# Intrusion Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Intrusion Inc](/companies/intz.md) (CIK 736012)
- Form: 10-Q
- Filed: 2025-04-29
- Accepted by EDGAR: Apr 29, 2025, 17:10 ET
- Period: 2025-03-31
- Accession: 0001683168-25-002943
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/736012/000168316825002943/intrusion_i10q-033125.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/736012/000168316825002943/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $1.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $432.0k | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $1.3m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $1.2m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$2.1m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$2.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.11 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$0.11 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 19,216,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$1.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $392.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $10.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $12.1m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $18.0m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $3.0m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-03-31 | $13.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 17,099 characters.

#### 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 (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which statements involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our financial position; our ability to continue our business as a going concern; our business, sales, and marketing strategies and plans; our ability to successfully market, sell, and deliver our **INTRUSION** ***Shield*** commercial product and solutions to an expanding customer base; and our ability to secure additional financing; are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, such statements.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and our most recent Annual Report on Form 10-K, as the same may be amended or updated from time to time.

In addition, statements such as "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements do not indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

#### Overview

We offer businesses of all sizes and industries products and services that leverage our exclusive threat intelligence database of over 8.5 billion IP addresses and domain names. After many years of gathering intelligence and providing our **INTRUSION** ***TraceCop*** and ***Savant*** solutions exclusively to government entities, we released our first commercial product in 2021, the **INTRUSION** ***Shield.*** **INTRUSION** ***Shield*** was designed to allow businesses to incorporate a Zero Trust, reputation-based security solution into their existing infrastructure to observe traffic flow and instantly block known malicious or unknown connections from both entering or exiting a network, making it an ideal solution for protecting from Zero-Day and ransomware attacks.

#### Results of Operations

### Comparison of the Periods Ended March 31, 2025, and March 31, 2024

*(in thousands)*

|  | Three Months Ended March 31, 2025 | 2024 | Change Dollar | Percentage |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $1,775 | $1,131 | $644 | 56.9% |
| Cost of Revenue | 432 | 226 | 206 | 91.2% |
| Gross Profit | 1,343 | 905 | 438 | 48.4% |
| Operating Expenses: |  |  |  |  |
| Sales and marketing | 1,184 | 1,177 | 7 | 0.6% |
| Research and development | 1,218 | 1,019 | 199 | 19.5% |
| General and administrative | 1,034 | 1,181 | (147) | -12.4% |
| Operating Loss | (2,093) | (2,472) | 379 | -15.3% |
| Interest Expense | (29) | (228) | 199 | -87.3% |
| Interest Accretion and Debt Issuance Costs, Net | – | 990 | (990) | -100.0% |
| Other Income (Expense), Net | 24 | (6) | 30 | -500.0% |
| Net Loss | $(2,098) | $(1,716) | $(382) | 22.3% |

**Revenues**. Revenue for the three month period ended March 31, 2025, was $1.8 million compared to $1.1 million for the same period in 2024. Revenue from consulting services totaled $1.4 million for the three month period ended March 31, 2025, compared to $0.7 million for the three month period ended March 31, 2024. The continuing resolution and delay in the approval of a federal budget for the 2024 year impacted renewals and task orders received for long-standing contracts which resulted in a decline in consulting revenues. **INTRUSION** ***Shield*** revenues were $0.4 million for both the three month period ended March 31, 2025 and 2024. On March 31, 2024, we lost a large **INTRUSION** ***Shield*** customer that was utilizing a highly customized and non-standard configuration of the product. The loss of revenues from this customer, which represented 78% of **INTRUSION** ***Shield*** revenues, has been fully backfilled with the addition of new customers, inclusive of the Department of Defense contract awarded in the second half of 2024.

We believe that the recent **INTRUSION** ***Shield*** transactions booked in the fourth quarter of 2024 and during the first quarter of 2025 and the transactions that we anticipate will close in the second quarter of this year will help drive **INTRUSION** ***Shield*** revenue growth in 2025.

