0001437749-20-017830.txt : 20200813 0001437749-20-017830.hdr.sgml : 20200813 20200813163518 ACCESSION NUMBER: 0001437749-20-017830 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 51 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200813 DATE AS OF CHANGE: 20200813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTRUSION INC CENTRAL INDEX KEY: 0000736012 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 751911917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20191 FILM NUMBER: 201099823 BUSINESS ADDRESS: STREET 1: 1101 ARAPAHO ROAD CITY: RICHARDSON STATE: TX ZIP: 75081 BUSINESS PHONE: 9722346400 MAIL ADDRESS: STREET 1: 1101 ARAPAHO ROAD CITY: RICHARDSON STATE: TX ZIP: 75081 FORMER COMPANY: FORMER CONFORMED NAME: INTRUSION COM INC DATE OF NAME CHANGE: 20000601 FORMER COMPANY: FORMER CONFORMED NAME: ODS NETWORKS INC DATE OF NAME CHANGE: 19970507 FORMER COMPANY: FORMER CONFORMED NAME: OPTICAL DATA SYSTEMS INC DATE OF NAME CHANGE: 19950517 10-Q 1 intz20200630_10q.htm FORM 10-Q intz20200630_10q.htm
 


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                  to                        

 

Commission File Number 0-20191

 

INTRUSION INC.

(Exact name of registrant as specified in its charter)

 

Delaware

75-1911917

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

1101 East Arapaho Road, Suite 200, Richardson, Texas 75081

(Address of principal executive offices)

(Zip Code)

 

(972) 234-6400

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

* * * * * * * * * *

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

           Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

☐ 

 

Smaller reporting company

Emerging growth company

     

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

 

The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, on July 31, 2020 was 13,792,030.

 



 

 

1

 

 

INTRUSION INC.

 

INDEX

 

PART I – FINANCIAL INFORMATION  
   
Item 1. Financial Statements  
   
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 3
   

Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019

4
   
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2020 and 2019 5
   

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019

6
   
Notes to Unaudited Condensed Consolidated Financial Statements 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
   
Item 4. Controls and Procedures 16
   
PART II – OTHER INFORMATION 16
   
Item 1. Legal Proceedings 16
   
Item 1A. Risk Factors 17
   
Item 6. Exhibits 19
   
Signature Page 20

 

2

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. FINANCIAL STATEMENTS

 

INTRUSION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

 

   

June 30,

2020

   

December 31,
2019

 

ASSETS

               

Current Assets:

               

Cash and cash equivalents

  $ 2,872     $ 3,334  

Accounts receivable

    1,067       1,566  

Prepaid expenses

    388       152  

Total current assets

    4,327       5,052  

Noncurrent Assets:

               

Property and equipment, net

    311       335  

Finance leases, right-of-use assets, net

    41       62  

Operating leases, right-of-use asset, net

    1,223       1,348  

Other assets

    36       38  

Total noncurrent assets

    1,611       1,783  

TOTAL ASSETS

  $ 5,938     $ 6,835  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               
                 

Current Liabilities:

               

Accounts payable and accrued expenses

  $ 1,152     $ 1,080  

Dividends payable

    19       20  

Finance leases liability, current portion

    38       43  

Operating leases liability, current portion

    291       284  

PPP loan payable, current portion

    285        

Deferred revenue

    164       516  

Total current liabilities

    1,949       1,943  

Noncurrent Liabilities:

               

Finance leases liability, noncurrent portion

    5       21  

Operating leases liability, noncurrent portion

    1,170       1,315  

PPP loan payable, noncurrent portion

    345        

Total noncurrent liabilities

    1,520       1,336  
                 

Commitments and contingencies

               
                 

Stockholders’ equity:

               

Preferred stock, $0.01 par value: Authorized shares – 5,000

               

Series 1 shares issued and outstanding — 200 Liquidation preference of $1,012 in 2020 and $1,013 in 2019

    707       707  

Series 2 shares issued and outstanding — 420 in 2020 and 460 in 2019 Liquidation preference of $1,054 in 2020 and $1,155 in 2019

    661       724  

Series 3 shares issued and outstanding — 266 in 2020 and 289 in 2019 Liquidation preference of $583 in 2020 and $634 in 2019

    379       412  

Common stock, $0.01 par value:

               

Authorized shares — 80,000

               

Issued shares — 13,802 in 2020 and 13,552 in 2019 Outstanding shares — 13,792 in 2020 and 13,542 in 2019

    138       136  

Common stock held in treasury, at cost – 10 shares

    (362

)

    (362

)

Additional paid-in capital

    56,946       56,759  

Accumulated deficit

    (55,957

)

    (54,777

)

Accumulated other comprehensive loss

    (43

)

    (43

)

Total stockholders’ equity

    2,469       3,556  

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 5,938     $ 6,835  

 

See accompanying notes.

 

3

 

 

INTRUSION INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

   

June 30, 2020

   

June 30, 2019

 

Revenue

  $ 1,655     $ 4,020     $ 3,450     $ 7,211  

Cost of revenue

    651       1,590       1,398       2,874  
                                 

Gross profit

    1,004       2,430       2,052       4,337  
                                 

Operating expenses:

                               

Sales and marketing

    485       46       995       458  

Research and development

    907       296       1,660       477  

General and administrative

    326       321       582       652  
                                 

Operating income (loss)

    (714

)

    1,767       (1,185

)

    2,750  
                                 

Interest income

    1             7        

Interest expense

    (2

)

    (9

)

    (2

)

    (44

)

                                 

Net income (loss)

  $ (715

)

  $ 1,758     $ (1,180

)

  $ 2,706  
                                 

Preferred stock dividends accrued

    (33

)

    (35

)

    (66

)

    (69

)

Net income (loss) attributable to common stockholders

  $ (748

)

  $ 1,723     $ (1,246

)

  $ 2,637  
                                 

Net income (loss) per share attributable to common stockholders:

                               

Basic

  $ (0.05

)

  $ 0.13     $ (0.09

)

  $ 0.20  

Diluted

  $ (0.05

)

  $ 0.11     $ (0.09

)

  $ 0.17  
                                 
Weighted average common shares outstanding:                                

Basic

    13,784       13,523       13,743       13,466  

Diluted

    13,784       15,371       13,743       15,314  

 

See accompanying notes.

 

4

 

 

INTRUSION INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

 

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

 

NUMBER OF PREFERRED SHARES—ISSUED AND OUTSTANDING

               

Balance, beginning of quarter

    949       949  

Conversion of preferred stock to common

    (63

)

     

Balance, end of quarter

    886       949  

PREFERRED STOCK

               

Balance, beginning of quarter

  $ 1,843     $ 1,843  

Conversion of preferred stock to common

    (96

)

     

Balance, end of quarter

    1,747       1,843  

NUMBER OF COMMON SHARES—ISSUED

               

Balance, beginning of quarter

    13,552       13,259  

Conversion of preferred stock to common

    63        

Exercise of stock options

    187       280  

Balance, end of quarter

    13,802       13,539  

COMMON STOCK

               

Balance, beginning of quarter

  $ 136     $ 133  

Conversion of preferred stock to common

    1        

Exercise of stock options

    1       2  

Balance, end of quarter

  $ 138     $ 135  

TREASURY SHARES

               

Balance, beginning of quarter and end of quarter

  $ (362

)

  $ (362

)

ADDITIONAL PAID-IN-CAPITAL

               

Balance, beginning of quarter

  $ 56,759     $ 56,609  

Conversion of preferred stock to common

    95        

Stock-based compensation

    74       14  

Exercise of stock options

    84       224  

Preferred stock dividends declared, net of waived penalties by shareholders

    (66

)

    (62

)

Balance, end of quarter

  $ 56,946     $ 56,785  

ACCUMULATED DEFICIT

               

Balance, beginning of quarter

  $ (54,777

)

  $ (59,242

)

Net income (loss)

    (1,180

)

    2,706  

Balance, end of quarter

  $ (55,957

)

  $ (56,536

)

ACCUMULATED OTHER COMPREHENSIVE LOSS

               

Balance, beginning of quarter and end of quarter

  $ (43

)

  $ (43

)

TOTAL STOCKHOLDERS’ EQUITY

  $ 2,469     $ 1,822  

 

See accompanying notes.

 

5

 

 

INTRUSION INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 

   

Six Months Ended

 
   

June 30,

2020

   

June 30,
201
9

 

Operating Activities:

               

Net income (loss)

  $ (1,180

)

  $ 2,706  

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

               

Depreciation and amortization

    107       86  

Stock-based compensation

    74       14  

Penalties on dividends

          6  

Noncash lease costs

    124       304  

Changes in operating assets and liabilities:

               

Accounts receivable

    499       (738

)

Prepaid expenses and other assets

    (234

)

    (234

)

Accounts payable and accrued expenses

    (64

)

    (66 )

Deferred revenue

    (352

)

    179  

Net cash provided by (used in) operating activities

    (1,026

)

    2,257  
                 

Investing Activities:

               

Purchases of property and equipment

    (62

)

    (168

)

                 

Financing Activities:

               

Proceeds from PPP loan payable

    629        

Payments on loan from officer

          (1,815

)

Proceeds from stock options exercised

    85       226  

Payments of dividends

    (67

)

    (644

)

Reduction of finance lease liability

    (21

)

    (31

)

Net cash provided by (used in) financing activities

    626       (2,264

)

                 

Net decrease in cash and cash equivalents

    (462

)

    (175

)

Cash and cash equivalents at beginning of period

    3,334       1,652  

Cash and cash equivalents at end of period

  $ 2,872     $ 1,477  
                 
                 

SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING ACTIVITIES:

               
                 

Preferred stock dividends accrued

  $ 66     $ 68  

Conversion of preferred stock to common

  $ 96     $  

 

See accompanying notes.

 

6

 

INTRUSION INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

1.

Description of Business

 

We develop, market and support a family of entity identification, high speed data mining and cybersecurity solutions. Our products help detect, report and mitigate cybercrimes and advanced persistent threats.

 

Our product families include:

 

 

TraceCop for entity identification, cybercrime detection and disclosure, and;

 

Savant for high speed data mining, analytics, detection, reporting and mitigation of cybersecurity threats.

 

Our products in development include:

 

 

Intrusion Shield

 

        We are in the process of developing a new product offering, Intrusion Shield, that is designed to be a next generation intrusion detection and protection solution.  After 20 years of providing research, analysis, and tools to the federal government and enterprise corporations, Intrusion possesses a comprehensive and proprietary database of Internet activity, including information about the activities of malicious online actors.  Intrusion’s Shield product will combine that comprehensive database with artificial intelligence (AI) and real-time process flow technology to provide businesses and government agencies with a unique and affordable tool to detect, identify, and prevent cyber-crimes. 

 

Shield is a combination of plug-and-play hardware, software, global data, and AI services providing organizations with aggressive protection against unaddressed information security threats and the most robust defense possible against cybercrime. Unlike traditional industry approaches that rely heavily on human resources, which malicious actors have learned to bypass, Intrusion Shield uses our extensive database together with real-time AI technology to prevent illicit behavior.  Shield's proprietary architecture isolates and neutralizes malicious traffic and network flows that existing solutions cannot identify or even characterize. Most breaches today are caused by malware free compromises that trigger no alarms in a firewall or endpoint solution. The common denominator is network communications, and Shield monitors and analyses all network traffic and communications allowing it to identify and stop malware-free attacks. Shield's capabilities will continuously evolve based on real-time updates originating from our worldwide installations and growing TraceCop database identifying new dangers.

 

Shield does not seek to displace existing solutions, instead providing a new, and additional layer of cybersecurity for enterprises.  According to SBA 2019, the U.S. enterprise market consists of 30.7 million businesses, of which 70% are characterized as small and medium sized businesses.  While the company believes that many large enterprises will recognize the need this product addresses and will be incentivized to purchase Shield, the enterprise market has many decision makers for new security product purchases; therefore, the sale cycle may be longer for this product than our current product offerings.  We have identified businesses with from 100 to 1,000 users as our initial target market, as we believe this market segment has the most pressing need for the enhanced protection that the Intrusion Shield will offer.  We intend to leverage existing and new channel partners, such as value added resellers and systems integrators, to market Shield to this target market.

 

Shield has experienced positive progress during Alpha testing and the Company has identified twelve companies for the Beta release anticipated to begin in September.  The configuration of hardware is a single Dell network appliance installed inline inside of the customer's firewall.  The size of the network appliance will vary depending on the number of workstations and the size of the customer's internet connection be that 1Gb, 10Gb, or 100 Gb.

 

Intrusion’s products help protect critical information assets by quickly detecting, protecting, analyzing and reporting attacks or misuse of classified, private and regulated information for government and enterprise networks.

 

We market and distribute our products through a direct sales force to:

 

  end-users, and
  value-added resellers.

 

Our end-user customers include:

 

 

U.S. federal government entities,

 

state and local government entities,

 

large and diverse conglomerates,

 

manufacturing entities, and

 

other customers.

 

7

 

We were organized in Texas in September 1983 and reincorporated in Delaware in October 1995. Our principal executive offices are located at 1101 East Arapaho Road, Suite 200, Richardson, Texas 75081, and our telephone number is (972) 234-6400. Our website URL is www.intrusion.com. References to the “Company”, “we”, “us”, “our”, “Intrusion” or “Intrusion Inc.” refer to Intrusion Inc. and its subsidiaries. Trademarks of Intrusion include:

 

 

INTRUSION SHIELD

 

PROCESS FLOW TECHNOLOGY

 

INTRUSION SAVANT

 

BRINGING SCIENCE INTO DECISION MAKING

 

TRACECOP

 

INTRUSION PROTECT EVERYTHING. TRUST NOTHING

 

PROTECT EVERYTHING. TRUST NOTHING.

 

 

2.     Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Item 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The December 31, 2019 balance sheet was derived from audited financial statements, but does not include all the disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented not misleading. In our opinion, all the adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. The results of operations for the three and six month periods ended June 30, 2020 are not necessarily indicative of the results that may be achieved for the full fiscal year or for any future period. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2020.

 

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Loans payable to officer are with a related party and as a result do not bear market rates of interest.  Management believes based on its current financial position that it could not obtain comparable amounts of third party financing, and as such cannot estimate the fair value of the loans payable to officer. None of these instruments are held for trading purposes.

 

On January 1, 2019 we adopted ASU No. 2016-02, Leases (topic 842). At the date of adoption there was no impact on the statement of operations, while the balance sheet reflects recording both assets and liabilities applicable to the operating right-of-use asset lease identified. ASU No. 2016-02 did not have a material effect on the Company’s results of operations or cash flows for the three and six month periods ended June 30, 2020 and 2019.

 

 

3.     Loan Payable to Officer

 

On February 8, 2018, the Company entered into an unsecured revolving promissory note to borrow up to $3,700,000 from G. Ward Paxton. Under the terms of the CEO Note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of $3,700,000 at any given time through March 2020.

 

On February 7, 2019, the Company amended the unsecured revolving promissory note to borrow up to $2,700,000 from G. Ward Paxton, the Company’s former Chief Executive Officer. Amounts borrowed under the CEO Note accrued interest at a floating rate per annum equal to Silicon Valley Bank’s (“SVB”) prime rate plus 1%. Under the terms of the note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of $2,700,000 at any given time through March 2021. We reduced our borrowing under this note to zero as of May 2019.

 

As of October 24, 2019, G. Ward Paxton passed away, terminating the CEO Note with the result that future borrowings thereunder will no longer be available to the Company. Our management will be assessing whether to replace this borrowing capacity and assessing what terms may be available to the Company, including whether any such terms are acceptable to the Company, if at all.

 

8

 

 

4.     Accounting for Stock-Based Compensation

 

During the three month periods ended June 30, 2020 and 2019, the Company granted 323,000 and 24,000, respectively, of stock options to employees or directors. The Company recognized $55,000 and $10,000, respectively, of stock-based compensation expense for the three month periods ended June 30, 2020 and 2019. During the six month periods ended June 30, 2020 and 2019, the Company granted 323,000 and 24,000, respectively, of stock options to employees and directors. The Company recognized $74,000 and $14,000, respectively, of stock-based compensation expense for the six month periods ended June 30, 2020 and 2019.

 

During the three month periods ended June 30, 2020 and 2019, 14,000 and 14,000 were exercised under the 2005 Plan, respectively. During the six month periods ended June 30, 2020 and 2019, 186,600 and 280,500 were exercised under the 2005 Plan, respectively.

