of Services A Preferred Stock (See Note 8 ). Following these transactions, $0.5 million principal remained on the first note.
We satisfy our performance obligation when our INTRUSION Shield solution is available to detect and prevent unauthorized access to a client’s information networks. Revenue is recognized monthly over the term of the contract. The Company’s standard initial contract terms automatically renew unless notice is given 30 days before renewal.
Revenue is recognized monthly over the term of the contract. The Company’s standard initial contract terms are automatically renewed unless notice is given 30 days before renewal.
The $1.5 million reduction in the 2024 period relates principally to the elimination of two positions, reduced share-based compensation, and one-time negotiated cost savings of $0.5 million. 15 Interest Expense Interest expense for the twelve months ended December 31, 2024, was $328 thousand consisting principally of the stated interest related to the Streeterville and Scott notes, and finance leases.
The $0.4 million increase in 2025 was primarily due to one-time negotiated savings of $0.2 million included in the 2024 period and increased share-based compensation related to equity grants made in the first quarter of 2025. Interest Expense Interest expense for the twelve months ended December 31, 2025, was $81 thousand which related primarily to imputed interest on finance leases.
Consulting services, including reporting, 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.
Product sales may include maintenance and customer support elements, with consideration allocated to each performance obligation based on the 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.
For the year ended December 31, 2023, net cash provided by financing activities was $6.3 million which consisted principally of proceeds from sales of common stock using our ATM program of $4.7 million and a private placement in November 2023 of $2.3 million offset partially by a $0.4 million paydown on the Streeterville notes.
Financing Activities For the year ended December 31, 2025, net cash provided by financing activities was $8.1 million, which consisted principally of net proceeds from a registered direct offering of $7.0 million and the receipt of $1.5 million in proceeds from the sale of common stock pursuant to the SEPA, which was recorded as a stock subscription receivable at December 31, 2024, offset partially by principal payments on equipment finance leases of $0.4 million.
Riley Securities, Inc. acts as sales agent under our ATM program, which, using the shelf-registration statement on Form S-3 filed on August 5, 2021, allowed us to potentially sell up to $50.0 million of our common stock.
Riley Securities, Inc (“B. Riley”) and entered into a new ATM Offering Agreement with H.C. Wainwright & Co., LLC (“Wainwright”) to potentially sell up to $50.0 million of our common stock using a shelf registration statement on Form S-3/A (File No. 333-281565) which was filed in January 2025 and became effective in February 2025.
Operating Expenses Operating expenses for the year ended December 31, 2024, totaled $12.9 million, a decrease of 21.5% when compared to $16.4 million for the year ended December 31, 2023. Factors contributing to the decrease most notably related to a reduction in staffing and contract labor expenses, in addition to reduced spending on sales and marketing.
Operating Expenses Operating expenses for the year ended December 31, 2025, totaled $14.5 million, an increase of 13.0% when compared to $12.9 million for the year ended December 31, 2024.
“VWAP” is defined as the daily volume weighted average price of the shares of Common Stock for such trading day on the Nasdaq Stock Market during regular trading hours as reported by Bloomberg L.P. The Company will use 10% of the proceeds associated with each Advance to redeem the outstanding Series A Preferred Stock held by Streeterville.
We are required to use 10% of the proceeds from each advance to redeem outstanding shares of Series A Preferred Stock held by Streeterville.
Interest expenses will vary in the future based on our cash flow and borrowing needs.
Interest expense for the 2024 period totaled $328 thousand consisting principally of interest on finance leases and the stated interest related to the Streeterville Capital, LLC (“Streeterville”) and Scott notes, both of which have been fully repaid. Interest expenses will vary in the future based on our cash flow and borrowing needs.
Removed
During 2023 and 2024, our primary focus has been building out our sales reseller and channel platform and collaborating with those partners to 1) increase our sales pipeline and 2) progress customer prospects, leads and opportunities through the sales lifecycle. Gaining traction with our Shield solutions has taken longer than initially anticipated.
Added
Revenue growth in 2025 was primarily driven by work performed for the U.S. Department of Defense for the development and implementation of the Shield OT Defender in the Asia Pacific region which contributed to increases in both Shield and consulting revenues. Consulting revenues totaled $5.3 million in 2025 compared to $4.2 million in 2024.
Removed
Revenues in the first half of 2024 were hampered by both the delay in the approval of a federal budget which impacted the timing of renewals and task orders received and the loss of a large early Shield customer that had a non-standard custom implementation that was no longer supported.
Added
Shield revenues totaled $1.8 million, compared to $1.6 million in 2024. We anticipate that the sale of our OT Defender solution to other departments of the U.S. government, as well as commercially, will continue to contribute to future growth. Additionally, during 2025, we partnered with Port Nexus to integrate our Shield technology into its My Flare Alert school safety solution.
Removed
Revenues increased in the second half of 2024 as a result of new customers signed in recent quarters and, to a large degree, the new government awards for the combined use of both threat reporting and the use of Shield technology. Consulting revenues totaled $4.2 million in 2024 compared to $4.0 million in 2023.
Added
Although sales to Port Nexus did not materially impact 2025 revenues, the expanded pipeline for this offering is expected to support future Shield revenue growth.
Removed
Shield revenues totaled $1.6 million in 2024 which is flat when compared to 2023. The loss of the large early Shield customer which accounted for greater than 70% of the Shield revenue base has been fully offset by the expanded use of Shield from existing customers and new customers signed in 2024.
