Intrusion(INTZ) - 2024 Q4 - Annual Report

Financial Performance - 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[105] - Gross profit for the 12-months ended December 31, 2024, was$4.4 million, maintaining a gross profit margin of 76.8% compared to 77.6% in 2023[110] - Operating expenses for the year ended December 31, 2024, totaled $12.9 million, a decrease of 21.5$16.4 million in 2023[111] - Net loss for the year ended December 31, 2024, was $7.8 million, a reduction of 43.9$13.9 million in 2023[104] Revenue Sources - Revenues from U.S. government entities accounted for $4.8 million or 83.8$2.6 million or 46.2% in 2023[107] - The company anticipates that sales to government customers will represent a lower percentage of total revenues as it gains traction in commercial markets[107] Expenses - Sales and marketing expenses decreased to $4.7 million in 2024, compared to$5.7 million in 2023[113] - Research and development expenses decreased to $4.4 million in 2024 from$5.6 million in 2023[114] Cash and Financing - Cash and cash equivalents as of December 31, 2024, were $4.9 million, with$1.9 million in working capital[125] - The company entered into a $10 million Standby Equity Purchase Agreement with Streeterville Capital, LLC on July 3, 2024[129] - In 2024, Streeterville purchased 1.2 million shares of common stock, resulting in aggregate net proceeds of$1.8 million, with $0.1 million received in 2024 and$1.7 million received in January 2025[131] - The company made principal payments of $0.4 million in 2023 and$1.5 million in 2022, with a remaining balance of $0.5 million on the first note due in September 2024[133] - A note purchase agreement in September 2024 involved Streeterville purchasing a note payable of$0.6 million for $0.5 million in cash, requiring weekly payments of$25,000 until maturity[134] - The CEO purchased a note payable of $1.1 million for$1.0 million in cash, with weekly payments of $40,000 until maturity on June 15, 2024[135] Revenue Recognition - The company recognizes product revenue upon shipment or after meeting performance obligations, with most sales derived from consulting services[140] - The new product, INTRUSION Shield, is offered on a subscription basis, with revenue recognized monthly over the contract term[143] Financial Estimates and Valuations - The company maintains allowances for credit losses for estimated losses from customer payment defaults, with historical estimates aligning closely with actual results[148] - The estimated fair value of accounts receivable and accounts payable approximates their carrying amounts due to short maturities[149] Preferred Stock - The Series A preferred stock has a stated value of$1,100 per share, with a portion of proceeds used to redeem outstanding preferred stock[133] - The company is in discussions with Streeterville regarding the redemption or amendment of the first note due in September 2024[133]