 

Valuation Assumptions

 

The fair values of employee and director option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

 

   

For Three Months Ended

June 30, 2020

   

For Three Months Ended

June 30, 2019

   

For Six Months

 Ended

June 30, 2020

   

For Six Months

Ended
June 30, 2019

 
                                 

Weighted average grant date fair value

  $ 2.80     $ 3.61     $ 2.80     $ 3.61  

Weighted average assumptions used:

                               

Expected dividend yield

    0.0

%

    0.0

%

    0.0

%

    0.0

%

Risk-free interest rate

    0.43

%

    2.19

%

    0.43

%

    2.19

%

Expected volatility

    76.00

%

    127.52

%

    76.00

%

    127.52

%

Expected life (in years)

    6.2       5.0       6.2       5.0  

 

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. Options granted to non-employees are valued using the fair market value on each measurement date of the option.

 

 

5.     Revenue Recognition

 

We generally recognize product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, perpetual software licenses and data sets. Data set updates are the majority of our sales. We do not currently offer software on a subscription basis. Warranty costs and sales returns have not been material.

 

We recognize sales of our data sets in accordance with FASB ASC Topic 606 whereby revenue from contracts with

customers is not recognized until all five of the following have been met:

 

 

i)

identify the contract with a customer;

 

ii)

identify the performance obligations in the contract;

 

iii)

determine the transaction price;

 

iv)

allocate the transaction price to the separate performance obligations; and

  v) recognize revenue upon satisfaction of a performance obligation.

 

Data updates are typically done monthly and revenue will be matched accordingly. Product sales may include maintenance and customer support allocated revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy using the relative selling price method. All of our product offering and service offering market values are readily determined based on current and prior stand-alone sales. We may defer and recognize maintenance, updates and support revenue over the term of the contract period, which is generally one year.

 

Service revenue, primarily including maintenance, training and installation are recognized upon delivery of the service and typically are unrelated to product sales. To date, training and installation revenue has not been material. These revenues are included in net customer support and maintenance revenues in the statement of operations.

 

9

 

Our normal payment terms offered to customers, distributors and resellers are net 30 days domestically and net 45 days internationally. We do not offer payment terms that extend beyond one year and rarely do we extend payment terms beyond our normal terms. If certain customers do not meet our credit standards, we do require payment in advance to limit our credit exposure.

 

Shipping and handling costs are billed to the customer and included in product revenue. Shipping and handling expenses are included in cost of product revenue. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.

 

Contract assets represent contract billings for sales per contracts with customers and are classified as current. Our contract assets include our accounts receivables. At June 30, 2020, the Company had contract assets balance of $1,067,000. At December 31, 2019, the Company had contract assets balance of $1,566,000.

 

Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies deferred revenue as a contract liability. At June 30, 2020, the Company had contract liabilities balance of $164,000. At December 31, 2019, the Company had contract liabilities balance of $516,000.

 

 

6.     Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing net income attributable to common stockholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and dilutive common stock equivalents outstanding for the period. Our common stock equivalents include all common stock issuable upon conversion of preferred stock and the exercise of outstanding options. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the three month periods ended June 30, 2020 and 2019 are 1,942,990 and 12,132, respectively. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the six month periods ended June 30, 2020 and 2019 are 1,909,289 and 6,066, respectively. Since the Company is in a net loss position for the three and six month periods ending June 30, 2020, basic and dilutive net loss per share are the same.

 

 

7.     Concentrations

 

Our operations are concentrated in one area—security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled 91.0% of total revenues for the second quarter of 2020 compared to 91.3% of total revenues for the second quarter of 2019. During the second quarter of 2020, approximately 91.0% of total revenues were attributable to four government customers compared to approximately 73.2% of total revenues attributable to three government customers in the second quarter of 2019. In the second quarter of 2020, no individual commercial customer had revenues over 10.0% of total revenue compared to no individual commercial customer for the same period in 2019. Our similar product and service offerings are not viewed as individual segments, as our management analyzes the business as a whole and expenses are not allocated to each product offering.

 

 

8.     Commitments and Contingencies

 

We are subject from time to time to various legal proceedings and claims that arise during the ordinary course of our business. We do not believe that the outcome of those "routine" legal matters should have a material adverse effect on our consolidated financial position, operating results or cash flows; however, we can provide no assurances that legal claims that may arise in the future will not have such a material impact on the Company.

 

 

9.     Dividends Payable

 

During the quarter ended June 30, 2020, we accrued $13,000 in dividends payable to the holders of our 5% Preferred Stock, $13,000 in dividends payable to the holders of our Series 2 5% Preferred Stock and $7,000 in dividends payable to the holders of our Series 3 5% Preferred Stock. As of June 30, 2020, we had $19,000 in accrued and unpaid dividends, all of which have been paid as of the date of this Quarterly Report.

 

 

10.   Right-of-use Asset and Leasing Liabilities

 

Under the new lease accounting standard, we have determined that we have leases for right-of-use (ROU) assets. We have both finance right-of-use assets and operating right-of-use assets with a related lease liability. Our finance lease right-of-use assets consist of computer hardware and a copying machine. Our operating lease right-of-use assets include our rental agreements for our offices in Richardson and San Marcos, CA. Both types of lease liabilities are determined by the net present value of total payments and are amortized over the life of the lease. Both types of lease obligations are designed to terminate with the last scheduled payment. All of the finance lease right-of-use assets have a three year life and are in various stages of completion. The Richardson operating lease liability has a life of four years and five months as of June 30, 2020. The San Marcos operating lease liability has a life of nine months as of June 30, 2020. The adoption of the lease accounting standard resulted in the recognition of an operating ROU asset of $1,553 thousand and a related lease liability of $1,744 thousand during the first quarter of 2019.

 

10

 

Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of: (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

 

As the implicit rate is not readily determinable for the Company's lease agreement, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. This discount rate for the lease approximates SVB's prime rate.

 

Supplemental cash flow information includes operating cash flows related to operating leases. For the six months ended June 30, 2020 and 2019, the Company had $179 thousand and $88 thousand, respectively, in operating cash flows related to operating leases.

 

Schedule of Items Appearing on the Statement of Operations:

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

   

June 30, 2020

   

June 30, 2019

 

Operating expense:

                               

Amortization expense – Finance ROU

  $ 11     $ 16     $ 21     $ 32  

Lease expense – Operating ROU

    82       83       165       162  

Other expense:

                               

Interest expense – Finance ROU

  $     $ 1     $ 1     $ 2  

 

 

Future minimum lease obligations consisted of the following at June 30, 2020 (in thousands):

 

   

Operating

   

Finance

         

Period ending June 30,

 

ROU Leases

   

ROU Leases

   

Total

 

2021

  $ 363     $ 39     $ 402  

2022

    363       5       368  

2023

    375             375  

2024

    384             384  

2025

    159             159  

Thereafter

                 
    $ 1,644     $ 44     $ 1,688  

Less Interest*

    (183

)

    (1

)

       
    $ 1,461     $ 43          

 

 

*Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying condensed consolidated statement of operations.

 

11

 

 

11.   PPP Loan

 

On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which includes provision for a Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”). The PPP allows qualifying businesses to borrow up to $10 million calculated based on qualifying payroll costs. The loan is guaranteed by the federal government, and does not require collateral. On April 30, 2020 we entered into a PPP Loan with Silicon Valley Bank effective April 30, 2020, pursuant to the PPP under CARES for $629,000. The PPP Loan matures on April 30, 2022 and bears interest at a rate of 1.0% per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan funds were received on April 30, 2020. The PPP Loan contains events of default and other provisions customary for a loan of this type. The PPP provides that (1) the use of PPP Loan amount shall be limited to certain qualifying expenses, (2) 100 percent of the principal amount of the loan is guaranteed by the SBA and (3) an amount up to the full principal amount may qualify for loan forgiveness in accordance with the terms of CARES. We are not yet able to determine the amount that might be forgiven. As of June 30, 2020, the Company was in full compliance with all covenants with respect to the PPP Loan. The Company expects to use the full proceeds of the PPP loan in accordance with the provisions of CARES. As of June 30, 2020, the balance of the PPP Loan was $630,000, which includes $1.0 thousand in accrued interest.

 

Future minimum loan obligations consisted of the following at June 30, 2020 (in thousands):

 

Period ending June 30,

 

PPP Loan

 

2021

  $ 285  

2022

    356  

2023

     

2024

     

2025

     

Thereafter

     
    $ 641  

Less Interest*

    (11

)

    $ 630  

 

 

12.   Coronavirus Outbreak in the United States

 

Uncertainties surrounding the effects of the coronavirus, particularly potential diversion of time and resources of federal government entities which make up a significant concentration of our customer base, could cause a material adverse effect on our results of operations and financial results. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. A material disruption in our workplace as a result of the coronavirus could affect our ability to carry on our business operations in the ordinary course and may require additional cost and effort should our employees not be able to be physically on-premises.

 

 

13.   Subsequent Events.

 

As of the date of this Quarterly Report, all current shares of issued and outstanding preferred stock have been voluntarily converted, resulting in the issuance of a total of 1,004,249 newly issued shares of the Company’s common stock. The addition of these newly issued shares has resulted in the dilution of each share of issued and outstanding common stock by a factor of 7.28%.  While the elimination of these three classes of preferred stock removes a number of the Company’s obligations to the holders of preferred stock (such as the obligation to pay continuing dividends) as well as a number of restrictions on the Company’s activities (such as restrictions on certain capital raising and funding transactions), the addition of these newly issued shares combined with the fact that the Company’s common stock is thinly traded on the OTCQB Marketplace could cause an increase in selling volume, and result in a decline in the market price of the Company’s common stock.

 

On August 6, 2020, Anthony J. LeVecchio was appointed to the board of directors and to serve on the Company’s audit and compensation committees.

 

12

 

 

Item 2.                 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward Looking Statements

 

This Quarterly Report on Form 10-Q, including, without limitation, the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are generally accompanied by words such as “estimate,” “expect,” “believe,” “should,” “would,” “could,” “anticipate,” “may” or other words that convey uncertainty of future events or outcomes. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations, which we describe in more detail elsewhere in this Quarterly Report on Form 10-Q, as well as in our 2019 Annual Report on Form 10-K, filed March 27, 2020, in Item 1A “Risk Factors” include, but are not limited to:

 

 

the uncertain ramifications related to the coronavirus outbreak;

 

 

our ability to successfully create, market, sell and distribute our new Shield product to a new and distinct customer base

 

 

our ability to produce and promote our new commercial product, Intrusion Shield, and market it through new sales channels to a new set of prospective customers;

 

 

insufficient cash to operate our business and inability to meet our liquidity requirements;

 

 

loss of revenues due to the failure of our newer products, Shield in particular, to achieve market acceptance;

 

 

our need to increase current revenue levels in order to achieve sustainable profitability;

 

 

our unavailability to make future borrowings under the CEO Note;

 

 

our ability to replace all or a portion of the borrowing capacity available to the Company under the CEO Note and whether any such terms would be available on terms acceptable to the Company, if at all;

 

 

our ability to raise funds through debt or equity offerings related to launching a commercial product;

 

 

concentration of our revenues from U.S. government entities or commercial customers and the possibility of loss of one of these customers and the unique risks associated with government customers;

 

 

our dependence on sales made through indirect channels; and

 

 

the influence that our management and larger stockholders have over actions taken by the Company.

 

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. These forward-looking statements and other statements made elsewhere in this report are made in reliance on the Private Securities Litigation Reform Act of 1995. Any forward-looking statement you read in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The section below entitled “Factors That May Affect Future Results of Operations” sets forth and incorporates by reference certain factors that could cause actual future results of the Company to differ materially from these statements.

 

13

 

Results of Operations

 

The following table sets forth, for the periods indicated, certain financial data as a percentage of net revenues. The period-to-period comparison of financial results is not necessarily indicative of future results.

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

   

June 30, 2020

   

June 30, 2019

 

Total revenue

    100.0

%

    100.0

%

    100.0

%

    100.0

%

                                 

Total cost of revenue

    39.3       39.6       40.5       39.9  
                                 

Gross profit

    60.7       60.4       59.5       60.1  
                                 

Operating expenses:

                               

Sales and marketing

    29.3       1.0       28.8       6.3  

Research and development

    54.8       7.4       48.1       6.7  

General and administrative

 

19.7

      8.0       16.9       9.0  

Operating income (loss)

    (43.1

)

    43.9       (34.3

)

    38.1  
                                 

Interest income

    0.1             0.2        

Interest expense

    (0.2

)

    (0.2

)

    (0.1

)

    (0.6

)

                                 

Income (loss) before income tax provision

    (43.2

)

    43.7       (34.2

)

    37.5  
                                 

Income tax provision

                       
                                 

Net income (loss)

    (43.2

)%

    43.7

%

    (34.2

)%

    37.5

%

Preferred stock dividends accrued

    (2.0

)

    (0.8

)

    (1.9

)

    (0.9

)

                                 

Net income (loss) attributable to common stockholders

    (45.2

)%

    42.9

%

    (36.1

)%

    36.6

%

 

 

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

   

June 30, 2020

   

June 30, 2019

 

Domestic revenues

    100.0

%

    100.0

%

    100.0

%

    100.0

%

Export revenues

                       
                                 

Net revenues

    100.0

%

    100.0

%

    100.0

%

    100.0

%

 

 

Net Revenues. Net revenues for the quarter and six months ended June 30, 2020 were $1.7 million and $3.5 million, respectively, compared to $4.0 million and $7.2 million for the same periods in 2019. Product revenues decreased $2.3 million for the quarter ended June 30, 2020, and $3.7 million for the six months ended June 30, 2020 compared to the same periods in 2019. Decreased product revenues were primarily due to a decrease in sales of our TraceCop product line. TraceCop sales for the quarters ended June 30, 2020 and 2019 were $1.6 million and $4.0 million, respectively. Savant sales were $106 thousand for the quarter ended June 30, 2020 and were $29 thousand for the quarter ended June 30, 2019.

 

Concentration of Revenues. Revenues from sales to various U.S. government entities totaled $1.5 million, or 91.0% of revenues, for the quarter ended June 30, 2020 compared to $3.9 million, or 91.3% of revenues, for the same period in 2019. Revenues from sales to various U.S. government entities totaled $2.8 million, or 80.8% of revenues, for the six months ended June 30, 2020 compared to $6.4 million, or 89.2% of revenues, for the same period in 2019. Sales to commercial customers totaled 9.0% of total revenue for the second quarter of 2020 compared to 8.7% of total revenue for the second quarter of 2019. During the second quarter of 2020 and 2019, no individual commercial customer had revenues over 10.0% of total revenue. Although we expect our concentration of revenues to vary among customers in future periods depending upon the timing of certain sales, we anticipate that sales to government customers will continue to account for a significant portion of our revenues in future periods. Sales to the government present risks in addition to those involved in sales to commercial customers which could adversely affect our revenues, including, without limitation, potential disruption to appropriation and spending patterns and the government’s reservation of the right to cancel contracts and purchase orders for its convenience. Although we do not anticipate that any of our revenues with government customers will be renegotiated, a large number of cancelled or renegotiated government orders could have a material adverse effect on our financial results. Currently, we are not aware of any proposed cancellation or renegotiation of any of our existing arrangements with government entities and, historically, government entities have not cancelled or renegotiated orders which had a material adverse effect on our business.

 

14

 

Gross Profit. Gross profit was $1.0 million or 60.7% of net revenues for the quarter ended June 30, 2020, compared to $2.4 million or 60.4% of net revenues for the quarter ended June 30, 2019. Gross profit was $2.1 million or 59.5% of net revenues for the six months ended June 30, 2020 compared to $4.3 million or 60.1% of net revenues for the six months ended June 30, 2019. Gross profit on product revenues trended from 59.5% of net revenues for the six months ended June 30, 2020 to 60.1% of net revenues for the six months ended June 30, 2019, mainly due to TraceCop/Savant product mix. Gross profit as a percentage of net revenues is impacted by several factors, including shifts in product mix, changes in channels of distribution, revenue volume, pricing strategies, and fluctuations in revenues of integrated third-party products.

 

Sales and Marketing. Sales and marketing expenses increased to $0.5 million for the quarter ended June 30, 2020 compared to $46 thousand for the same period in 2019. Sales and marketing expenses increased to $1.0 million for the six months ended June 30, 2020 compared to $0.5 million for the same period in 2019. Sales and marketing expenses may vary in the future. Sales and marketing expenses increased compared to the comparable periods last year due to increases in labor and expenses and the Company was able to collect payment of $200 thousand from a customer related expense in 2018 that reduced expense in 2019. We believe that these costs will increase through the end of 2020 due to increased marketing expense related to the Shield launch.

 

Research and Development. Research and development expenses increased to $0.9 million for the quarter ended June 30, 2020 compared to $0.3 million for the same period in 2019. Research and development expenses increased to $1.7 million for the six months ended June 30, 2020 compared to $0.5 million for the same period in 2019. The increase in research and development expense was due partly to increased costs related to the development of our Intrusion Shield product as well as an increase in labor expense due to less direct labor required on existing projects. Research and development costs are expensed in the period in which they are incurred. Research and development expenses may vary in the future; mainly dependent on levels of research and development labor expense charged to projects.

