INTRUSION INC
For the period ended Dec 31, 2025. Filed Mar 25, 2026.
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FY2025 · Filed Mar 25, 2026
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Stock-Based Compensation
- Stock-Based Compensation
The Company accounts for equity-based compensation in accordance with ASC 718 which requires that compensation related to all equity-based awards be recognized in the Consolidated Financial Statements. Stock-based compensation is valued at fair value at the date of grant, and the grant date fair value is recognized as expense over each award’s requisite service period with a corresponding increase to equity or liability based on the terms of each award and the appropriate accounting treatment under ASC 718.
The Company had three stock-based compensation plans on December 31, 2025, the 2023 ESPP, the 2021 Plan, and the 2015 Plan. The Company grants stock from the 2021 Plan. This plan provides a means through which the Company may attract and retain key personnel and provide a means whereby directors, officers, employees, consultants and advisors of the Company can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of common stock, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Company’s stockholders. The typical vesting schedule of stock awards ranges from 1 to 4 years based on the individual grant agreements. The maximum term of stock option awards is ten years. These plans are described below.
ESPP
During 2023, the Company adopted the ESPP. The ESPP provides for the issuance of up to 1.0 million shares of common stock to participating eligible employees and allows eligible employees to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at six-month intervals. The offering periods under the ESPP commence on first day of January and July of each year.
2021 Plan
The 2021 Plan is administered by the Compensation Committee of the Company’s Board of Directors and permits the grant of cash and equity-based awards, which may be awarded in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, other stock-based awards, and other cash-based awards.
The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which awards may be granted under the 2021 Plan shall not exceed 2.5 million shares and is subject to any increase or decrease, which shares may be either authorized and unissued common stock or common stock held in or acquired for the treasury of the Company or both.
2015 Plan
Grants can no longer be made from the 2015 Plan. The 2015 Plan will remain active until all outstanding options have been exercised, forfeited, expired, or cancelled.
Common shares reserved for future issuance, including options and restricted stock under all the stock option plans are as follows:
| Schedule of common shares reserved for future issuance | |
|---|---|
| (In thousands) | Common Shares Reserved for Future Issuance |
| 2021 Plan | 1,663 |
| 2015 Plan | – |
| Total | 1,663 |
Total stock-based compensation expense is included in operating expense on the statements of operations of $1.1 and $0.3 million for the years ended December 31, 2025 and 2024, respectively.
Restricted Stock Units
During the years ended December 31, 2025 and 2024, the Company granted 592 thousand and 254 thousand restricted stock units (“RSUs”), respectively. The Company recognized compensation expense related to RSUs of $1.0 million and $0.1 million, for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the total unrecognized compensation cost related to unvested RSUs not yet recognized in the statement of operations totaled $0.3 million. This amount is expected to be recognized over a weighted-average period of 1.06 years.
The following table summarizes the activities for the Company’s unvested RSUs in Intrusion Inc. stock for the year ended December 31, 2025 and 2024:
| Schedule of unvested RSUs | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Number of Shares (in thousands) | Weighted Average Grant-Date Fair Value | Number of Shares (in thousands) | Weighted Average Grant-Date Fair Value | |
| Unvested at the beginning of the year | 203 | $1.38 | – | $– |
| Granted | 592 | 2.02 | 254 | 1.38 |
| Vested | (203) | 1.38 | – | – |
| Forfeited/canceled | (19) | 2.18 | (51) | 1.38 |
| Unvested at the end of the year | 573 | $2.02 | 203 | $1.38 |
Restricted Stock Awards
No restricted stock awards (RSAs”) were granted during the years ended December 31, 2025 or 2024. Compensation expense related to RSAs was $0.1 million for the year ended December 31, 2024, withno compensation expense for RSAs for the year ended December 31, 2025. As of December 31, 2025, all previously granted RSAs were fully vested with no remaining unrecognized compensation cost.
Stock Option Awards
During the year ended December 31, 2025, the Company granted 15 thousand stock option awards. No awards were granted in 2024. The Company recognized compensation expenses related to stock options of $38 thousand and $130 thousand, for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the total unrecognized compensation cost related to unvested options not yet recognized in the Consolidated Statements of Operations totaled $3 thousand. This amount is expected to be recognized over the weighted average period of 0.1 years.