**Concentration of Revenues.** Revenues from sales to various U.S. government entities totaled $1.6 million, or 91.6% of revenues, for the quarter ended March 31, 2025, compared to $0.7 million, or 58.6% of revenues, for the same period in 2024. The change in revenue mix primarily resulted from the loss of the large INTRUSION *Shield* customer mentioned above, and the addition of the Department of Defense contract award in the second half of 2024. 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 contracts with government customers will be renegotiated or cancelled, the loss of government orders could have a material adverse effect on our financial results. We had three customers accounting for 91.4% of total revenue for the three months ended March 31, 2025. We had three customers in the first quarter of 2024 that accounted for 85.2% of total revenue. 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.

**Gross Profit.** Gross profit was $1.3 million or 75.7% of revenues for the quarter ended March 31, 2025, compared to $0.9 million or 80.0% of revenues for the quarter ended March 31, 2024. The decrease in gross profit margin for the 2025 period is a result of a change in product mix with INTRUSION *Shield* revenues representing 23.4% of our revenue mix compared to 39.1% in the same period in 2024.

**Operating Expenses.** Operating expenses for the quarter ended March 31, 2025, totaled $3.4 million, remaining unchanged from the same period in 2024. The 2024 period included $0.3 million in one-time negotiated contract savings. When adjusted for these one-time savings, operating expense for the three months ended March 31, 2025 is $0.3 million lower principally due to decreased legal fees of $0.1 million as a result of litigation matters from prior years being resolved, and increased allocations out of operating expense to cost of sales for resources dedicated to the increased consulting work performed in quarter of $0.2 million.

**Sales and Marketing.** Sales and marketing expenses totaled $1.2 million for both the quarters ended March 31, 2025, and 2024. The 2024 period includes approximately $0.1 million in one-time negotiated contract savings. We anticipate increasing our spend to create more brand awareness, concise product messaging and drive increased sales through the remainder of 2025.

**Research and Development.** Research and development expenses totaled $1.2 million for the quarter ended March 31, 2025, representing an increase of $0.2 million compared to the same period in 2024. The increase is primarily due to increased depreciation of $0.1 million on internally developed software as we continue to invest in adding new features and functionality to the INTRUSION *Shield* and higher expense due to the 2024 period including one-time negotiated savings of $0.1 million. Research and development costs may vary over time as we determine the frequency of new releases, improved functionality and enhancements needed to be competitive with our product offering.

**General and Administrative.** General and administrative expenses totaled $1.0 million for the quarter ended March 31, 2025, compared to $1.2 million for the quarter ended March 31, 2024. The reduction is primarily due to decreased legal expenses as a result of the prior year’s litigation matters being fully resolved.

**Interest Expense.** Interest expense for the period March 31, 2025, was $29 thousand and consisting principally of the stated interest related to the Streeterville note and imputed interest on finance leases. Interest expense for the 2024 period totaled $228 thousand and consisted principally of the stated interest related to the Streeterville notes, interest associated with the note’s payable issued to Scott and finance leases.

**Interest Accretion and Amortization of Debt Issuance Costs.** During the March 2024 quarter, we entered into exchange agreements to convert $9.5 million in Streeterville debt to $9.3 million shares of Series A preferred stock and $0.2 million to common stock and, as a result, we reversed the interest accretion associated with the ability to stock-settle principal redemptions and wrote-off the remaining deferred debt issue costs resulting in a net credit to interest expense of $1.0 million.

**Other Income (Expense), Net.** Other income and expense were nominal amounts for both the periods ended March 31, 2025, and 2024.

**Net Loss.** Net loss for the first quarter of 2025 was $2.1 million, or $0.11 per share, compared to a net loss of $1.7 million, or $0.94 per share, for the first quarter of 2024. The increase in net loss for 2025 was a result of a net interest credit of $0.8 million recorded in the 2024 period resulting from the exchange of $9.3 million in senior debt for Series A preferred stock and the associated reversal of interest accretion for the ability to stock-settle principal redemptions on the debt.