 

General and Administrative. General and administrative expenses remained constant at $0.3 million for the quarters ended June 30, 2020 and 2019. General and administrative expenses decreased to $0.6 million for the six months ended June 30, 2020 compared to $0.7 million for the same period in 2019. It is expected that general and administrative expenses will remain relatively constant throughout the remainder of 2020, although expenses may be increased due to increased expenses related to a new product launch.

 

Interest. Interest expense decreased to $2 thousand for the quarter ended June 30, 2020 compared to $9 thousand for the same period in 2019. Interest expense decreased to $2 thousand for the six months ended June 30, 2020 compared to $44 thousand for the same period in 2019. Interest expense decreased due to decreased amount of Loan Payable to Officer culminating in our repayment of the balance in May 2019. Interest expense will vary in the future based on our cash flow and borrowing needs. Interest income increased to $1 thousand for the quarter ended June 30, 2020 compared to none for the same period in 2019. Interest income increased to $7 thousand for the six months ended June 30, 2020 compared to none for the same period in 2019. This is attributable to investing extra cash in money market accounts and getting better interest rates.

 

Liquidity and Capital Resources

 

Our principal source of liquidity at June 30, 2020 was approximately $2.9 million of cash and cash equivalents. At June 30, 2020, we had working capital of $2.4 million compared to $1.4 million at June 30, 2019.

 

Net cash used in operations for the six months ended June 30, 2020 was $1.0 million due primarily to a net loss of $1.2 million and the following uses of cash: a $352 thousand decrease in deferred revenue, a $234 thousand increase in prepaid expenses and other assets, and a $64 thousand decrease in accounts payable and accrued expenses. This was partially offset by the following provisions of cash and non-cash items: a $499 thousand decrease in accounts receivable, $124 thousand in noncash lease costs, $107 thousand in depreciation and amortization expense, and $74 thousand in stock-based compensation. Net cash provided by operations for the six months ended June 30, 2019 was $2.3 million due primarily to a net income of $2.7 million and the following provisions of cash and non-cash items: $304 thousand in noncash lease costs, a $179 thousand increase in deferred revenue, $86 thousand in depreciation and amortization expense, $14 thousand in stock-based compensation, and $6 thousand in penalties and waived penalties on dividends. This was partially offset by a $738 thousand increase in accounts receivable, a $234 thousand increase in prepaid expenses and other assets, and a $66 thousand decrease in accounts payable and accrued expenses. Future fluctuations in accounts receivable and accounts payable will be dependent upon several factors, including, but not limited to, quarterly sales volumes and timing of invoicing, and the accuracy of our forecasts of product demand and component requirements.

 

Net cash used in investing activities for the six months ended June 30, 2020, was $62 thousand for net purchases of property and equipment, compared to $168 thousand net cash used in investing activities for the six months ended June 30, 2019 for net purchases of property and equipment.

 

15

 

Net cash provided by financing activities in 2020 was $0.6 million generated primarily by proceeds from a PPP loan of $0.6 million and proceeds from exercise of stock options of $85 thousand. This was directly offset by the following uses of cash: payments for preferred stock dividends of $67 thousand, and payment on principal of finance right-of-use leases of $21 thousand. Net cash used in financing activities in 2019 was $2.3 million with payments on the loan from an officer of $1.8 million, payments for preferred stock dividends of $644 thousand, and payment on principal of finance right-of-use leases of $31 thousand. This was directly offset by the following provisions of cash: proceeds from exercise of stock options of $226 thousand.

 

At June 30, 2020, the Company did not have any material commitments for capital expenditures.

 

During the six months ended June 30, 2020, the Company funded its operations through the use of cash and cash equivalents. As of June 30, 2020, we had cash and cash equivalents of approximately $2,872,000, down from approximately $3,334,000 as of December 31, 2019. We had a net loss of $715,000 for the quarter ended June 30, 2020 compared to a net income of $1,758,000 for the quarter ended June 30, 2019. Based on projections of growth in revenue in the coming quarters, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months.

 

As of October 24, 2019, our funding available from the CEO Note terminated. Our management will be assessing whether to replace this borrowing capacity and assessing what terms may be available to the Company, including whether any such terms are available on terms acceptable to the Company, if at all (the “Potential Replacement Funding Facility”).

 

We expect to fund our operations through anticipated Company profits, the Potential Replacement Funding Facility, and possible additional investments of equity and debt. Any equity or debt options, if available at all, may be on terms which are not favorable to us and, in the case of any potential equity financings, may result in dilution to our stockholders. If our operations do not generate positive cash flow in the future, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, if at all, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.

 

Item 4.

CONTROLS AND PROCEDURES

 

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

 

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020, and concluded that the disclosure controls and procedures were effective.

 

Our management, with the participation of our principal executive officer and principal financial officer, evaluated our “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) as of December 31, 2019, and concluded that there have not been any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1.

LEGAL PROCEEDINGS

 

We are subject from time to time to various legal proceedings and claims that arise during the ordinary course of our business. We do not believe that the outcome of those "routine" legal matters should have a material adverse effect on our consolidated financial position, operating results or cash flows; however, we can provide no assurances that legal claims that may arise will not have such a material impact in the future.

 

16

 

Item 1A.          RISK FACTORS

 

Factors That May Affect Future Results of Operations

 

We are providing the following information regarding changes that have occurred to previously disclosed risk factors from our Annual Report on Form 10-K for the year ended December 31, 2019. In addition to the other information set forth below and elsewhere in this report, you should consider the factors discussed under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2019 filed on March 27, 2020 and in our Form 10-Q for the quarter ended March 31, 2020 filed on May 15, 2020. The risks described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

Uncertainties surrounding the effects of the coronavirus, particularly potential diversion of time and resources of the federal, state, and local governmental entities which make up a significant concentration of our customer base, could cause a material adverse effect on our results of operations and financial results.

 

            We have a concentration of customers that are federal, state, and local governmental entities.  Such entities will be required to allocate resources and adjust budgets to accommodate potential contingencies related to the effects of the coronavirus and measures required to be put in place to prevent and contain contamination of the virus.  These uncertainties have resulted in certain of our customers delaying budgeted expenditures or re-allocating resources that would result in a decrease in orders from these customers, and the possibility that other customers may follow suit in the weeks and months to come.  Any such decrease in orders from these customers could cause a material adverse effect on our operations and financial results.

 

A material disruption in our workplace as a result of the coronavirus could affect our ability to carry on our business operations in the ordinary course and may require additional cost and effort should our employees not be able to be physically on-premises.

 

Should we experience periods where it is not prudent for some or all of our employees to be physically present on-site, we may not have the benefit of the time and skills of such employees or we may be required to adjust our current business operations and processes to permit some or all of our employees at any one of our locations to work remotely in order to avoid the potential spread of the virus.  We can offer no assurances that these adjustments would not cause material disruptions to our daily operations, require us to expend our time, energy and resources to make necessary adjustments, and may result in a material adverse effect on our sales, research and development and other critical areas of our business model.

 

Our common stock may experience volatility in trading or loss in value as a result of the effects of the coronavirus on the US and global economies.

 

            Uncertainties surrounding the effects of the coronavirus on the US and global economies has resulted in an increase in volatility and violent drops in the value of publicly traded securities, including the trading in our common stock.  We can offer no assurances that these effects are temporary or that any losses that are incurred as a result of these uncertainties will be regained if and when this crisis has passed.  As a result, the value of our stock remains subject to such volatility and potential loss of market value.

 

We may be unable to successfully produce and promote our new commercial product, Intrusion Shield, and market it through new sales channels to a new set of prospective customers.

 

We anticipate significant resources will be required in order to complete product development of Intrusion Shield, including the time, attention, and focus of our senior management and our research and development team, coordination of new marketing strategies highlighting this new product offering and promoting it through new and expanded sales channels to a wider audience of prospective customers than we have historically marketed and sold our products and services. In addition, significant financial resources will be required to successfully manage and implementation this new product rollout. This could result in diversion of those resources from critical areas of our company operations and a potential strain on our liquidity and ability to meet our current and these anticipated increases in our cash-flow needs. We may need to explore possible funding sources in order to successfully complete this project, including, without limitation, exploring options for meeting those needs through equity investment and/or debt financing which may not be on terms favorable to the Company and its stockholders (if available at all), and in the instance where additional equity securities may be issued, result in significant dilution to our existing stockholders.

 

17

 

We could experience damage to our reputation in the cyber-security industry in the event that our Intrusion Shield product fails to perform as expected, to meet our customers’ needs, or to achieve market acceptance.

 

Our reputation in the industry as a leading provider of entity identification, data mining, and advanced persistent threat detection products may be harmed, perhaps significantly, in the event that our new Intrusion Shield fails to perform as we expect it to. If Shield does not perform as we expect, if we experience product delivery delays, or if our customers do not perceive the benefits of purchasing and using Shield as part of their comprehensive cyber-security solution, our position as a leader in this technology space may be damaged and could affect customers, as well as potential customers, willingness to purchase our other products that function separately from our Intrusion Shield. Any reputational damage could result in a decrease in orders for all of our products, the loss of current customers, and a decrease in our overall revenues which could in turn have a material adverse effect on our results of operation.

 

We must expend time and resources addressing potential cyber-security risk, and any breach of our information security safeguards could have a material adverse effect on the Company.

 

            The threat of cyber-attacks requires additional time and money to be expended in efforts to prevent any breaches of our information security protocols.  However, we can provide no assurances that we can prevent any and all such attempts from being successful, which could result in expenses to address and remediate such breaches as well as potentially losing the confidence of our customers who depend upon our services to prevent and mitigate such attacks on their respective business.  Should a material breach of our information security systems occur, it would likely have a material adverse impact on our business operations, our customer relations, and our current and future sales prospects, resulting in a significant loss of revenue.

 

We may not have sufficient cash to operate our business and may not be able to maintain future liquidity requirements. Additional debt and equity offerings to fund future operations may not be available and, if available, may significantly dilute the value of our currently outstanding common stock.

 

As of June 30, 2020, we had cash and cash equivalents of approximately $2,872,000, down from approximately $3,334,000 as of December 31, 2019. We had a net loss of $715,000 for the quarter ended June 30, 2020 compared to a net income of $1,758,000 for the quarter ended June 30, 2019. Based on projections of growth in revenue in the coming quarters, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months. As of October 24, 2019, our funding available from the CEO Note terminated. Our management will be assessing whether to replace this borrowing capacity and assessing what terms may be available to the Company, including whether any such terms are available on terms acceptable to the Company, if at all (the “Potential Replacement Funding Facility”).

 

We expect to fund our operations through anticipated Company profits, the Potential Replacement Funding Facility, and possible additional investments of equity and debt. Any equity or debt options, if available at all, may be on terms which are not favorable to us and, in the case of any potential equity financings, may result in dilution to our stockholders. If our operations do not generate positive cash flow in the future, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, if at all, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.

 

We had a net loss of $0.7 million for the quarter ended June 30, 2020, and we have an accumulated deficit of $56.0 million as of June 30, 2020. To improve our financial performance, we must increase revenue levels of our existing product offerings and/or increase our revenue through the introduction and sale of our new Shield product.

 

For the quarter ended June 30, 2020, we had a net loss of $0.7 million and had an accumulated deficit of approximately $56.0 million as of June 30, 2020, compared to a net income of $1.8 million for the quarter ended June 30, 2019 and an accumulated deficit of approximately $54.8 million at December 31, 2019. We need to increase current revenue levels from the sales of our currently existing products or through the addition of sales of our new Shield product if we are to regain profitability. If we are unable to achieve these revenue levels, losses could continue for the near term and possibly longer, and we may not regain profitability or generate positive cash flow from operations in the future.

 

A large percentage of our revenues are received from U.S. government entities/resellers, and the loss of any one of these customers could reduce our revenues and materially harm our business and prospects.

 

A large percentage of our revenues result from sales to U.S. government entities/resellers. If we were to lose one or more of these key relationships, our revenues could decline and our business and prospects may be materially harmed. We expect that even if we are successful in developing relationships with non-governmental customers, our revenues will continue to be concentrated among government entities. For the quarter ended June 30, 2020, sales to U.S. government entities/resellers collectively accounted for 91.0% of our revenues, compared to 91.3% for the comparable period in 2019. The loss of any of these key relationships may send a negative message to other U.S. government entities or non-governmental customers concerning our product offering. We cannot assure you that U.S. government entities will be customers of ours in future periods or that we will be able to diversify our customer portfolio to adequately mitigate the risk of loss of any of these customers.

 

18

 

Almost all of our revenues are from one product line with a limited number of customers, and the decrease of revenue from sales of this product line could materially harm our business and prospects. Timeliness of orders from customers may cause volatility in growth.

 

Almost all of our revenues result from sales of one security product line. TraceCop revenues were $1.6 million for the quarter ended June 30, 2020, compared to $4.0 million for the second quarter 2019. Savant revenues increased to $106 thousand for the quarter ended June 30, 2020, compared to $29 thousand for the second quarter 2019. If sales of this key product line were to decrease, our revenues could decline and our business and prospects may be materially harmed. No individual commercial customer in the second quarter of 2020 and 2019 had over 10.0% of total revenue.

 

We are highly dependent on sales made through indirect channels, the loss of which would materially adversely affect our operations.

 

We derived 54.0% of revenue in the second quarter of 2020 through indirect channels of mainly government resellers, compared to 91.3% of our revenues in the quarter ended June 30, 2019. We must continue to expand our sales through these indirect channels in order to increase our revenues. We cannot assure you that our products will gain market acceptance in these indirect sales channels or that sales through these indirect sales channels will increase our revenues. Further, many of our competitors are also trying to sell their products through these indirect sales channels, which could result in lower prices and reduced profit margins for sales of our products.

 

You will experience substantial dilution upon the exercise of stock options currently outstanding.

 

On July 31, 2020, we had 13,792,030 shares of common stock outstanding.  Upon the exercising of current options exercisable at or below the exercise price of $4.75, we would have approximately 14,546,533 shares of common stock outstanding, a 5.5% increase in the number of shares of our common stock outstanding.

 

Our management and larger stockholders exercise significant control over our company and have the ability to approve or take actions that may be adverse to your interests.

 

As of the date of this Quarterly Report, our executive officers and directors beneficially own approximately 28% of our voting power.  In addition, other related non-affiliate parties control approximately 35% of voting power.  As a result, these stockholders will be able to exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, which could delay or prevent someone from acquiring or merging with us.  These stockholders may use their influence to approve or take actions that may be adverse to the interests of holders of our Common Stock.  Further, we contemplate the possible issuance of shares of our Common Stock or of securities exercisable or convertible into shares of our Common Stock in the future to our Chief Executive Officer, Chief Financial Officer and Senior Vice President.  Any such issuance will increase the percentage of stock our Chief Executive Officer, Chief Financial Officer, Senior Vice President and our management group beneficially holds.

 

Item 6.

Exhibits

 

The following Exhibits are filed with this report form 10-Q:

 

31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.

31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.

32.1

Certification Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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19

 

S I G N A T U R E S

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

INTRUSION INC.

