Business Context and Reporting Period
Company: Intrusion Inc. (INTZ)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2025
Business Overview: Intrusion Inc. develops cybersecurity products (TraceCop, Savant, and INTRUSION Shield) that fuse threat intelligence with real-time mitigation. The company serves U.S. federal, state, and local government entities, as well as commercial enterprises. As of March 31, 2025, the company had no outstanding Series A preferred stock and retired all remaining Streeterville debt.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Revenue | $1.775 million | $1.131 million |
| Gross Profit | $1.343 million | $0.905 million |
| Gross Margin | 75.7% | 80.0% |
| Operating Loss | $(2.093) million | $(2.472) million |
| Net Loss | $(2.098) million | $(1.716) million |
| Net Loss Per Share (Basic/Diluted) | $(0.11) | $(0.94) |
| Cash and Cash Equivalents | $10.744 million | $0.122 million |
| Working Capital | $9.031 million | N/A (Negative in prior period) |
| Notes Payable | $0 | $1.2 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 56.9% year-over-year, driven primarily by a 100% increase in consulting services ($1.4M vs $0.7M). INTRUSION Shield revenue remained flat at $0.4M.
- Customer Concentration: Government entities accounted for 91.6% of revenue in Q1 2025, up from 58.6% in Q1 2024. Three customers accounted for 91.4% of total revenue.
- Debt Elimination: The company retired all remaining debt ($0.5M) owed to Streeterville Capital in March 2025 by exchanging principal for common stock. Consequently, interest expense dropped 87.3% to $29k.
- Liquidity Improvement: Cash balances increased by $5.9M to $10.7M, fueled by a $7.0M registered direct offering and $1.5M in proceeds from a Standby Equity Purchase Agreement (SEPA).
- Expense Management: Operating expenses remained flat year-over-year. General and Administrative expenses decreased 12.4% due to the resolution of prior litigation matters.
Outlook, Risks, and Management Commentary
- Outlook: Management anticipates INTRUSION Shield revenue growth in 2025 driven by transactions booked in late 2024 and expected to close in Q2 2025. The company plans to increase sales and marketing spend to drive brand awareness.
- Risks: Significant revenue concentration risk exists with three customers accounting for over 90% of revenue. The company relies heavily on U.S. government contracts, which are subject to appropriation delays and cancellation rights.
- Capital Resources: The company has a new $50M ATM shelf registration effective February 2025 and a $10M SEPA with Streeterville. No sales were made under the new ATM program in Q1 2025.
- Unusual Items: Q1 2024 net loss was artificially reduced by a $1.0M non-cash credit related to the reversal of interest accretion and write-off of debt issuance costs upon converting debt to preferred stock. This non-recurring item is not present in Q1 2025.
Investor Verification Checklist
- Customer Concentration: Verify the stability of the three customers representing 91.4% of revenue, specifically the Department of Defense contract.
- Debt-Free Status: Confirm the complete retirement of Streeterville debt and the absence of any remaining preferred stock obligations.
- Product Mix Shift: Assess the sustainability of the shift toward consulting services (higher margin) versus the flat performance of the core INTRUSION Shield product.
- Cash Burn: Monitor the $1.7M cash burn from operating activities against the $10.7M cash balance to determine runway without further equity dilution.
- Equity Dilution: Review the impact of the recent registered direct offering and debt-for-equity exchanges on share count and per-share value.