Revenue and Profitability - Total revenue increased by 9.9% to $7.3 million in 2021 from $6.6 million in 2020, driven by $0.6 million in revenues from the INTRUSION Shield product line [110]. - Gross profit rose 19.0% to $4.7 million in 2021, with gross profit margin increasing from 59.1% in 2020 to 63.9% in 2021 [114]. - Revenues from U.S. government entities totaled $5.2 million, or 71.3% of total revenues in 2021, down from $5.7 million or 86.3% in 2020 [113]. Expenses - Sales and marketing expenses surged to $11.9 million, representing 164.0% of net revenue in 2021, compared to $3.8 million or 57.7% in 2020 [115]. - Research and development expenses increased to $6.3 million, accounting for 87.0% of net revenue in 2021, up from $3.8 million or 57.4% in 2020 [117]. - General and administrative expenses rose to $5.9 million, or 81.0% of revenue in 2021, compared to $2.8 million or 42.5% in 2020 [118]. Net Loss and Financial Position - A net loss of $18.8 million was reported for 2021, compared to a net loss of $6.5 million in 2020, reflecting a significant increase in operating loss [109]. - Net cash used in operating activities for the year ended December 31, 2021, was $16.6 million, compared to $5.2 million in 2020, primarily due to a net loss of $18.8 million in 2021 [125][126]. - As of December 31, 2021, cash and cash equivalents were $4.1 million, down from approximately $16.7 million in 2020, with working capital of $2.1 million compared to $16.2 million in 2020 [132]. Financing Activities - The company raised approximately $5.5 million through an at-the-market stock issuance program initiated in August 2021 [106]. - Net cash provided by financing activities was $5.1 million in 2021, primarily from net proceeds of $5.6 million from an at-the-market program [130]. - The company entered into a securities purchase agreement for the issuance of convertible notes totaling $5.35 million, with proceeds intended for general corporate purposes [135]. - The convertible notes carry an interest rate of 7% per annum and have a maturity date of 18 months from issuance [137]. Product Development and Revenue Recognition - INTRUSION Shield, the company's new product, is offered on a subscription basis, with revenue recognized monthly over the contract term [147][151]. - The company reported a $383 thousand increase in deferred revenue due to cash advances from customers for the INTRUSION Shield product [125]. Future Outlook and Funding Needs - The company anticipates needing to raise additional funds through public or private financings to continue operations beyond March 2023 [140]. - The company maintains allowances for doubtful accounts to estimate losses from customers' inability to make payments, expecting to continue this policy in the future [152]. Fair Value Estimates - The estimated fair value of accounts receivable, accounts payable, and accrued expenses approximates their carrying amounts due to their relatively short maturity [153]. - Financing leases and PPP loans approximate fair value as they bear market rates of interest [153].
Intrusion(INTZ) - 2021 Q4 - Annual Report