 
     

Date: August 13, 2020

        /s/ Jack B. Blount

   
 

Jack B. Blount

 
 

Director, President & Chief Executive Officer

 
 

(Principal Executive Officer)

 
     
     

Date: August 13, 2020

        /s/ Michael L. Paxton

   
 

Michael L. Paxton

 
 

Chairman, Vice President, Chief Financial Officer,
Treasurer & Secretary

 
 

(Principal Financial & Accounting Officer)

 

 

20
EX-31.1 2 ex_198283.htm EXHIBIT 31.1 ex_198283.htm

EXHIBIT 31.1

 

I, Jack B. Blount, Chief Executive Officer of Intrusion Inc., certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of Intrusion Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: August 13, 2020

/s/ Jack B. Blount

 
 

Jack B. Blount

 

Chief Executive Officer

 

 
EX-31.2 3 ex_198284.htm EXHIBIT 31.2 ex_198284.htm

EXHIBIT 31.2

 

I, Michael L. Paxton, Chief Financial Officer of Intrusion Inc., certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of Intrusion Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

Date: August 13, 2020

/s/ Michael L. Paxton

 
 

Michael L. Paxton

 

Chief Financial Officer

 

 
EX-32.1 4 ex_198285.htm EXHIBIT 32.1 ex_198285.htm

EXHIBIT 32.1

 

 

CERTIFICATION PURSUANT TO RULE 13a-14(b) OF THE EXCHANGE ACT AND 18 U.S.C. SECTION 1350, AS ENACTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Intrusion Inc. (the “Company”) on Form 10-Q, for the quarter ended June 30, 2020 (the “Report”) as filed with the Securities and Exchange Commission on the date hereof, each of the undersigned Officers of the Company does hereby certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

August 13, 2020

/s/ Jack B. Blount

 
 

Jack B. Blount

 

Chief Executive Officer

 

 

August 13, 2020

/s/ Michael L. Paxton

 
 

Michael L. Paxton

 

Chief Financial Officer

 

 

 

