Basis of Presentation

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) 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 the information and disclosures required by GAAP for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 18, 2022. All significant intercompany balances and transactions have been eliminated in consolidation.

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 approximate their carrying amounts due to the relatively short maturity of these instruments. Financing leases and Notes Payable loan approximate fair value as they bear market rates of interest. None of these instruments are held for trading purposes.

As of March 31, 2022, we had cash and cash equivalents of approximately $6.1 million, compared to approximately $4.1 million as of December 31, 2021. We generated a net loss of $4.1 million for the three-months ended March 31, 2022, compared to a net loss of $3.9 million for the three-months ended March 31, 2021. Under our at-the-market offering, since January 1, 2022, we have received proceeds of approximately $0.95 million net of fees from the sale of our common stock related to this program. On March 10, 2022, we entered into a debt securities agreement that provides $10,000,000 in funds through two separate fundings throughout 2022 and have received net proceeds of $4.6 million under this agreement through March 31, 2022. We will have the ability to draw the remaining funds in the second funding provided we have met certain conditions under a second promissory note within 180 days of the execution of the loan agreement. Based on the current forecast for the year 2022, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures through May 13, 2023. We will continue to streamline our sales and marketing departments to better align expenses with revenue and build the customer base for our new INTRUSION Shield product. If our operations do not generate positive cash flow in the upcoming year, 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.