#### Liquidity and Capital Resources

#### Sources of Liquidity

As of March 31, 2025, we had cash and cash equivalents of $10.7 million, representing an increase of $5.8 million from $4.9 million as of December 31, 2024, and net working capital of $9.0 million compared to $1.9 million as of December 31, 2024. Our principal sources of cash for funding operations in the March 2025 quarter was receipt of proceeds from the sale of common stock pursuant to the SEPA $1.5 million, recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025. Our principal source for funding operations in the March 2024 quarter was through the issuance of notes payable to Scott of $1.3 million and the issuance of common stock using our ATM program (defined below) which provided $0.5 million.

### ATM Program

B. Riley Securities, Inc. acts as sales agent for our ATM program. In December 2024, we closed out sales of common stock on the our ATM program under the shelf registration statement on Form S-3 that was filed on August 5, 2021, and declared effective by the SEC on August 16, 2021. On January 31, 2025, we filed a new shelf registration on Form S-3/A that was declared effective by the SEC on February 10, 2025, which allows us to potentially sell up to $50.0 million of our common stock on a delayed or continuous basis utilizing the ATM program. No sales under the new shelf registration have been made to date.

### Notes Payable

In March 2025, through three separate exchange agreements we retired the remaining $0.5 million in Streeterville debt through the issuance of 552.3 thousand shares of common stock. The issuance of common stock was made pursuant to the exemption from the registration requirements afforded by the Securities Act.

#### Unaudited Condensed Consolidated Statements of Cash Flows

Our cash flows for the three months ended March 31, 2025 and 2024 were:

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(1,690) | $(1,114) |
| Net cash used in investing activities | (787) | (427) |
| Net cash provided by financing activities | 8,370 | 1,524 |
| Change in cash and cash equivalents | $5,893 | $(17) |

#### Operating Activities

Net cash used in operations for the quarter ended March 31, 2025, was ($1.7) million due primarily to a net loss of ($2.1) million partially offset by 1) adjustments for non-cash items of $0.8 million which are mostly comprised of depreciation and stock-based compensation, and 2) changes in working capital of (0.4) million.

Net cash used in operations for the quarter ended March 31, 2024, was ($1.1) million principally due to a net loss of ($1.7) million partially offset by changes in working capital which consisted principally of reductions in prepaid expenses.

### Investing Activities

For the three months ended March 31, 2025, net cash used in investing activities was ($0.8) million, which was comprised of capitalization of internally developed software and hardware purchases. Net cash used by investing activities for the three months ended March 31, 2024, was ($0.4) million principally for capitalization of internally developed software.

### Financing Activities

For three months ended March 31, 2025, net cash provided by financing activities was $8.4 million which resulted from the receipt of proceeds from the sale of common stock pursuant to the SEPA of $1.5 million, previously recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025. Net proceeds from financing activities for the March 2024 period totaled $1.5 million which was primarily the result of net proceeds from issuance of the Scott notes $1.1 million and ATM program public offerings of $0.5 million.

### Critical Accounting Policies and Use of Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

We believe the critical accounting policies and estimates discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025, (the “2024 Annual Report”) reflect our more significant judgments and estimates used in the preparation of the condensed consolidated financial statements. There have been no significant changes to our critical accounting policies and estimates as disclosed in the 2024 Annual Report.

## Controls and procedures

As filed, 1,660 characters.

#### Evaluation of Effectiveness of Disclosure 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 must apply our reasonable judgment in evaluating the cost-benefit relationship of potential disclosure controls and procedures.

As of March 31, 2025, 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 and concluded that the disclosure controls and procedures were effective as of March 31, 2025.

#### Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the three months ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 462 characters.

You should carefully consider the risk factors we previously disclosed in the 2024 Annual Report. These risks could materially and adversely affect our business, financial condition, results of operations, and cash flows. However, these risks are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations, and cash flows.

Filed Apr 29, 2025.
Source: SEC EDGAR, the filing index for accession 0001683168-25-002943. Last ingested by Listed: Nov 2, 2026, 07:54 ET. No prices; not investment advice.