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">402</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2022</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">363</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">368</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2023</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">375</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">375</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2024</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">384</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">384</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2025</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">159</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">159</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Thereafter</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1,644</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">44</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1,688</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Less Interest*</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(183</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font: inherit;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">1,461</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font: inherit;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> </table></div> 1688000 159000 384000 375000 368000 402000 641000 11000 1 4 3 0 0 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">10.</div> &nbsp; Right-of-use Asset and Leasing Liabilities</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Under the new lease accounting standard, we have determined that we have leases for right-of-use (ROU) assets. We have both finance right-of-use assets and operating right-of-use assets with a related lease liability. Our finance lease right-of-use assets consist of computer hardware and a copying machine. Our operating lease right-of-use assets include our rental agreements for our offices in Richardson and San Marcos, CA. Both types of lease liabilities are determined by the net present value of total payments and are amortized over the life of the lease. Both types of lease obligations are designed to terminate with the last scheduled payment. All of the finance lease right-of-use assets have a <div style="display: inline; font-style: italic; font: inherit;">three</div> year life and are in various stages of completion. The Richardson operating lease liability has a life of <div style="display: inline; font-style: italic; font: inherit;">four</div> years and <div style="display: inline; font-style: italic; font: inherit;">five</div> months as of <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020. </div>The San Marcos operating lease liability has a life of <div style="display: inline; font-style: italic; font: inherit;">nine</div> months as of <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020. </div>The adoption of the lease accounting standard resulted in the recognition of an operating ROU asset of <div style="display: inline; font-style: italic; font: inherit;">$1,553</div> thousand and a related lease liability of <div style="display: inline; font-style: italic; font: inherit;">$1,744</div> thousand during the <div style="display: inline; font-style: italic; font: inherit;">first</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2019.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC <div style="display: inline; font-style: italic; font: inherit;">842</div> prospectively and elected the package of transition practical expedients that does <div style="display: inline; font-style: italic; font: inherit;">not</div> require reassessment of: (<div style="display: inline; font-style: italic; font: inherit;">1</div>) whether any existing or expired contracts are or contain leases, (<div style="display: inline; font-style: italic; font: inherit;">2</div>) lease classification and (<div style="display: inline; font-style: italic; font: inherit;">3</div>) initial direct costs. In addition, the Company has elected other available practical expedients to <div style="display: inline; font-style: italic; font: inherit;">not</div> separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of <div style="display: inline; font-style: italic; font: inherit;">12</div> months or less.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">As the implicit rate is <div style="display: inline; font-style: italic; font: inherit;">not</div> readily determinable for the Company's lease agreement, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. This discount rate for the lease approximates SVB's prime rate.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Supplemental cash flow information includes operating cash flows related to operating leases. For the <div style="display: inline; font-style: italic; font: inherit;">six</div> months ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019,</div> the Company had <div style="display: inline; font-style: italic; font: inherit;">$179</div> thousand and <div style="display: inline; font-style: italic; font: inherit;">$88</div> thousand, respectively, in operating cash flows related to operating leases.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">&nbsp;</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">Schedule of Items Appearing on the Statement</div><div style="display: inline; font-weight: bold;"> of Operations</div><div style="display: inline; font-weight: bold;">:</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">&nbsp;</div></div> <div> <table style="margin-right: 5%; margin-left: 18pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Three Months Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Six Months Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 20</div><div style="display: inline; font-weight: bold;">20</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 201</div><div style="display: inline; font-weight: bold;">9</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 20</div><div style="display: inline; font-weight: bold;">20</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 201</div><div style="display: inline; font-weight: bold;">9</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 48%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Operating expense:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Amortization expense &#x2013; Finance ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">11</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">16</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">21</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">32</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Lease expense &#x2013; Operating ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">82</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">83</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">165</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">162</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Other expense:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Interest expense &#x2013; Finance ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">&nbsp;</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">Future minimum lease obligations consisted of the following at </div><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;"> June 30</div></div><div style="display: inline; font-weight: bold;">, <div style="display: inline; font-style: italic; font: inherit;">20</div></div><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">20</div></div><div style="display: inline; font-weight: bold;"> (in thousands):</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">&nbsp;</div></div> <div> <table style="margin-right: auto; margin-left: 36pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0pt" cellpadding="0pt"> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Operating</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Finance</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 46%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Period ending June 30,</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">ROU Leases</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">ROU Leases</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Total</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2021</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">363</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">39</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">402</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2022</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">363</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">368</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2023</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">375</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">375</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2024</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">384</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">384</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2025</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">159</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">159</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Thereafter</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1,644</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">44</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1,688</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Less Interest*</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(183</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font: inherit;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">1,461</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 15%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-style: italic; font: inherit;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:36pt;margin-right:0pt;margin-top:0pt;text-align:left;text-indent:-4.5pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:36pt;margin-right:0pt;margin-top:0pt;text-align:left;text-indent:-4.5pt;">*Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying condensed consolidated statement of operations.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:36pt;margin-right:0pt;margin-top:0pt;text-align:left;text-indent:-4.5pt;">&nbsp;</div></div> 124000 304000 6000 0.0728 P30D P45D 1152000 1080000 1067000 1566000 -43000 -43000 56946000 56759000 66000 62000 74000 14000 55000 10000 74000 14000 1942990 12132 1909289 6066 5938000 6835000 4327000 5052000 1611000 1783000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form <div style="display: inline; font-style: italic; font: inherit;">10</div>-Q and Item <div style="display: inline; font-style: italic; font: inherit;">10</div>-<div style="display: inline; font-style: italic; font: inherit;">01</div> of Regulation S-<div style="display: inline; font-style: italic; font: inherit;">X.</div> Accordingly, they do <div style="display: inline; font-style: italic; font: inherit;">not</div> include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The <div style="display: inline; font-style: italic; font: inherit;"> December 31, 2019 </div>balance sheet was derived from audited financial statements, but does <div style="display: inline; font-style: italic; font: inherit;">not</div> include all the disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented <div style="display: inline; font-style: italic; font: inherit;">not</div> misleading. In our opinion, all the adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. The results of operations for the <div style="display: inline; font-style: italic; font: inherit;">three</div> and <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>are <div style="display: inline; font-style: italic; font: inherit;">not</div> necessarily indicative of the results that <div style="display: inline; font-style: italic; font: inherit;"> may </div>be achieved for the full fiscal year or for any future period. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form <div style="display: inline; font-style: italic; font: inherit;">10</div>-K for the year ended <div style="display: inline; font-style: italic; font: inherit;"> December&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">31,</div> <div style="display: inline; font-style: italic; font: inherit;">2019,</div> filed with the U.S. Securities and Exchange Commission (the &#x201c;SEC&#x201d;) on <div style="display: inline; font-style: italic; font: inherit;"> March 27, 2020.</div></div></div></div></div></div></div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">2.</div>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Presentation</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form <div style="display: inline; font-style: italic; font: inherit;">10</div>-Q and Item <div style="display: inline; font-style: italic; font: inherit;">10</div>-<div style="display: inline; font-style: italic; font: inherit;">01</div> of Regulation S-<div style="display: inline; font-style: italic; font: inherit;">X.</div> Accordingly, they do <div style="display: inline; font-style: italic; font: inherit;">not</div> include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The <div style="display: inline; font-style: italic; font: inherit;"> December 31, 2019 </div>balance sheet was derived from audited financial statements, but does <div style="display: inline; font-style: italic; font: inherit;">not</div> include all the disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented <div style="display: inline; font-style: italic; font: inherit;">not</div> misleading. In our opinion, all the adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. The results of operations for the <div style="display: inline; font-style: italic; font: inherit;">three</div> and <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>are <div style="display: inline; font-style: italic; font: inherit;">not</div> necessarily indicative of the results that <div style="display: inline; font-style: italic; font: inherit;"> may </div>be achieved for the full fiscal year or for any future period. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form <div style="display: inline; font-style: italic; font: inherit;">10</div>-K for the year ended <div style="display: inline; font-style: italic; font: inherit;"> December&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">31,</div> <div style="display: inline; font-style: italic; font: inherit;">2019,</div> filed with the U.S. Securities and Exchange Commission (the &#x201c;SEC&#x201d;) on <div style="display: inline; font-style: italic; font: inherit;"> March 27, 2020.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Loans payable to officer are with a related party and as a result do <div style="display: inline; font-style: italic; font: inherit;">not</div> bear market rates of interest. &nbsp;Management believes based on its current financial position that it could <div style="display: inline; font-style: italic; font: inherit;">not</div> obtain comparable amounts of <div style="display: inline; font-style: italic; font: inherit;">third</div> party financing, and as such cannot estimate the fair value of the loans payable to officer. <div style="display: inline; font-style: italic; font: inherit;">None</div> of these instruments are held for trading purposes.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">On <div style="display: inline; font-style: italic; font: inherit;"> January 1, 2019 </div>we adopted ASU <div style="display: inline; font-style: italic; font: inherit;">No.</div> <div style="display: inline; font-style: italic; font: inherit;">2016</div>-<div style="display: inline; font-style: italic; font: inherit;">02,</div> <div style="display: inline; font-style: italic;">Leases (topic <div style="display: inline; font-style: italic; font: inherit;">842</div>)</div>. At the date of adoption there was <div style="display: inline; font-style: italic; font: inherit;">no</div> impact on the statement of operations, while the balance sheet reflects recording both assets and liabilities applicable to the operating right-of-use asset lease identified. ASU <div style="display: inline; font-style: italic; font: inherit;">No.</div> <div style="display: inline; font-style: italic; font: inherit;">2016</div>-<div style="display: inline; font-style: italic; font: inherit;">02</div> did <div style="display: inline; font-style: italic; font: inherit;">not</div> have a material effect on the Company's results of operations or cash flows for the <div style="display: inline; font-style: italic; font: inherit;">three</div> and <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019.</div></div></div> 2872000 3334000 3334000 1652000 2872000 1477000 -462000 -175000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">8.</div>&nbsp;&nbsp;&nbsp;&nbsp; Commitments and Contingencies</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">We are subject from time to time to various legal proceedings and claims that arise during the ordinary course of our business. We do <div style="display: inline; font-style: italic; font: inherit;">not</div> believe that the outcome of those "routine" legal matters should have a material adverse effect on our consolidated financial position, operating results or cash flows; however, we can provide <div style="display: inline; font-style: italic; font: inherit;">no</div> assurances that legal claims that <div style="display: inline; font-style: italic; font: inherit;"> may </div>arise in the future will <div style="display: inline; font-style: italic; font: inherit;">not</div> have such a material impact on the Company.</div></div> 0.01 0.01 80000000 80000000 13802000 13552000 13792000 13542000 138000 136000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">7.</div> &nbsp; &nbsp; Concentrations</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Our operations are concentrated in <div style="display: inline; font-style: italic; font: inherit;">one</div> area&#x2014;security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled <div style="display: inline; font-style: italic; font: inherit;">91.0%</div> of total revenues for the <div style="display: inline; font-style: italic; font: inherit;">second</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2020</div> compared to <div style="display: inline; font-style: italic; font: inherit;">91.3%</div> of total revenues for the <div style="display: inline; font-style: italic; font: inherit;">second</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2019.</div> During the <div style="display: inline; font-style: italic; font: inherit;">second</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2020,</div> approximately <div style="display: inline; font-style: italic; font: inherit;">91.0%</div> of total revenues were attributable to <div style="display: inline; font-style: italic; font: inherit;">four</div> government customers compared to approximately <div style="display: inline; font-style: italic; font: inherit;">73.2%</div> of total revenues attributable to <div style="display: inline; font-style: italic; font: inherit;">three</div> government customers in the <div style="display: inline; font-style: italic; font: inherit;">second</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2019.</div> In the <div style="display: inline; font-style: italic; font: inherit;">second</div> quarter of <div style="display: inline; font-style: italic; font: inherit;">2020,</div> <div style="display: inline; font-style: italic; font: inherit;">no</div> individual commercial customer had revenues over <div style="display: inline; font-style: italic; font: inherit;">10.0%</div> of total revenue compared to <div style="display: inline; font-style: italic; font: inherit;">no</div> individual commercial customer for the same period in <div style="display: inline; font-style: italic; font: inherit;">2019.</div> Our similar product and service offerings are <div style="display: inline; font-style: italic; font: inherit;">not</div> viewed as individual segments, as our management analyzes the business as a whole and expenses are <div style="display: inline; font-style: italic; font: inherit;">not</div> allocated to each product offering.</div></div> 0.91 0.913 0.91 0.732 1067000 1566000 164000 516000 96000 96000 63000 651000 1590000 1398000 2874000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">11.</div>&nbsp;&nbsp; PPP Loan</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On <div style="display: inline; font-style: italic; font: inherit;"> March 27, 2020, </div>the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (&#x201c;CARES Act&#x201d;), which includes provision for a Paycheck Protection Program (&#x201c;PPP&#x201d;) administered by the U.S. Small Business Administration (&#x201c;SBA&#x201d;). The PPP allows qualifying businesses to borrow up to <div style="display: inline; font-style: italic; font: inherit;">$10</div> million calculated based on qualifying payroll costs. The loan is guaranteed by the federal government, and does <div style="display: inline; font-style: italic; font: inherit;">not</div> require collateral. On <div style="display: inline; font-style: italic; font: inherit;"> April&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">30,</div> <div style="display: inline; font-style: italic; font: inherit;">2020</div> we entered into a PPP Loan with Silicon Valley Bank effective <div style="display: inline; font-style: italic; font: inherit;"> April&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">30,</div> <div style="display: inline; font-style: italic; font: inherit;">2020,</div> pursuant to the PPP under CARES for <div style="display: inline; font-style: italic; font: inherit;">$629,000.</div> The PPP Loan matures on <div style="display: inline; font-style: italic; font: inherit;"> April&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">30,</div> <div style="display: inline; font-style: italic; font: inherit;">2022</div> and bears interest at a rate of <div style="display: inline; font-style: italic; font: inherit;">1.0%</div> per annum. Monthly amortized principal and interest payments are deferred for <div style="display: inline; font-style: italic; font: inherit;">six</div> months after the date of disbursement. The PPP Loan funds were received on <div style="display: inline; font-style: italic; font: inherit;"> April&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">30,</div> <div style="display: inline; font-style: italic; font: inherit;">2020.</div> The PPP Loan contains events of default and other provisions customary for a loan of this type. The PPP provides that (<div style="display: inline; font-style: italic; font: inherit;">1</div>) the use of PPP Loan amount shall be limited to certain qualifying expenses, (<div style="display: inline; font-style: italic; font: inherit;">2</div>) <div style="display: inline; font-style: italic; font: inherit;">100</div> percent of the principal amount of the loan is guaranteed by the SBA and (<div style="display: inline; font-style: italic; font: inherit;">3</div>) an amount up to the full principal amount <div style="display: inline; font-style: italic; font: inherit;"> may </div>qualify for loan forgiveness in accordance with the terms of CARES. We are <div style="display: inline; font-style: italic; font: inherit;">not</div> yet able to determine the amount that might be forgiven. As of <div style="display: inline; font-style: italic; font: inherit;"> June&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">30,</div> <div style="display: inline; font-style: italic; font: inherit;">2020,</div> the Company was in full compliance with all covenants with respect to the PPP Loan. The Company expects to use the full proceeds of the PPP loan in accordance with the provisions of CARES. As of <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>the balance of the PPP Loan was <div style="display: inline; font-style: italic; font: inherit;">$630,000,</div> which includes <div style="display: inline; font-style: italic; font: inherit;">$1.0</div> thousand in accrued interest.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">Future minimum l</div><div style="display: inline; font-weight: bold;">oan</div><div style="display: inline; font-weight: bold;"> obligations consisted of the following at <div style="display: inline; font-style: italic; font: inherit;"> June 30, </div><div style="display: inline; font-style: italic; font: inherit;">20</div></div><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">20</div></div><div style="display: inline; font-weight: bold;"> (in thousands):</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div> <table style="margin-right: auto; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0pt" cellpadding="0pt"> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 81%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Period ending June 30,</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">PPP Loan</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2021</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">285</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2022</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">356</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2023</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2024</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2025</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Thereafter</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">641</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Less Interest*</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(11</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">630</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div></div> 0.01 107000 86000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">4.</div>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounting for Stock-Based Compensation</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">During the <div style="display: inline; font-style: italic; font: inherit;">three</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019,</div> the Company granted <div style="display: inline; font-style: italic; font: inherit;">323,000</div> and <div style="display: inline; font-style: italic; font: inherit;">24,000,</div> respectively, of stock options to employees or directors. The Company recognized <div style="display: inline; font-style: italic; font: inherit;">$55,000</div> and <div style="display: inline; font-style: italic; font: inherit;">$10,000,</div> respectively, of stock-based compensation expense for the <div style="display: inline; font-style: italic; font: inherit;">three</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019.</div> During the <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019,</div> the Company granted <div style="display: inline; font-style: italic; font: inherit;">323,000</div> and <div style="display: inline; font-style: italic; font: inherit;">24,000,</div> respectively, of stock options to employees and directors. The Company recognized <div style="display: inline; font-style: italic; font: inherit;">$74,000</div> and <div style="display: inline; font-style: italic; font: inherit;">$14,000,</div> respectively, of stock-based compensation expense for the <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">During the <div style="display: inline; font-style: italic; font: inherit;">three</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019,</div> <div style="display: inline; font-style: italic; font: inherit;">14,000</div> and <div style="display: inline; font-style: italic; font: inherit;">14,000</div> were exercised under the <div style="display: inline; font-style: italic; font: inherit;">2005</div> Plan, respectively. During the <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019,</div> <div style="display: inline; font-style: italic; font: inherit;">186,600</div> and <div style="display: inline; font-style: italic; font: inherit;">280,500</div> were exercised under the <div style="display: inline; font-style: italic; font: inherit;">2005</div> Plan, respectively.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; text-decoration: underline;">Valuation Assumptions</div></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The fair values of employee and director option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div> <table style="; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Three Months Ended</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Three Months Ended </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Six Months </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">&nbsp;Ended</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Six Months</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Ended</div><br /> <div style="display: inline; font-weight: bold;">June 30, 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td style="width: 44%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Weighted average grant date fair value</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.80</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">3.61</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.80</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">3.61</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Weighted average assumptions used:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected dividend yield</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Risk-free interest rate</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.19</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.19</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected volatility</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">76.00</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">127.52</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">76.00</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">127.52</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected life (in years)</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">6.2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">6.2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">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. Options granted to non-employees are valued using the fair market value on each measurement date of the option.</div></div> 19000 20000 66000 68000 13000 13000 7000 19000 -0.05 0.13 -0.09 0.20 -0.05 0.11 -0.09 0.17 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">6.</div>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Income (Loss) Per Share</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Basic net income (loss) per share is computed by dividing net income attributable to common stockholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and dilutive common stock equivalents outstanding for the period. Our common stock equivalents include all common stock issuable upon conversion of preferred stock and the exercise of outstanding options. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the <div style="display: inline; font-style: italic; font: inherit;">three</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019</div> are <div style="display: inline; font-style: italic; font: inherit;">1,942,990</div> and <div style="display: inline; font-style: italic; font: inherit;">12,132,</div> respectively. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019</div> are <div style="display: inline; font-style: italic; font: inherit;">1,909,289</div> and <div style="display: inline; font-style: italic; font: inherit;">6,066,</div> respectively. Since the Company is in a net loss position for the <div style="display: inline; font-style: italic; font: inherit;">three</div> and <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ending <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>basic and dilutive net loss per share are the same.</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt">The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Loans payable to officer are with a related party and as a result do <div style="display: inline; font-style: italic; font: inherit;">not</div> bear market rates of interest. &nbsp;Management believes based on its current financial position that it could <div style="display: inline; font-style: italic; font: inherit;">not</div> obtain comparable amounts of <div style="display: inline; font-style: italic; font: inherit;">third</div> party financing, and as such cannot estimate the fair value of the loans payable to officer. <div style="display: inline; font-style: italic; font: inherit;">None</div> of these instruments are held for trading purposes.</div></div></div></div></div></div></div></div> 1000 1000 2000 43000 38000 43000 5000 21000 44000 39000 5000 1000 21000 31000 41000 62000 11000 16000 21000 32000 326000 321000 582000 652000 1004000 2430000 2052000 4337000 -64000 -66000 -499000 738000 -352000 179000 234000 234000 2000 9000 2000 44000 1000 1000 7000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="margin-right: 5%; margin-left: 18pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Three Months Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Six Months Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 20</div><div style="display: inline; font-weight: bold;">20</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 201</div><div style="display: inline; font-weight: bold;">9</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 20</div><div style="display: inline; font-weight: bold;">20</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 201</div><div style="display: inline; font-weight: bold;">9</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 48%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Operating expense:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Amortization expense &#x2013; Finance ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">11</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">16</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">21</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">32</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Lease expense &#x2013; Operating ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">82</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">83</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">165</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">162</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Other expense:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 18pt;">Interest expense &#x2013; Finance ROU</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table></div> P3Y 1644000 159000 384000 375000 363000 363000 183000 P4Y244D P270D 5938000 6835000 1949000 1943000 1520000 1336000 0 3700000 2700000 0 630000 285000 356000 345000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><div style="display: inline; font-style: italic; font: inherit;">12.</div> &nbsp; Coronavirus Outbreak in the United States</div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Uncertainties surrounding the effects of the coronavirus, particularly potential diversion of time and resources of federal government entities which make up a significant concentration of our customer base, could cause a material adverse effect on our results of operations and financial results. The extent of the impact of COVID-<div style="display: inline; font-style: italic; font: inherit;">19</div> on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. A material disruption in our workplace as a result of the coronavirus could affect our ability to carry on our business operations in the ordinary course and <div style="display: inline; font-style: italic; font: inherit;"> may </div>require additional cost and effort should our employees <div style="display: inline; font-style: italic; font: inherit;">not</div> be able to be physically on-premises.</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width: 2%; vertical-align: top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-style: italic; font: inherit;">1.</div></div> </td> <td style="vertical-align: top; width: 98%;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">Description of Business</div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:36pt;margin-right:0pt;margin-top:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">We develop, market and support a family of entity identification, high speed data mining and cybersecurity solutions. Our products help detect, report and mitigate cybercrimes and advanced persistent threats.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Our product families include:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">TraceCop for entity identification, cybercrime detection and disclosure, and;</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">Savant for high speed data mining, analytics, detection, reporting and mitigation of cybersecurity threats.</div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Our products in development include:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">Intrusion Shield</div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" background-color: rgb(255, 255, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 18pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are in the process of developing a new product offering, Intrusion Shield, that is designed to be a next generation intrusion detection and protection solution.&nbsp; After <div style="display: inline; font-style: italic; font: inherit;">20</div> years of providing research, analysis, and tools to the federal government and enterprise corporations, Intrusion possesses a comprehensive and proprietary database of Internet activity, including information about the activities of malicious online actors.