A summary of the Company’s stock option activity and related information for the years ended December 31, 2025 and 2024 is as follows:
| Schedule of stock option activity | ||||
|---|---|---|---|---|
| 2025 | 2024 | |||
| Number of Options (in thousands) | Weighted Average Exercise Price | Number of Options (in thousands) | Weighted Average Exercise Price | |
| Outstanding at beginning of year | 43 | $61.26 | 50 | $62.40 |
| Granted | 15 | 2.09 | – | – |
| Exercised | – | – | – | – |
| Forfeited | – | – | (1) | 73.04 |
| Expired | (4) | 40.56 | (6) | 66.55 |
| Outstanding at end of year | 54 | $46.28 | 43 | $61.26 |
| Options exercisable at end of year | 39 | $63.36 | 41 | $61.05 |
Information related to stock options outstanding on December 31, 2025, is summarized below:
| Schedule of stock options by exercise price | |||||
|---|---|---|---|---|---|
| Options Outstanding · Options Exercisable | |||||
| Range of Exercise Prices | Outstanding at 12/31/25 (in thousands) | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Exercisable at 12/31/25 (in thousands) | Weighted Average Exercise Price |
| $2.09 - $5.02 | 15 | 9.54 | $2.09 | – | $5.02 |
| $24.20 - $36.30 | 25 | 7.07 | $24.40 | 25 | $24.40 |
| $63.80 - $95.70 | 10 | 6.04 | $74.13 | 10 | $74.23 |
| $174.40 - $261.60 | 3 | 4.42 | $236.35 | 3 | $236.35 |
| $470.40 - $705.60 | 1 | 5.17 | $470.40 | 1 | $470.40 |
| $2.09 - $705.60 (all) | 54 | 7.38 | $46.28 | 39 | $63.36 |
Summarized information about outstanding stock options as of December 31, 2025, that are expected to vest in the future, as well as stock options that are fully vested and currently exercisable, are as follows:
| Schedule of outstanding stock options | ||
|---|---|---|
| Outstanding Stock Options (Expected to Vest) | Options that are Exercisable | |
| Number of outstanding options (in thousands) | 54 | 39 |
| Weighted average remaining contractual life | 7.38 years | 6.55 years |
| Weighted average exercise price per share | $46.28 | $63.36 |
| Intrinsic value (in thousands) | $– | $– |
The fair values of option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions for the year ended December 31, 2025:
| Schedule of assumptions for stock based compensation | |
|---|---|
| Weighted average grant date fair value | $1.94 |
| Weighted average assumptions used: | |
| Expected dividend yield | 0.00% |
| Risk-free interest rate | 4.10% |
| Expected volatility | 146.69% |
| Expected life (in years) | 5.7 |
Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award.
11. Employee Benefit Plan
Employee 401(k) Plan
The Company has a plan known as the Intrusion Inc. 401(k) Savings Plan (the “Plan”) to provide retirement and incidental benefits for the Company’s employees. The Plan covers substantially all employees who meet minimum age and service requirements. As allowed under Section 401(k) of the Internal Revenue Code (‘IRC”), the Plan provides tax deferred salary deductions for eligible employees.
Employees may contribute up to 90% of their annual compensation to the Plan, limited to a maximum amount as set by the IRC. Participants who are over the age of 50 may contribute an additional amount of their salary per year, as defined annually by the IRC. The Company matches employee contributions at the rate of 0.25% per each 1% of contributions on the first 4% of compensation. Matching contributions to the Plan were approximately $0.1 million each for the years ended December 31, 2025 and 2024.
**12. Related Party Transactions **
In January 2024, the Company entered into a note purchase agreement with the Company’s CEO. These notes and related activities during the years ended December 31, 2025 and 2024, are discussed in detail in Note 6.
13. Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2025 and 2024 are as follows (in thousands):
| Schedule of deferred tax assets liabilities | ||
|---|---|---|
| December 31, | ||
| 2025 | 2024 | |
| Net operating loss carryforwards | $17,410 | $16,493 |
| Net operating loss carryforwards of foreign subsidiary | 56 | 56 |
| Depreciation expense | (533) | (341) |
| Stock-based compensation expense | 760 | 608 |
| Other | 616 | 550 |
| Net deferred tax assets | 18,309 | 17,366 |
| Valuation allowance for net deferred tax assets | (18,309) | (17,366) |
| Net deferred tax assets, net of valuation allowance | $– | $– |
Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all the deferred tax assets will not be realized. Realization of the future benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the near to medium term. Management has considered these factors in determining the valuation allowance for 2025 and 2024.
The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended December 31, 2025 and 2024 are as follows (in thousands):
| Schedule of effective income tax rate reconciliation | ||
|---|---|---|
| 2025 | 2024 | |
| Reconciliation of income tax benefit to statutory rate: | ||
| Income benefit at statutory rate | $(1,903) | $(1,636) |
| State income taxes (benefit), net of federal income tax benefit | (60) | (61) |
| Permanent differences | 11 | 1 |
| Change in valuation allowance | 942 | 420 |
| Expiring federal net operating losses | 913 | 1,079 |
| Other | 97 | 197 |
| Income tax provision | $– | $– |
On December 31, 2025, the Company had federal net operating loss carryforwards of approximately $82.9 million for income tax purposes that begin to expire in 2026 and are subject to the ownership change limitations under IRC Section 382.
14. Subsequent Events
None.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.