Added
Revenue in the fourth quarter of fiscal 2025 decreased 25% compared to the prior quarter and 12% compared to the prior year period, primarily reflecting the delayed timing of incremental funding under a major U.S. government contract.
Removed
We are beginning to see traction with our Shield products with multiple Shield sales that, essentially, are paid proof of values which have the potential for significant Shield sales growth beyond the initial engagement. On December 31, 2024, our Shield opportunities comprised a large percentage of our sales pipeline. Concentration of Revenues .
Added
The timing of this funding was impacted by operational and administrative constraints associated with the U.S. government shutdown and continuing resolution, which limited agencies’ ability to initiate and process contract actions during the period.
Removed
Over 2024, we have expanded the number of Shield resellers and referral partners. We anticipate our concentration of revenues will vary among customers in future periods depending upon the timing of certain sales.
Added
As a company that derives a significant portion of its revenue from U.S. government customers, our operating results are dependent on the timing of government funding authorizations, contract awards, and program execution.
Removed
Currently, we are not aware of any additional proposed cancellation or renegotiation of any of our existing arrangements with government entities and, historically, cancellations or renegotiated orders by government entities have not resulted in a material adverse effect on our business.
Added
While we believe the impact of this delay is primarily timing-related, changes in federal budget priorities, including those related to defense and national security, may continue to influence the timing and allocation of future funding, which could affect our revenue and operating results in future periods. Concentration of Revenues .
Removed
In late March 2023 we implemented cost reduction measures that resulted in the reduction of sixteen permanent positions, the reduced use of contractors and renegotiated or replaced spend on certain sales support and marketing services with less costly programs. As a retention incentive, employees were granted equity awards in March 2023 with a one-year vesting.
Added
Factors contributing to the increase most notably related to one-time savings realized in 2024 from the negotiation or cancellation of existing contracts which contributed $0.5 million in savings in 2024, increased share-based compensation of $0.7 million from equity grants made in the first quarter of 2025 and cost of living and merit increases of $0.3 million. 16 Sales and Marketing Sales and marketing expenses totaled $5.3 million, an increase of $0.5 million from $4.7 million in 2024.
Removed
Reduced non-cash share-based compensation in 2024 in addition to one time negotiated contract savings, and an insurance settlement for legal defense costs associated with litigation matters that arose in 2021, contributed $1.4 million in savings over 2023. Many of the reductions were in Research and Development, which will impact the number and frequency of product releases.
Added
The increased Sales and Marketing spend related primarily to increased participation in trade shows and increased spend to create more brand awareness and concise product messaging which was partially offset by increased allocations out of operating expenses to cost of sales for resources dedicated to increased consulting work in 2025 and one-time negotiated savings included in the 2024 period of approximately $0.2 million.
Removed
As we grow our customer base and increase our revenues, we may choose to accelerate our product development in future periods, which would result in increased spending. Employee headcount on December 31, 2024, totaled fifty compared to forty-nine on December 31, 2023.
Added
Research and Development Research and development expenses totaled $5.2 million for the year ended December 31, 2025, representing an increase of $0.7 million when compared to the prior year.
Removed
Sales and Marketing Sales and marketing expenses decreased to $4.7 million in 2024, compared to $5.7 million in 2023. The 2024 period included approximately $0.2 million in one-time negotiated contract savings.
Added
The increase was primarily due to increased depreciation of $0.2 million on infrastructure hardware purchases and internally developed software and increases in compensation related to the addition of a Sales Engineer and Software Engineer, merit increases and equity awards made in the first quarter of 2025.
Removed
General and Administrative General and administrative expenses totaled $3.7 million in 2024 compared to $5.2 million in 2023.
Added
Other Income (Expense), Net Other income included interest income on cash and short-term investments of $0.2 million in 2025.
Removed
Interest expense for the year ended December 31, 2023, was $958 thousand. The decreased interest expense resulted principally from the $9.5 million aggregate exchange of the Streeterville debt to both common and preferred stock. As of December 31, 2024, $529 thousand of the Streeterville Note One remained outstanding.
Added
Investing Activities For the year ended December 31, 2025, net cash used in investing activities was ($2.5) million, of which $1.8 million was the capitalization of internally developed software, and $0.8 million was the purchase of equipment.
Removed
For the year ended December 31, 2023, the interest accretion and amortization of debt issuance costs totaled $0.9 million in expense. Other (Expense) Income, Net Interest and other income were negligible in 2024 and 2023.
Added
Our primary source of cash for funding operations in 2025 has come from net proceeds received from a registered direct offering of $7.0 million and $1.5 million in proceeds from the sale of common stock pursuant to a SEPA, recorded as a receivable at December 31, 2024.
Removed
Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $4.9 million and $1.9 million in working capital.
Added
Our independent registered public accounting firm’s report on our audited financial statements for the fiscal year ended December 31, 2025 includes an explanatory paragraph stating that our historically recurring losses from operations, negative cash flows from operations, and dependence on equity and debt financings raise substantial doubt about our ability to continue as a going concern.
Removed
Our principal source of cash for funding operations in 2023 was $4.7 million from sales of common stock utilizing the ATM program, a private placement offering completed in November 2023 of $2.3 million and net funds through changes in working capital which included the receipt of the remaining ERC refund of $1.4 million. ATM Program B.
Added
Our ability to continue as a going concern is dependent upon our ability to raise additional funds through public or private financings, including the utilization of our ATM program.

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