&nbsp; Intrusion's Shield product will combine that comprehensive database with artificial intelligence (AI) and real-time process flow technology to provide businesses and government agencies with a unique and affordable tool to detect, identify, and prevent cyber-crimes.&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:12.3pt;margin-top:0pt;text-align:left;text-indent:18pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:12.3pt;margin-top:0pt;text-align:left;text-indent:36pt;">Shield is a combination of plug-and-play hardware, software, global data, and AI services providing organizations with aggressive protection against unaddressed information security threats and the most robust defense possible against cybercrime. Unlike traditional industry approaches that rely heavily on human resources, which malicious actors have learned to bypass, Intrusion Shield uses our extensive database together with real-time AI technology to prevent illicit behavior.&nbsp; Shield's proprietary architecture isolates and neutralizes malicious traffic and network flows that existing solutions cannot identify or even characterize. Most breaches today are caused by malware free compromises that trigger <div style="display: inline; font-style: italic; font: inherit;">no</div> alarms in a firewall or endpoint solution. The common denominator is network communications, and Shield monitors and analyses all network traffic and communications allowing it to identify and stop malware-free attacks. Shield's capabilities will continuously evolve based on real-time updates originating from our worldwide installations and growing TraceCop database identifying new dangers.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:12.3pt;margin-top:0pt;text-align:left;text-indent:18pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:12.3pt;margin-top:0pt;text-align:left;text-indent:36pt;">Shield does <div style="display: inline; font-style: italic; font: inherit;">not</div> seek to displace existing solutions, instead providing a new, and additional layer of cybersecurity for enterprises.&nbsp; According to SBA <div style="display: inline; font-style: italic; font: inherit;">2019,</div> the U.S. enterprise market consists of <div style="display: inline; font-style: italic; font: inherit;">30.7</div> million businesses, of which <div style="display: inline; font-style: italic; font: inherit;">70%</div> are characterized as small and medium sized businesses.&nbsp; While the company believes that many large enterprises will recognize the need this product addresses and will be incentivized to purchase Shield, the enterprise market has many decision makers for new security product purchases; therefore, the sale cycle <div style="display: inline; font-style: italic; font: inherit;"> may </div>be longer for this product than our current product offerings.&nbsp; We have identified businesses with from <div style="display: inline; font-style: italic; font: inherit;">100</div> to <div style="display: inline; font-style: italic; font: inherit;">1,000</div> users as our initial target market, as we believe this market segment has the most pressing need for the enhanced protection that the Intrusion Shield will offer.&nbsp; We intend to leverage existing and new channel partners, such as value added resellers and systems integrators, to market Shield to this target market.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 12.3pt 0pt 0pt; text-align: left; text-indent: 36pt;">Shield has experienced positive progress during Alpha testing and the Company has identified <div style="display: inline; font-style: italic; font: inherit;">twelve</div> companies for the Beta release anticipated to begin in <div style="display: inline; font-style: italic; font: inherit;"> September. </div>The configuration of hardware is a single Dell network appliance installed inline inside of the customer's firewall. The size of the network appliance will vary depending on the number of workstations and the size of the customer's internet connection be that <div style="display: inline; font-style: italic; font: inherit;">1Gb,</div> <div style="display: inline; font-style: italic; font: inherit;">10Gb</div> or <div style="display: inline; font-style: italic; font: inherit;">100</div> Gb.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Intrusion's products help protect critical information assets by quickly detecting, protecting, analyzing and reporting attacks or misuse of classified, private and regulated information for government and enterprise networks.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">We market and distribute our products through a direct sales force to:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;">&#x25cf;</td> <td style="vertical-align:top;">end-users, and</td> </tr> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;">&#x25cf;</td> <td style="vertical-align:top;">value-added resellers.</td> </tr> </table> <div style=" margin: 0pt;">&nbsp;</div> <div style=" margin: 0pt; text-indent: 36pt;">Our end-user customers include:</div> <div style=" margin: 0pt;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">U.S. federal government entities,</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">state and local government entities,</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">large and diverse conglomerates,</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">manufacturing entities, and</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:36pt;">&nbsp;</td> <td style="width:36pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">other customers.</div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:72pt;margin-right:0pt;margin-top:0pt;text-align:justify;text-indent:-36pt;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;">We were organized in Texas in <div style="display: inline; font-style: italic; font: inherit;"> September 1983 </div>and reincorporated in Delaware in <div style="display: inline; font-style: italic; font: inherit;"> October 1995. </div>Our principal executive offices are located at <div style="display: inline; font-style: italic; font: inherit;">1101</div> East Arapaho Road, Suite <div style="display: inline; font-style: italic; font: inherit;">200,</div> Richardson, Texas <div style="display: inline; font-style: italic; font: inherit;">75081,</div> and our telephone number is (<div style="display: inline; font-style: italic; font: inherit;">972</div>) <div style="display: inline; font-style: italic; font: inherit;">234</div>-<div style="display: inline; font-style: italic; font: inherit;">6400.</div> Our website URL is www.intrusion.com. References to the &#x201c;Company&#x201d;, &#x201c;we&#x201d;, &#x201c;us&#x201d;, &#x201c;our&#x201d;, &#x201c;Intrusion&#x201d; or &#x201c;Intrusion Inc.&#x201d; refer to Intrusion Inc. and its subsidiaries. Trademarks of Intrusion include:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">INTRUSION SHIELD</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">PROCESS FLOW TECHNOLOGY</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">INTRUSION SAVANT</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">BRINGING SCIENCE INTO DECISION MAKING</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">TRACECOP</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">INTRUSION PROTECT EVERYTHING. TRUST NOTHING</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">&#x25cf;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;background-color:#FFFFFF;margin-bottom:0pt;font-size:10pt;">PROTECT EVERYTHING. TRUST NOTHING.</div> </td> </tr> </table></div> 626000 -2264000 -1026000 2257000 -1180000 2706000 -715000 1758000 -1180000 2706000 -748000 1723000 -1246000 2637000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt">On <div style="display: inline; font-style: italic; font: inherit;"> January 1, 2019 </div>we adopted ASU <div style="display: inline; font-style: italic; font: inherit;">No.</div> <div style="display: inline; font-style: italic; font: inherit;">2016</div>-<div style="display: inline; font-style: italic; font: inherit;">02,</div> <div style="display: inline; font-style: italic;">Leases (topic <div style="display: inline; font-style: italic; font: inherit;">842</div>)</div>. At the date of adoption there was <div style="display: inline; font-style: italic; font: inherit;">no</div> impact on the statement of operations, while the balance sheet reflects recording both assets and liabilities applicable to the operating right-of-use asset lease identified. ASU <div style="display: inline; font-style: italic; font: inherit;">No.</div> <div style="display: inline; font-style: italic; font: inherit;">2016</div>-<div style="display: inline; font-style: italic; font: inherit;">02</div> did <div style="display: inline; font-style: italic; font: inherit;">not</div> have a material effect on the Company's results of operations or cash flows for the <div style="display: inline; font-style: italic; font: inherit;">three</div> and <div style="display: inline; font-style: italic; font: inherit;">six</div> month periods ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020 </div>and <div style="display: inline; font-style: italic; font: inherit;">2019.</div></div></div></div></div></div></div></div></div> 630000 285000 -714000 1767000 -1185000 2750000 82000 83000 165000 162000 1744000 1461000 291000 284000 1170000 1315000 179000 88000 1553000 1223000 1348000 36000 38000 67000 644000 62000 168000 0.05 0.05 0.05 33000 35000 66000 69000 1012 1013 1054 1155 583 634 0.01 0.01 5000000 5000000 200000 200000 420000 460000 266000 289000 200000 200000 420000 460000 266000 289000 707000 707000 661000 724000 379000 412000 388000 152000 629000 629000 85000 226000 311000 335000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">3.</div>&nbsp;&nbsp;&nbsp;&nbsp; Loan Payable to Officer</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">On <div style="display: inline; font-style: italic; font: inherit;"> February 8, 2018, </div>the Company entered into an unsecured revolving promissory note to borrow up to <div style="display: inline; font-style: italic; font: inherit;">$3,700,000</div> from G. Ward Paxton. Under the terms of the CEO Note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of <div style="display: inline; font-style: italic; font: inherit;">$3,700,000</div> at any given time through <div style="display: inline; font-style: italic; font: inherit;"> March 2020.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">On <div style="display: inline; font-style: italic; font: inherit;"> February&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">7,</div> <div style="display: inline; font-style: italic; font: inherit;">2019,</div> the Company amended the unsecured revolving promissory note to borrow up to <div style="display: inline; font-style: italic; font: inherit;">$2,700,000</div> from G. Ward Paxton, the Company's former Chief Executive Officer. Amounts borrowed under the CEO Note accrued interest at a floating rate per annum equal to Silicon Valley Bank's (&#x201c;SVB&#x201d;) prime rate plus <div style="display: inline; font-style: italic; font: inherit;">1%.</div> Under the terms of the note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of <div style="display: inline; font-style: italic; font: inherit;">$2,700,000</div> at any given time through <div style="display: inline; font-style: italic; font: inherit;"> March&nbsp;</div><div style="display: inline; font-style: italic; font: inherit;">2021.</div> We reduced our borrowing under this note to <div style="display: inline; font-style: italic; font: inherit;">zero</div> as of <div style="display: inline; font-style: italic; font: inherit;"> May 2019.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:7.5pt;margin-top:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">As of <div style="display: inline; font-style: italic; font: inherit;"> October 24, 2019, </div>G. Ward Paxton passed away, terminating the CEO Note with the result that future borrowings thereunder will <div style="display: inline; font-style: italic; font: inherit;">no</div> longer be available to the Company. Our management will be assessing whether to replace this borrowing capacity and assessing what terms <div style="display: inline; font-style: italic; font: inherit;"> may </div>be available to the Company, including whether any such terms are acceptable to the Company, if at all.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div></div> 1815000 907000 296000 1660000 477000 -55957000 -54777000 1655000 4020000 3450000 7211000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">5.</div>&nbsp;&nbsp;&nbsp;&nbsp; Revenue Recognition</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">We generally recognize product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, perpetual software licenses and data sets. Data set updates are the majority of our sales. We do <div style="display: inline; font-style: italic; font: inherit;">not</div> currently offer software on a subscription basis. Warranty costs and sales returns have <div style="display: inline; font-style: italic; font: inherit;">not</div> been material.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">We recognize sales of our data sets in accordance with FASB ASC Topic <div style="display: inline; font-style: italic; font: inherit;">606</div> whereby revenue from contracts with</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">customers is <div style="display: inline; font-style: italic; font: inherit;">not</div> recognized until all <div style="display: inline; font-style: italic; font: inherit;">five</div> of the following have been met:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">i)</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">identify the contract with a customer;</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">ii)</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">identify the performance obligations in the contract;</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">iii)</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">determine the transaction price;</div> </td> </tr> </table> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">iv)</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:left;margin-bottom:0pt;font-size:10pt;">allocate the transaction price to the separate performance obligations; and</div> </td> </tr> <tr> <td style="width:18pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;">v)</td> <td style="vertical-align:top;">recognize revenue upon satisfaction of a performance obligation.</td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Data updates are typically done monthly and revenue will be matched accordingly. Product sales <div style="display: inline; font-style: italic; font: inherit;"> may </div>include maintenance and customer support allocated revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy using the relative selling price method. All of our product offering and service offering market values are readily determined based on current and prior stand-alone sales. We <div style="display: inline; font-style: italic; font: inherit;"> may </div>defer and recognize maintenance, updates and support revenue over the term of the contract period, which is generally <div style="display: inline; font-style: italic; font: inherit;">one</div> year.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Service revenue, primarily including maintenance, training and installation are recognized upon delivery of the service and typically are unrelated to product sales. To date, training and installation revenue has <div style="display: inline; font-style: italic; font: inherit;">not</div> been material. These revenues are included in net customer support and maintenance revenues in the statement of operations.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Our normal payment terms offered to customers, distributors and resellers are net <div style="display: inline; font-style: italic; font: inherit;">30</div> days domestically and net <div style="display: inline; font-style: italic; font: inherit;">45</div> days internationally. We do <div style="display: inline; font-style: italic; font: inherit;">not</div> offer payment terms that extend beyond <div style="display: inline; font-style: italic; font: inherit;">one</div> year and rarely do we extend payment terms beyond our normal terms. If certain customers do <div style="display: inline; font-style: italic; font: inherit;">not</div> meet our credit standards, we do require payment in advance to limit our credit exposure.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Shipping and handling costs are billed to the customer and included in product revenue. Shipping and handling expenses are included in cost of product revenue. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Contract assets represent contract billings for sales per contracts with customers and are classified as current. Our contract assets include our accounts receivables. At <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>the Company had contract assets balance of <div style="display: inline; font-style: italic; font: inherit;">$1,067,000.</div> At <div style="display: inline; font-style: italic; font: inherit;"> December 31, 2019, </div>the Company had contract assets balance of <div style="display: inline; font-style: italic; font: inherit;">$1,566,000.</div></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies deferred revenue as a contract liability. At <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>the Company had contract liabilities balance of <div style="display: inline; font-style: italic; font: inherit;">$164,000.</div> At <div style="display: inline; font-style: italic; font: inherit;"> December 31, 2019, </div>the Company had contract liabilities balance of <div style="display: inline; font-style: italic; font: inherit;">$516,000.</div></div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="margin-right: auto; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;" cellspacing="0pt" cellpadding="0pt"> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 81%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Period ending June 30,</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">PPP Loan</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2021</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">285</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2022</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">356</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2023</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2024</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">2025</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Thereafter</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">&#x2014;</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">641</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Less Interest*</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">(11</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</div> </td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">630</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style="; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Three Months Ended</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Three Months Ended </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Six Months </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">&nbsp;Ended</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">June 30, 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">For Six Months</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Ended</div><br /> <div style="display: inline; font-weight: bold;">June 30, 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td style="width: 44%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> <td style="width: 11%;">&nbsp;</td> <td style="width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Weighted average grant date fair value</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.80</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">3.61</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.80</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">3.61</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Weighted average assumptions used:</div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 11%;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected dividend yield</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Risk-free interest rate</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.19</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">0.43</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">2.19</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected volatility</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">76.00</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">127.52</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">76.00</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">127.52</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">%</div> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt; margin-left: 9pt;">Expected life (in years)</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">6.2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">6.2</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 11%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">5.0</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table></div> 485000 46000 995000 458000 74000 14000 0 0 0 0 0.76 1.2752 0.76 1.2752 0.0043 0.0219 0.0043 0.0219 323000 24000 323000 24000 2.80 3.61 2.80 3.61 P6Y73D P5Y P6Y73D P5Y 949000 949000 886000 949000 13552000 13259000 13802000 13539000 -362000 -362000 1004249 63000 14000 14000 186600 280500 187000 280000 1000 95000 1000 2000 84000 224000 2469000 3556000 1843000 1843000 1747000 1843000 136000 133000 138000 135000 56759000 56609000 56946000 56785000 -54777000 -59242000 -55957000 -56536000 -43000 -43000 1822000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">9.</div>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends Payable</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">During the quarter ended <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>we accrued <div style="display: inline; font-style: italic; font: inherit;">$13,000</div> in dividends payable to the holders of our <div style="display: inline; font-style: italic; font: inherit;">5%</div> Preferred Stock, <div style="display: inline; font-style: italic; font: inherit;">$13,000</div> in dividends payable to the holders of our Series <div style="display: inline; font-style: italic; font: inherit;">2</div> <div style="display: inline; font-style: italic; font: inherit;">5%</div> Preferred Stock and <div style="display: inline; font-style: italic; font: inherit;">$7,000</div> in dividends payable to the holders of our Series <div style="display: inline; font-style: italic; font: inherit;">3</div> <div style="display: inline; font-style: italic; font: inherit;">5%</div> Preferred Stock. As of <div style="display: inline; font-style: italic; font: inherit;"> June 30, 2020, </div>we had <div style="display: inline; font-style: italic; font: inherit;">$19,000</div> in accrued and unpaid dividends, all of which have been paid as of the date of this Quarterly Report.</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-style: italic; font: inherit;">13.</div> &nbsp; Subsequent Events.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;">As of the date of this Quarterly Report, all current shares of issued and outstanding preferred stock have been voluntarily converted, resulting in the issuance of a total of <div style="display: inline; font-style: italic; font: inherit;">1,004,249</div> newly issued shares of the Company's common stock. The addition of these newly issued shares has resulted in the dilution of each share of issued and outstanding common stock by a factor of <div style="display: inline; font-style: italic; font: inherit;">7.28%.</div>&nbsp; While the elimination of these <div style="display: inline; font-style: italic; font: inherit;">three</div> classes of preferred stock removes a number of the Company's obligations to the holders of preferred stock (such as the obligation to pay continuing dividends) as well as a number of restrictions on the Company's activities (such as restrictions on certain capital raising and funding transactions), the addition of these newly issued shares combined with the fact that the Company's common stock is thinly traded on the OTCQB Marketplace could cause an increase in selling volume, and result in a decline in the market price of the Company's common stock.</div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: left; text-indent: 36pt;">On <div style="display: inline; font-style: italic; font: inherit;"> August 6, 2020, </div>Anthony J. LeVecchio was appointed to the board of directors and to serve on the Company's audit and compensation committees.</div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div></div> 10000 10000 362000 362000 13784000 15371000 13743000 15314000 13784000 13523000 13743000 13466000 Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying condensed consolidated statement of operations. xbrli:shares xbrli:pure iso4217:USD iso4217:USD xbrli:shares 0000736012 2019-01-01 2019-06-30 0000736012 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0000736012 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0000736012 us-gaap:PreferredStockMember 2019-01-01 2019-06-30 0000736012 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0000736012 2019-04-01 2019-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:CommercialCustomersMember 2019-04-01 2019-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:ThreeGovernmentCustomersMember 2019-04-01 2019-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:USGovernmentMember 2019-04-01 2019-06-30 0000736012 2020-01-01 2020-06-30 0000736012 us-gaap:RevolvingCreditFacilityMember srt:ChiefExecutiveOfficerMember 2020-01-01 2020-06-30 0000736012 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-06-30 0000736012 us-gaap:CommonStockMember 2020-01-01 2020-06-30 0000736012 us-gaap:PreferredStockMember 2020-01-01 2020-06-30 0000736012 us-gaap:RetainedEarningsMember 2020-01-01 2020-06-30 0000736012 2020-04-01 2020-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:CommercialCustomersMember 2020-04-01 2020-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:FourGovernmentCustomersMember 2020-04-01 2020-06-30 0000736012 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember intz:USGovernmentMember 2020-04-01 2020-06-30 0000736012 intz:Series1PreferredStockMember 2020-04-01 2020-06-30 0000736012 intz:Series2PreferredStockAndSeries3PreferredStockMember 2020-04-01 2020-06-30 0000736012 intz:Series2PreferredStockMember 2020-04-01 2020-06-30 0000736012 intz:Series3PreferredStockMember 2020-04-01 2020-06-30 0000736012 intz:PaycheckProtectionProgramCaresActMember 2020-04-30 2020-04-30 0000736012 us-gaap:SubsequentEventMember 2020-08-13 2020-08-13 0000736012 us-gaap:RevolvingCreditFacilityMember srt:ChiefExecutiveOfficerMember 2018-02-08 0000736012 2018-12-31 0000736012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000736012 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000736012 us-gaap:CommonStockMember 2018-12-31 0000736012 us-gaap:PreferredStockMember 2018-12-31 0000736012 us-gaap:RetainedEarningsMember 2018-12-31 0000736012 us-gaap:RevolvingCreditFacilityMember srt:ChiefExecutiveOfficerMember 2019-02-07 0000736012 2019-03-31 0000736012 us-gaap:RevolvingCreditFacilityMember srt:ChiefExecutiveOfficerMember 2019-05-31 0000736012 2019-06-30 0000736012 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000736012 us-gaap:CommonStockMember 2019-06-30 0000736012 us-gaap:PreferredStockMember 2019-06-30 0000736012 us-gaap:RetainedEarningsMember 2019-06-30 0000736012 us-gaap:TreasuryStockMember 2019-06-30 0000736012 us-gaap:RevolvingCreditFacilityMember srt:ChiefExecutiveOfficerMember 2019-10-24 0000736012 2019-12-31 0000736012 intz:Series1PreferredStockMember 2019-12-31 0000736012 intz:Series2PreferredStockMember 2019-12-31 0000736012 intz:Series3PreferredStockMember 2019-12-31 0000736012 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000736012 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000736012 us-gaap:CommonStockMember 2019-12-31 0000736012 us-gaap:PreferredStockMember 2019-12-31 0000736012 us-gaap:RetainedEarningsMember 2019-12-31 0000736012 2020-06-30 0000736012 intz:PaycheckProtectionProgramCaresActMember 2020-06-30 0000736012 intz:RichardsonPropertyMember 2020-06-30 0000736012 intz:TheSanMarcosPropertyMember 2020-06-30 0000736012 intz:Series1PreferredStockMember 2020-06-30 0000736012 intz:Series2PreferredStockMember 2020-06-30 0000736012 intz:Series3PreferredStockMember 2020-06-30 0000736012 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000736012 us-gaap:CommonStockMember 2020-06-30 0000736012 us-gaap:PreferredStockMember 2020-06-30 0000736012 us-gaap:RetainedEarningsMember 2020-06-30 0000736012 us-gaap:TreasuryStockMember 2020-06-30 0000736012 2020-07-31 0000736012 us-gaap:SubsequentEventMember 2020-08-13 EX-101.SCH 6 intz-20200630.xsd XBRL TAXONOMY EXTENSION SCHEMA 000 - 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Document And Entity Information - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Document Information [Line Items]    
Entity Registrant Name Intrusion Inc  
Entity Central Index Key 0000736012  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Interactive Data Current Yes  
Entity Common Stock, Shares Outstanding (in shares)   13,792,030
Entity Shell Company false  
Document Type 10-Q  
Document Period End Date Jun. 30, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Amendment Flag false  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.20.2
Unaudited Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 2,872,000 $ 3,334,000
Accounts receivable 1,067,000 1,566,000
Prepaid expenses 388,000 152,000
Total current assets 4,327,000 5,052,000
Noncurrent Assets:    
Property and equipment, net 311,000 335,000
Finance leases, right-of-use assets, net 41,000 62,000
Operating leases, right-of-use asset, net 1,223,000 1,348,000
Other assets 36,000 38,000
Total noncurrent assets 1,611,000 1,783,000
TOTAL ASSETS 5,938,000 6,835,000
Current Liabilities:    
Accounts payable and accrued expenses 1,152,000 1,080,000
Dividends payable 19,000 20,000
Finance leases liability, current portion 38,000 43,000
Operating leases liability, current portion 291,000 284,000
PPP loan payable, current portion 285,000
Deferred revenue 164,000 516,000
Total current liabilities 1,949,000 1,943,000
Noncurrent Liabilities:    
Finance leases liability, noncurrent portion 5,000 21,000
Operating leases liability, noncurrent portion 1,170,000 1,315,000
PPP loan payable, noncurrent portion 345,000
Total noncurrent liabilities 1,520,000 1,336,000
Commitments and contingencies
Stockholders’ equity:    
Common stock, $0.01 par value: Authorized shares — 80,000 Issued shares — 13,802 in 2020 and 13,552 in 2019 Outstanding shares — 13,792 in 2020 and 13,542 in 2019 138,000 136,000
Common stock held in treasury, at cost – 10 shares (362,000) (362,000)
Additional paid-in capital 56,946,000 56,759,000
Accumulated deficit (55,957,000) (54,777,000)
Accumulated other comprehensive loss (43,000) (43,000)
Total stockholders’ equity 2,469,000 3,556,000
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 5,938,000 6,835,000
Series 1 Preferred Stock [Member]    
Stockholders’ equity:    
Preferred stock 707,000 707,000
Series 2 Preferred Stock [Member]    
Stockholders’ equity:    
Preferred stock 661,000 724,000
Series 3 Preferred Stock [Member]    
Stockholders’ equity:    
Preferred stock $ 379,000 $ 412,000
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.20.2
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
shares in Thousands
Jun. 30, 2020
Dec. 31, 2019
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 5,000 5,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 80,000 80,000
Common stock, shares issued (in shares) 13,802 13,552
Common stock, shares outstanding (in shares) 13,792 13,542
Common stock held in treasury, at cost, shares (in shares) 10 10
Series 1 Preferred Stock [Member]    
Preferred stock, shares issued (in shares) 200 200
Preferred stock, shares outstanding (in shares) 200 200
Preferred stock, liquidation preference (in dollars per share) $ 1,012 $ 1,013
Series 2 Preferred Stock [Member]    
Preferred stock, shares issued (in shares) 420 460
Preferred stock, shares outstanding (in shares) 420 460
Preferred stock, liquidation preference (in dollars per share) $ 1,054 $ 1,155
Series 3 Preferred Stock [Member]    
Preferred stock, shares issued (in shares) 266 289
Preferred stock, shares outstanding (in shares) 266 289
Preferred stock, liquidation preference (in dollars per share) $ 583 $ 634
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.20.2
Unaudited Condensed Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue $ 1,655 $ 4,020 $ 3,450 $ 7,211
Cost of revenue 651 1,590 1,398 2,874
Gross profit 1,004 2,430 2,052 4,337
Operating expenses:        
Sales and marketing 485 46 995 458
Research and development 907 296 1,660 477
General and administrative 326 321 582 652
Operating income (loss) (714) 1,767 (1,185) 2,750
Interest income 1 7
Interest expense (2) (9) (2) (44)
Net income (loss) (715) 1,758 (1,180) 2,706
Preferred stock dividends accrued (33) (35) (66) (69)
Net income (loss) attributable to common stockholders $ (748) $ 1,723 $ (1,246) $ 2,637
Net income (loss) per share attributable to common stockholders:        
Basic (in dollars per share) $ (0.05) $ 0.13 $ (0.09) $ 0.20
Diluted (in dollars per share) $ (0.05) $ 0.11 $ (0.09) $ 0.17
Weighted average common shares outstanding:        
Basic (in shares) 13,784 13,523 13,743 13,466
Diluted (in shares) 13,784 15,371 13,743 15,314
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.20.2
Unaudited Condensed Consolidated Statements of Changes In Stockholders' Equity - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balance, beginning of quarter and end of quarter (in shares) 949,000 13,259,000          
Balance, beginning of quarter (in shares) at Dec. 31, 2018 949,000 13,259,000          
Conversion of preferred stock to common (in shares)            
Balance, end of quarter (in shares) at Jun. 30, 2019 949,000 13,539,000 (362,000)        
Balance, beginning of quarter at Dec. 31, 2018 $ 1,843 $ 133   $ 56,609 $ (59,242) $ (43)  
Conversion of preferred stock to common          
Balance, end of quarter at Jun. 30, 2019 $ 1,843 $ 135   56,785 (56,536)   $ 1,822
Stock Issued During Period, Shares, Conversion of Convertible Securities (in shares)            
Exercise of stock options (in shares)   280,000         280,500
Conversion of preferred stock to common          
Exercise of stock options   $ 2   224      
Balance, beginning of quarter and end of quarter (in shares) 949,000 13,539,000 (362,000)        
Stock-based compensation       14      
Preferred stock dividends declared, net of waived penalties by shareholders       (62)      
Net income (loss)         2,706   $ 2,706
Balance, beginning of quarter and end of quarter (in shares) 949,000 13,539,000 (362,000)        
Balance, beginning of quarter and end of quarter (in shares) 949,000 13,552,000          
Balance, beginning of quarter (in shares) at Dec. 31, 2019 949,000 13,552,000          
Conversion of preferred stock to common (in shares) (63,000)            
Balance, end of quarter (in shares) at Jun. 30, 2020 886,000 13,802,000 (362,000)        
Balance, beginning of quarter at Dec. 31, 2019 $ 1,843 $ 136   56,759 (54,777) $ (43) 3,556
Conversion of preferred stock to common (96)           (96)
Balance, end of quarter at Jun. 30, 2020 $ 1,747 $ 138   56,946 (55,957)   $ 2,469
Stock Issued During Period, Shares, Conversion of Convertible Securities (in shares)   63,000          
Exercise of stock options (in shares)   187,000         186,600
Conversion of preferred stock to common   $ 1   95      
Exercise of stock options   $ 1   84      
Balance, beginning of quarter and end of quarter (in shares) 886,000 13,802,000 (362,000)        
Stock-based compensation       74      
Preferred stock dividends declared, net of waived penalties by shareholders       $ (66)      
Net income (loss)         $ (1,180)   $ (1,180)
Balance, beginning of quarter and end of quarter (in shares) 886,000 13,802,000 (362,000)        
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.20.2
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Operating Activities:    
Net income (loss) $ (1,180) $ 2,706
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization 107 86
Stock-based compensation 74 14
Penalties on dividends 6
Noncash lease costs 124 304
Changes in operating assets and liabilities:    
Accounts receivable 499 (738)
Prepaid expenses and other assets (234) (234)
Accounts payable and accrued expenses (64) (66)
Deferred revenue (352) 179
Net cash provided by (used in) operating activities (1,026) 2,257
Investing Activities:    
Purchases of property and equipment (62) (168)
Financing Activities:    
Proceeds from PPP loan payable 629
Payments on loan from officer (1,815)
Proceeds from stock options exercised 85 226
Payments of dividends (67) (644)
Reduction of finance lease liability (21) (31)
Net cash provided by (used in) financing activities 626 (2,264)
Net decrease in cash and cash equivalents (462) (175)
Cash and cash equivalents at beginning of period 3,334 1,652
Cash and cash equivalents at end of period 2,872 1,477
SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING ACTIVITIES:    
Preferred stock dividends accrued 66 68
Conversion of preferred stock to common $ 96
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.20.2
Note 1 - Description of Business
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Nature of Operations [Text Block]
1.
Description of Business
 
