INTRUSION INC Income Taxes Disclosure

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.