INTRUSION INC Stock Compensation Disclosure
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 four stock-based compensation plans on December 31, 2024, the 2023 Employee Stock Purchase Plan, the 2021 Omnibus Plan, the 2015 Stock Incentive Plan, and the 2005 Stock Incentive Plan. The Company grants stock from both the 2021 Omnibus Incentive Plan and the 2015 Stock Incentive Plan. These plans provide 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. These plans are described below.
2023 Employee Stock Purchase Plan (the “ESPP”)
During 2023, the Company adopted the ESPP. The ESPP provides for the issuance of up to .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 January 1 and July 1 of each year.
The 2021 Omnibus Incentive Plan (the “2021 Plan”)
The 2021 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 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 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.
The 2015 Stock Incentive Plan (“the “2015 Plan”)
The 2015 Plan provided for the issuance of up to shares of common stock. The 2015 Plan consists of three separate equity incentive programs: the Discretionary Option Grant Program; the Stock Issuance Program; and the Automatic Option Grant Program for non-employee Board members, officers, employees and non-employee. Board members and independent contractors are eligible to participate in the Discretionary Option Grant and Stock Issuance Programs.
The 2005 Stock Incentive Plan (the “2005 Plan”)
Grants can no longer be made from the 2005 Plan. The 2005 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:
| (In thousands) | Common Shares Reserved for Future Issuance | |||
| 2021 Plan | 2,250 | |||
| 2015 Plan | 8 | |||
| 2005 Plan | – | |||
| Total | 2,258 | |||
Total stock-based compensation expense is included in operating expense on the statements of operations of $ and $.0 million for the years ended December 31, 2024, and 2023, respectively.
Restricted Stock Units
During the year ended December 31, 2024, the Company granted thousand restricted stock units (“RSUs”). The Company recognized compensation expense related to RSUs of $ million, for the year ended December 31, 2024. As of December 31, 2024, the total unrecognized compensation cost related to non-vested RSUs not yet recognized in the statement of operations totaled $ million. This amount is expected to be recognized over a weighted-average period of years.
The following table summarizes the activities for the Company’s unvested RSUs in Intrusion Inc. stock for the year ended December 31, 2024:
| Unvested Restricted Stock Units | ||||||||
Number of Shares (in thousands) | Weighted-Average Grant-Date Fair Value | |||||||
| Unvested as of December 31, 2023 | – | $ | – | |||||
| Granted | 254 | 1.38 | ||||||
| Vested | – | – | ||||||
| Forfeited/canceled | (51 | ) | 1.38 | |||||
| Unvested as of December 31, 2024 | 203 | $ | 1.38 | |||||
Restricted Stock Awards
During the year ended December 31, 2023, the Company granted thousand restricted stock awards (“RSAs”). The Company recognized compensation expense related to RSAs of $ million and $ million, for the years ended December 31, 2024, and 2023, respectively. As of December 31, 2024, all RSAs were vested and there was no remaining unrecognized compensation cost.
Stock Option Awards
During the year ended December 31, 2023, the Company granted thousand stock options awards. No awards were granted in 2024. The Company recognized compensation expenses related to stock options of $ million and $ million, for the years ended December 31, 2024, and 2023, respectfully. As of December 31, 2024, the total unrecognized compensation cost related to non-vested options not yet recognized in the Consolidated Statements of Operations totaled $. This amount is expected to be recognized over the weighted average period of years.
A summary of the Company’s stock option activity and related information for the years ended December 31, 2024, and 2023 is as follows:
| 2024 | 2023 | |||||||||||||||
Number of (in thousands) | Weighted Average Exercise Price | Number of (in thousands) | Weighted Average Exercise Price | |||||||||||||
| Outstanding at beginning of year | 50 | $ | 62.40 | 33 | $ | 104.40 | ||||||||||
| Granted | – | – | 31 | 24.80 | ||||||||||||
| Exercised | – | – | (4 | ) | 9.60 | |||||||||||
| Forfeited | (2 | ) | 73.04 | (8 | ) | 86.40 | ||||||||||
| Expired | (6 | ) | 66.55 | (2 | ) | 156.00 | ||||||||||
| Outstanding at end of year | 43 | $ | 61.26 | 50 | $ | 62.40 | ||||||||||
| Options exercisable at end of year | 41 | $ | 61.05 | 23 | $ | 85.60 | ||||||||||
Information related to stock options outstanding on December 31, 2024, is summarized below:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
| Range of Exercise Prices | Outstanding at (in thousands) | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Exercisable at (in thousands) | Weighted Average Exercise Price | |||||||||||||||
| $ - $ | 27 | $ | 23.82 | 27 | $ | 23.92 | ||||||||||||||
| $ - $ | 12 | $ | 73.91 | 10 | $ | 74.29 | ||||||||||||||
| $ - $ | 4 | $ | 280.24 | 4 | $ | 280.24 | ||||||||||||||
| $ - $ (all) | 43 | $ | 61.26 | 41 | $ | 61.05 | ||||||||||||||
Summarized information about outstanding stock options as of December 31, 2024, that are expected to vest in the future as well as stock options that are fully vested and currently exercisable, are as follows:
Outstanding Stock Options (Expected to Vest) | Options that are Exercisable | |||||||
| As of December 31, 2024 | ||||||||
| Number of outstanding options (in thousands) | 43 | 41 | ||||||
| Weighted average remaining contractual life | years | years | ||||||
| Weighted average exercise price per share | $ | 61.26 | $ | 61.05 | ||||
| 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, 2023:
| 2023 | ||||
| Weighted average grant date fair value | $ | |||
| Weighted average assumptions used: | ||||
| Expected dividend yield | % | |||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected life (in years) | ||||
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.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.