We develop, market and support a family of entity identification, high speed data mining and cybersecurity solutions. Our products help detect, report and mitigate cybercrimes and advanced persistent threats.
 
Our product families include:
 
 
TraceCop for entity identification, cybercrime detection and disclosure, and;
 
Savant for high speed data mining, analytics, detection, reporting and mitigation of cybersecurity threats.
 
Our products in development include:
 
 
Intrusion Shield
 
        We are in the process of developing a new product offering, Intrusion Shield, that is designed to be a next generation intrusion detection and protection solution.  After
20
years of providing research, analysis, and tools to the federal government and enterprise corporations, Intrusion possesses a comprehensive and proprietary database of Internet activity, including information about the activities of malicious online actors.  Intrusion's Shield product will combine that comprehensive database with artificial intelligence (AI) and real-time process flow technology to provide businesses and government agencies with a unique and affordable tool to detect, identify, and prevent cyber-crimes. 
 
Shield is a combination of plug-and-play hardware, software, global data, and AI services providing organizations with aggressive protection against unaddressed information security threats and the most robust defense possible against cybercrime. Unlike traditional industry approaches that rely heavily on human resources, which malicious actors have learned to bypass, Intrusion Shield uses our extensive database together with real-time AI technology to prevent illicit behavior.  Shield's proprietary architecture isolates and neutralizes malicious traffic and network flows that existing solutions cannot identify or even characterize. Most breaches today are caused by malware free compromises that trigger
no
alarms in a firewall or endpoint solution. The common denominator is network communications, and Shield monitors and analyses all network traffic and communications allowing it to identify and stop malware-free attacks. Shield's capabilities will continuously evolve based on real-time updates originating from our worldwide installations and growing TraceCop database identifying new dangers.
 
Shield does
not
seek to displace existing solutions, instead providing a new, and additional layer of cybersecurity for enterprises.  According to SBA
2019,
the U.S. enterprise market consists of
30.7
million businesses, of which
70%
are characterized as small and medium sized businesses.  While the company believes that many large enterprises will recognize the need this product addresses and will be incentivized to purchase Shield, the enterprise market has many decision makers for new security product purchases; therefore, the sale cycle
may
be longer for this product than our current product offerings.  We have identified businesses with from
100
to
1,000
users as our initial target market, as we believe this market segment has the most pressing need for the enhanced protection that the Intrusion Shield will offer.  We intend to leverage existing and new channel partners, such as value added resellers and systems integrators, to market Shield to this target market.
 
Shield has experienced positive progress during Alpha testing and the Company has identified
twelve
companies for the Beta release anticipated to begin in
September.
The configuration of hardware is a single Dell network appliance installed inline inside of the customer's firewall. The size of the network appliance will vary depending on the number of workstations and the size of the customer's internet connection be that
1Gb,
10Gb
or
100
Gb.
 
Intrusion's products help protect critical information assets by quickly detecting, protecting, analyzing and reporting attacks or misuse of classified, private and regulated information for government and enterprise networks.
 
We market and distribute our products through a direct sales force to:
 
  end-users, and
  value-added resellers.
 
Our end-user customers include:
 
 
U.S. federal government entities,
 
state and local government entities,
 
large and diverse conglomerates,
 
manufacturing entities, and
 
other customers.
 
We were organized in Texas in
September 1983
and reincorporated in Delaware in
October 1995.
Our principal executive offices are located at
1101
East Arapaho Road, Suite
200,
Richardson, Texas
75081,
and our telephone number is (
972
)
234
-
6400.
Our website URL is www.intrusion.com. References to the “Company”, “we”, “us”, “our”, “Intrusion” or “Intrusion Inc.” refer to Intrusion Inc. and its subsidiaries. Trademarks of Intrusion include:
 
 
INTRUSION SHIELD
 
PROCESS FLOW TECHNOLOGY
 
INTRUSION SAVANT
 
BRINGING SCIENCE INTO DECISION MAKING
 
TRACECOP
 
INTRUSION PROTECT EVERYTHING. TRUST NOTHING
 
PROTECT EVERYTHING. TRUST NOTHING.
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.20.2
Note 2 - Basis of Presentation
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Basis of Presentation and Significant Accounting Policies [Text Block]
2.
     Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form
10
-Q and Item
10
-
01
of Regulation S-
X.
Accordingly, they do
not
include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The
December 31, 2019
balance sheet was derived from audited financial statements, but does
not
include all the disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented
not
misleading. In our opinion, all the adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. The results of operations for the
three
and
six
month periods ended
June 30, 2020
are
not
necessarily indicative of the results that
may
be achieved for the full fiscal year or for any future period. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form
10
-K for the year ended
December 
31,
2019,
filed with the U.S. Securities and Exchange Commission (the “SEC”) on
March 27, 2020.
 
The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Loans payable to officer are with a related party and as a result do
not
bear market rates of interest.  Management believes based on its current financial position that it could
not
obtain comparable amounts of
third
party financing, and as such cannot estimate the fair value of the loans payable to officer.
None
of these instruments are held for trading purposes.
 
On
January 1, 2019
we adopted ASU
No.
2016
-
02,
Leases (topic
842
)
. At the date of adoption there was
no
impact on the statement of operations, while the balance sheet reflects recording both assets and liabilities applicable to the operating right-of-use asset lease identified. ASU
No.
2016
-
02
did
not
have a material effect on the Company's results of operations or cash flows for the
three
and
six
month periods ended
June 30, 2020
and
2019.
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.20.2
Note 3 - Loan Payable to Officer
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
3.
     Loan Payable to Officer
 
On
February 8, 2018,
the Company entered into an unsecured revolving promissory note to borrow up to
$3,700,000
from G. Ward Paxton. Under the terms of the CEO Note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of
$3,700,000
at any given time through
March 2020.
 
On
February 
7,
2019,
the Company amended the unsecured revolving promissory note to borrow up to
$2,700,000
from G. Ward Paxton, the Company's former Chief Executive Officer. Amounts borrowed under the CEO Note accrued interest at a floating rate per annum equal to Silicon Valley Bank's (“SVB”) prime rate plus
1%.
Under the terms of the note, the Company had the ability to borrow, repay and reborrow on the loan as needed up to an outstanding principal balance due of
$2,700,000
at any given time through
March 
2021.
We reduced our borrowing under this note to
zero
as of
May 2019.
 
As of
October 24, 2019,
G. Ward Paxton passed away, terminating the CEO Note with the result that future borrowings thereunder will
no
longer be available to the Company. Our management will be assessing whether to replace this borrowing capacity and assessing what terms
may
be available to the Company, including whether any such terms are acceptable to the Company, if at all.
 
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Note 4 - Accounting for Stock-based Compensation
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]
4.
     Accounting for Stock-Based Compensation
 
During the
three
month periods ended
June 30, 2020
and
2019,
the Company granted
323,000
and
24,000,
respectively, of stock options to employees or directors. The Company recognized
$55,000
and
$10,000,
respectively, of stock-based compensation expense for the
three
month periods ended
June 30, 2020
and
2019.
During the
six
month periods ended
June 30, 2020
and
2019,
the Company granted
323,000
and
24,000,
respectively, of stock options to employees and directors. The Company recognized
$74,000
and
$14,000,
respectively, of stock-based compensation expense for the
six
month periods ended
June 30, 2020
and
2019.
 
During the
three
month periods ended
June 30, 2020
and
2019,
14,000
and
14,000
were exercised under the
2005
Plan, respectively. During the
six
month periods ended
June 30, 2020
and
2019,
186,600
and
280,500
were exercised under the
2005
Plan, respectively.
 
Valuation Assumptions
 
The fair values of employee and director option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:
 
   
For Three Months Ended
June 30, 2020
   
For Three Months Ended
June 30, 2019
   
For Six Months
 Ended
June 30, 2020
   
For Six Months
Ended

June 30, 2019
 
                                 
Weighted average grant date fair value
  $
2.80
    $
3.61
    $
2.80
    $
3.61
 
Weighted average assumptions used:
                               
Expected dividend yield
   
0.0
%
   
0.0
%
   
0.0
%
   
0.0
%
Risk-free interest rate
   
0.43
%
   
2.19
%
   
0.43
%
   
2.19
%
Expected volatility
   
76.00
%
   
127.52
%
   
76.00
%
   
127.52
%
Expected life (in years)
   
6.2
     
5.0
     
6.2
     
5.0
 
 
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. Options granted to non-employees are valued using the fair market value on each measurement date of the option.
XML 21 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Note 5 - Revenue Recognition
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]
5.
     Revenue Recognition
 
We generally recognize product revenue upon shipment or after meeting certain performance obligations. These products can include hardware, perpetual software licenses and data sets. Data set updates are the majority of our sales. We do
not
currently offer software on a subscription basis. Warranty costs and sales returns have
not
been material.
 
We recognize sales of our data sets in accordance with FASB ASC Topic
606
whereby revenue from contracts with
customers is
not
recognized until all
five
of the following have been met:
 
 
i)
identify the contract with a customer;
 
ii)
identify the performance obligations in the contract;
 
iii)
determine the transaction price;
 
iv)
allocate the transaction price to the separate performance obligations; and
  v) recognize revenue upon satisfaction of a performance obligation.
 
Data updates are typically done monthly and revenue will be matched accordingly. Product sales
may
include maintenance and customer support allocated revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy using the relative selling price method. All of our product offering and service offering market values are readily determined based on current and prior stand-alone sales. We
may
defer and recognize maintenance, updates and support revenue over the term of the contract period, which is generally
one
year.
 
Service revenue, primarily including maintenance, training and installation are recognized upon delivery of the service and typically are unrelated to product sales. To date, training and installation revenue has
not
been material. These revenues are included in net customer support and maintenance revenues in the statement of operations.
 
Our normal payment terms offered to customers, distributors and resellers are net
30
days domestically and net
45
days internationally. We do
not
offer payment terms that extend beyond
one
year and rarely do we extend payment terms beyond our normal terms. If certain customers do
not
meet our credit standards, we do require payment in advance to limit our credit exposure.
 
Shipping and handling costs are billed to the customer and included in product revenue. Shipping and handling expenses are included in cost of product revenue. We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.
 
Contract assets represent contract billings for sales per contracts with customers and are classified as current. Our contract assets include our accounts receivables. At
June 30, 2020,
the Company had contract assets balance of
$1,067,000.
At
December 31, 2019,
the Company had contract assets balance of
$1,566,000.
 
Contract liabilities consist of cash payments in advance of the Company satisfying performance obligations and recognizing revenue. The Company currently classifies deferred revenue as a contract liability. At
June 30, 2020,
the Company had contract liabilities balance of
$164,000.
At
December 31, 2019,
the Company had contract liabilities balance of
$516,000.
XML 22 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Note 6 - Net Income (Loss) Per Share
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Earnings Per Share [Text Block]
6.
     Net Income (Loss) Per Share
 
Basic net income (loss) per share is computed by dividing net income attributable to common stockholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and dilutive common stock equivalents outstanding for the period. Our common stock equivalents include all common stock issuable upon conversion of preferred stock and the exercise of outstanding options. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the
three
month periods ended
June 30, 2020
and
2019
are
1,942,990
and
12,132,
respectively. The aggregate number of common stock equivalents excluded from the diluted income (loss) per share calculation for the
six
month periods ended
June 30, 2020
and
2019
are
1,909,289
and
6,066,
respectively. Since the Company is in a net loss position for the
three
and
six
month periods ending
June 30, 2020,
basic and dilutive net loss per share are the same.
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.20.2
Note 7 - Concentrations
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Concentration Risk Disclosure [Text Block]
7.
    Concentrations
 
Our operations are concentrated in
one
area—security software/entity identification. Sales to the U.S. Government through direct and indirect channels totaled
91.0%
of total revenues for the
second
quarter of
2020
compared to
91.3%
of total revenues for the
second
quarter of
2019.
During the
second
quarter of
2020,
approximately
91.0%
of total revenues were attributable to
four
government customers compared to approximately
73.2%
of total revenues attributable to
three
government customers in the
second
quarter of
2019.
In the
second
quarter of
2020,
no
individual commercial customer had revenues over
10.0%
of total revenue compared to
no
individual commercial customer for the same period in
2019.
Our similar product and service offerings are
not
viewed as individual segments, as our management analyzes the business as a whole and expenses are
not
allocated to each product offering.
XML 24 R14.htm IDEA: XBRL DOCUMENT v3.20.2
Note 8 - Commitments and Contingencies
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
8.
     Commitments and Contingencies
 
We are subject from time to time to various legal proceedings and claims that arise during the ordinary course of our business. We do
not
believe that the outcome of those "routine" legal matters should have a material adverse effect on our consolidated financial position, operating results or cash flows; however, we can provide
no
assurances that legal claims that
may
arise in the future will
not
have such a material impact on the Company.
XML 25 R15.htm IDEA: XBRL DOCUMENT v3.20.2
Note 9 - Dividends Payable
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
9.
     Dividends Payable
 
During the quarter ended
June 30, 2020,
we accrued
$13,000
in dividends payable to the holders of our
5%
Preferred Stock,
$13,000
in dividends payable to the holders of our Series
2
5%
Preferred Stock and
$7,000
in dividends payable to the holders of our Series
3
5%
Preferred Stock. As of
June 30, 2020,
we had
$19,000
in accrued and unpaid dividends, all of which have been paid as of the date of this Quarterly Report.
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.20.2
Note 10 - Right-of-use Asset and Leasing Liabilities
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Operating and Finance Leases Of Lessee Disclosure [Text Block]
10.
  Right-of-use Asset and Leasing Liabilities
 
Under the new lease accounting standard, we have determined that we have leases for right-of-use (ROU) assets. We have both finance right-of-use assets and operating right-of-use assets with a related lease liability. Our finance lease right-of-use assets consist of computer hardware and a copying machine. Our operating lease right-of-use assets include our rental agreements for our offices in Richardson and San Marcos, CA. Both types of lease liabilities are determined by the net present value of total payments and are amortized over the life of the lease. Both types of lease obligations are designed to terminate with the last scheduled payment. All of the finance lease right-of-use assets have a
three
year life and are in various stages of completion. The Richardson operating lease liability has a life of
four
years and
five
months as of
June 30, 2020.
The San Marcos operating lease liability has a life of
nine
months as of
June 30, 2020.
The adoption of the lease accounting standard resulted in the recognition of an operating ROU asset of
$1,553
thousand and a related lease liability of
$1,744
thousand during the
first
quarter of
2019.
 
Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required. The Company adopted ASC
842
prospectively and elected the package of transition practical expedients that does
not
require reassessment of: (
1
) whether any existing or expired contracts are or contain leases, (
2
) lease classification and (
3
) initial direct costs. In addition, the Company has elected other available practical expedients to
not
separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of
12
months or less.
 
As the implicit rate is
not
readily determinable for the Company's lease agreement, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. This discount rate for the lease approximates SVB's prime rate.
 
Supplemental cash flow information includes operating cash flows related to operating leases. For the
six
months ended
June 30, 2020
and
2019,
the Company had
$179
thousand and
$88
thousand, respectively, in operating cash flows related to operating leases.
 
Schedule of Items Appearing on the Statement
of Operations
:
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 20
20
   
June 30, 201
9
   
June 30, 20
20
   
June 30, 201
9
 
Operating expense:
                               
Amortization expense – Finance ROU
  $
11
    $
16
    $
21
    $
32
 
Lease expense – Operating ROU
   
82
     
83
     
165
     
162
 
Other expense:
                               
Interest expense – Finance ROU
  $
    $
1
    $
1
    $
2
 
 
 
Future minimum lease obligations consisted of the following at
June 30
,
20
20
(in thousands):
 
   
Operating
   
Finance
         
Period ending June 30,
 
ROU Leases
   
ROU Leases
   
Total
 
2021
  $
363
    $
39
    $
402
 
2022
   
363
     
5
     
368
 
2023
   
375
     
     
375
 
2024
   
384
     
     
384
 
2025
   
159
     
     
159
 
Thereafter
   
     
     
 
    $
1,644
    $
44
    $
1,688
 
Less Interest*
   
(183
)
   
(1
)
   
 
 
    $
1,461
    $
43
     
 
 
 
 
*Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying condensed consolidated statement of operations.
 
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Note 11 - PPP Loan
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Debt Disclosure [Text Block]
11.
   PPP Loan
 
On
March 27, 2020,
the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which includes provision for a Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”). The PPP allows qualifying businesses to borrow up to
$10
million calculated based on qualifying payroll costs. The loan is guaranteed by the federal government, and does
not
require collateral. On
April 
30,
2020
we entered into a PPP Loan with Silicon Valley Bank effective
April 
30,
2020,
pursuant to the PPP under CARES for
$629,000.
The PPP Loan matures on
April 
30,
2022
and bears interest at a rate of
1.0%
per annum. Monthly amortized principal and interest payments are deferred for
six
months after the date of disbursement. The PPP Loan funds were received on
April 
30,
2020.
The PPP Loan contains events of default and other provisions customary for a loan of this type. The PPP provides that (
1
) the use of PPP Loan amount shall be limited to certain qualifying expenses, (
2
)
100
percent of the principal amount of the loan is guaranteed by the SBA and (
3
) an amount up to the full principal amount
may
qualify for loan forgiveness in accordance with the terms of CARES. We are
not
yet able to determine the amount that might be forgiven. As of
June 
30,
2020,
the Company was in full compliance with all covenants with respect to the PPP Loan. The Company expects to use the full proceeds of the PPP loan in accordance with the provisions of CARES. As of
June 30, 2020,
the balance of the PPP Loan was
$630,000,
which includes
$1.0
thousand in accrued interest.
 
Future minimum l
oan
obligations consisted of the following at
June 30,
20
20
(in thousands):
 
Period ending June 30,
 
PPP Loan
 
2021
  $
285
 
2022
   
356
 
2023
   
 
2024
   
 
2025
   
 
Thereafter
   
 
    $
641
 
Less Interest*
   
(11
)
    $
630
 
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.20.2
Note 12 - Coronavirus Outbreak in the United States
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Contingencies Disclosure [Text Block]
12.
  Coronavirus Outbreak in the United States
 
Uncertainties surrounding the effects of the coronavirus, particularly potential diversion of time and resources of federal government entities which make up a significant concentration of our customer base, could cause a material adverse effect on our results of operations and financial results. The extent of the impact of COVID-
19
on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers, employees and vendors all of which are uncertain and cannot be predicted. A material disruption in our workplace as a result of the coronavirus could affect our ability to carry on our business operations in the ordinary course and
may
require additional cost and effort should our employees
not
be able to be physically on-premises.
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Note 13 - Subsequent Events
6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Subsequent Events [Text Block]
13.
  Subsequent Events.
 
As of the date of this Quarterly Report, all current shares of issued and outstanding preferred stock have been voluntarily converted, resulting in the issuance of a total of
1,004,249
newly issued shares of the Company's common stock. The addition of these newly issued shares has resulted in the dilution of each share of issued and outstanding common stock by a factor of
7.28%.
  While the elimination of these
three
classes of preferred stock removes a number of the Company's obligations to the holders of preferred stock (such as the obligation to pay continuing dividends) as well as a number of restrictions on the Company's activities (such as restrictions on certain capital raising and funding transactions), the addition of these newly issued shares combined with the fact that the Company's common stock is thinly traded on the OTCQB Marketplace could cause an increase in selling volume, and result in a decline in the market price of the Company's common stock.
 
On
August 6, 2020,
Anthony J. LeVecchio was appointed to the board of directors and to serve on the Company's audit and compensation committees.
 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form
10
-Q and Item
10
-
01
of Regulation S-
X.
Accordingly, they do
not
include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The
December 31, 2019
balance sheet was derived from audited financial statements, but does
not
include all the disclosures required by accounting principles generally accepted in the United States. However, we believe that the disclosures are adequate to make the information presented
not
misleading. In our opinion, all the adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. The results of operations for the
three
and
six
month periods ended
June 30, 2020
are
not
necessarily indicative of the results that
may
be achieved for the full fiscal year or for any future period. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form
10
-K for the year ended
December 
31,
2019,
filed with the U.S. Securities and Exchange Commission (the “SEC”) on
March 27, 2020.
Fair Value of Financial Instruments, Policy [Policy Text Block]
The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued expenses, and dividends payable approximate their carrying amounts due to the relatively short maturity of these instruments. Loans payable to officer are with a related party and as a result do
not
bear market rates of interest.  Management believes based on its current financial position that it could
not
obtain comparable amounts of
third
party financing, and as such cannot estimate the fair value of the loans payable to officer.
None
of these instruments are held for trading purposes.
New Accounting Pronouncements, Policy [Policy Text Block]
On
January 1, 2019
we adopted ASU
No.
2016
-
02,
Leases (topic
842
)
. At the date of adoption there was
no
impact on the statement of operations, while the balance sheet reflects recording both assets and liabilities applicable to the operating right-of-use asset lease identified. ASU
No.
2016
-
02
did
not
have a material effect on the Company's results of operations or cash flows for the
three
and
six
month periods ended
June 30, 2020
and
2019.
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.20.2
Note 4 - Accounting for Stock-based Compensation (Tables)
6 Months Ended
Jun. 30, 2020
Notes Tables  
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]
   
For Three Months Ended
June 30, 2020
   
For Three Months Ended
June 30, 2019
   
For Six Months
 Ended
June 30, 2020
   
For Six Months
Ended

June 30, 2019
 
                                 
Weighted average grant date fair value
  $
2.80
    $
3.61
    $
2.80
    $
3.61
 
Weighted average assumptions used:
                               
Expected dividend yield
   
0.0
%
   
0.0
%
   
0.0
%
   
0.0
%
Risk-free interest rate
   
0.43
%
   
2.19
%
   
0.43
%
   
2.19
%
Expected volatility
   
76.00
%
   
127.52
%
   
76.00
%
   
127.52
%
Expected life (in years)
   
6.2
     
5.0
     
6.2
     
5.0
 
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.20.2
Note 10 - Right-of-use Asset and Leasing Liabilities (Tables)
6 Months Ended
Jun. 30, 2020
Notes Tables  
Lease, Cost [Table Text Block]
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 20
20
   
June 30, 201
9
   
June 30, 20
20
   
June 30, 201
9
 
Operating expense:
                               
Amortization expense – Finance ROU
  $
11
    $
16
    $
21
    $
32
 
Lease expense – Operating ROU
   
82
     
83
     
165
     
162
 
Other expense:
                               
Interest expense – Finance ROU
  $
    $
1
    $
1
    $
2
 
Lessee, Operating and Finance Lease, Liability, Maturity [Table Text Block]
   
Operating
   
Finance
         
Period ending June 30,
 
ROU Leases
   
ROU Leases
   
Total
 
2021
  $
363
    $
39
    $
402
 
2022
   
363
     
5
     
368
 
2023
   
375
     
     
375
 
2024
   
384
     
     
384
 
2025
   
159
     
     
159
 
Thereafter
   
     
     
 
    $
1,644
    $
44
    $
1,688
 
Less Interest*
   
(183
)
   
(1
)
   
 
 
    $
1,461
    $
43
     
 
 
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.20.2
Note 11 - PPP Loan (Tables)
6 Months Ended
Jun. 30, 2020
Notes Tables  
Schedule of Maturities of Long-term Debt [Table Text Block]
Period ending June 30,
 
PPP Loan
 
2021
  $
285
 
2022
   
356
 
2023
   
 
2024
   
 
2025
   
 
Thereafter
   
 
    $
641
 
Less Interest*
   
(11
)
    $
630
 
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.20.2
Note 3 - Loan Payable to Officer (Details Textual) - Revolving Credit Facility [Member] - Chief Executive Officer [Member] - USD ($)
6 Months Ended
Jun. 30, 2020
Oct. 24, 2019
May 31, 2019
Feb. 07, 2019
Feb. 08, 2018
Line of Credit Facility, Maximum Borrowing Capacity   $ 0   $ 2,700,000 $ 3,700,000
Debt Instrument, Basis Spread on Variable Rate 1.00%        
Long-term Line of Credit, Total     $ 0    
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.20.2
Note 4 - Accounting for Stock-based Compensation (Details Textual) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) 323,000 24,000 323,000 24,000
Share-based Payment Arrangement, Expense $ 55,000 $ 10,000 $ 74,000 $ 14,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in shares) 14,000 14,000 186,600 280,500
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.20.2
Note 4 - Accounting for Stock-based Compensation - Valuation Assumptions (Details) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Weighted average grant date fair value (in dollars per share) $ 2.80 $ 3.61 $ 2.80 $ 3.61
Weighted average assumptions used:        
Expected dividend yield 0.00% 0.00% 0.00% 0.00%
Risk-free interest rate 0.43% 2.19% 0.43% 2.19%
Expected volatility 76.00% 127.52% 76.00% 127.52%
Expected life (in years) (Year) 6 years 73 days 5 years 6 years 73 days 5 years
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.20.2
Note 5 - Revenue Recognition (Details Textual) - USD ($)
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Period of Payment Terms Offered to Customers Distributions and Resellers Domestically (Day) 30 days  
Period of Payment Terms Offered to Customers Distributors and Resllers Internationally (Day) 45 days  
Contract with Customer, Asset, after Allowance for Credit Loss, Current, Total $ 1,067,000 $ 1,566,000
Contract with Customer, Liability, Current $ 164,000 $ 516,000
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.20.2
Note 6 - Net Income (Loss) Per Share (Details Textual) - shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 1,942,990 12,132 1,909,289 6,066
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.20.2
Note 7 - Concentrations (Details Textual)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Number of Areas in Which Operations are Concentrated     1
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | U.S. Government [Member]      
Concentration Risk, Percentage 91.00% 91.30%  
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Four Government Customers [Member]      
Concentration Risk, Percentage 91.00%    
Number of Major Customers 4    
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Three Government Customers [Member]      
Concentration Risk, Percentage   73.20%  
Number of Major Customers   3  
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Commercial Customers [Member]      
Number of Major Customers 0 0  
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.20.2
Note 9 - Dividends Payable (Details Textual)
3 Months Ended
Jun. 30, 2020
USD ($)
Series 1 Preferred Stock [Member]  
Dividends, Preferred Stock, Total $ 13,000
Preferred Stock, Dividend Rate, Percentage 5.00%
Series 2 Preferred Stock [Member]  
Dividends, Preferred Stock, Total $ 13,000
Preferred Stock, Dividend Rate, Percentage 5.00%
Series 3 Preferred Stock [Member]  
Dividends, Preferred Stock, Total $ 7,000
Preferred Stock, Dividend Rate, Percentage 5.00%
Series 2 Preferred Stock and Series 3 Preferred Stock [Member]  
Dividends, Preferred Stock, Total $ 19,000
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.20.2
Note 10 - Right-of-use Asset and Leasing Liabilities (Details Textual) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Mar. 31, 2019
Lessee, Finance Lease, Term of Contract (Year) 3 years      
Operating Lease, Right-of-Use Asset $ 1,223   $ 1,348 $ 1,553
Operating Lease, Liability, Total 1,461     $ 1,744
Operating Lease, Payments $ 179 $ 88    
Richardson Property [Member]        
Lessee, Operating Lease, Term of Contract (Year) 4 years 244 days      
The San Marcos Property [Member]        
Lessee, Operating Lease, Term of Contract (Year) 270 days      
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.20.2
Note 10 - Right-of-use Asset and Leasing Liabilities - Schedule of Items Appearing on the Statement of Operations (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Amortization expense – Finance ROU $ 11 $ 16 $ 21 $ 32
Lease expense – Operating ROU 82 83 165 162
Interest expense – Finance ROU $ 1 $ 1 $ 2
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.20.2
Note 10 - Right-of-use Asset and Leasing Liabilities - Future Minimum Lease Obligations (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Mar. 31, 2019
Operating ROU Leases, 2021 $ 363  
Operating ROU Leases, 2022 363  
Operating ROU Leases, 2023 375  
Operating ROU Leases, 2024 384  
Operating ROU Leases, 2025 159  
Operating ROU Leases, Thereafter  
Operating ROU Leases Undiscounted Obligation 1,644  
Operating ROU Leases, Less Interest* [1] (183)  
Operating ROU Leases 1,461 $ 1,744
Finance ROU Leases, 2021 39  
Finance ROU Leases, 2022 5  
Finance ROU Leases, 2023  
Finance ROU Leases, 2024  
Finance ROU Leases, 2025  
Finance ROU Leases, Thereafter  
Finance ROU Leases Undiscounted Obligation 44  
Finance ROU Leases, Less Interest* [1] (1)  
Finance ROU Leases 43  
2021 402  
2022 368  
2023 375  
2024 384  
2025 159  
Thereafter  
Lessee, Operating and Finance Lease, Liability, Payments, Due $ 1,688  
[1] Interest is imputed for operating ROU leases and classified as lease expense and is included in operating expenses in the accompanying condensed consolidated statement of operations.
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.20.2
Note 11 - PPP Loan (Details Textual) - USD ($)
6 Months Ended
Apr. 30, 2020
Jun. 30, 2020
Jun. 30, 2019
Proceeds from Issuance of Long-term Debt, Total   $ 629,000
Paycheck Protection Program CARES Act [Member]      
Proceeds from Issuance of Long-term Debt, Total $ 629,000    
Notes Payable, Total   630,000  
Interest Payable   $ 1,000  
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.20.2
Note 11 - PPP Loan - Future Minimum Loan Obligations (Details) - Paycheck Protection Program CARES Act [Member]
$ in Thousands
Jun. 30, 2020
USD ($)
2021 $ 285
2022 356
2023
2024
2025
Thereafter
Long-term Debt, Before Expected Interest 641
Less Interest* (11)
Long-term Debt, Total $ 630
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.20.2
Note 13 - Subsequent Events (Details Textual) - Subsequent Event [Member]
Aug. 13, 2020
shares
Stock Issued During Period, Shares, Conversion of Convertible Securities (in shares) 1,004,249
Percentage Dilution from Conversion of Preferred Stock 7.28%
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