INTZ

INTRUSION INC. (INTZ) - 10-Q Summary for Period Ended June 30, 2025

Business Context and Reporting Period

Intrusion Inc. is a cybersecurity firm providing threat intelligence and mitigation solutions, including the TraceCop, Savant, and INTRUSION Shield products. The company serves U.S. federal, state, and local government entities as well as commercial enterprises. This report covers the quarterly period ended June 30, 2025. The company is classified as a non-accelerated filer and a smaller reporting company.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 28% year-over-year (YoY) for the quarter and 41% YoY for the six-month period. This growth was driven by a Department of Defense contract awarded in late 2024, which offset the loss of a major commercial INTRUSION Shield customer in March 2024.
• Customer Concentration: Revenue from U.S. government entities rose to 95.5% of total revenue for the quarter (up from 89.0% in 2024) and 93.6% for the six-month period (up from 75.7% in 2024).
• Debt Elimination: The company fully retired its remaining Streeterville debt ($0.5 million) in March 2025 by exchanging principal for common stock. Consequently, notes payable on the balance sheet are now zero.
• Operating Expenses: Operating expenses increased 12% for the quarter and 7% for the six-month period. Adjusted for one-time savings in the prior year, expenses were relatively flat, with increases in R&D due to infrastructure depreciation and new hires.
• Interest Expense: Interest expense decreased significantly (81% for six months) due to the retirement of debt and the absence of the $1.0 million non-cash credit recorded in the prior year related to debt-to-equity exchanges.

Guidance, Outlook, and Risks

• Liquidity: As of June 30, 2025, the company held $4.7 million in cash and $3.7 million in short-term investments. Liquidity was bolstered by $7.0 million in proceeds from a registered direct offering in January 2025 and $1.5 million from a Standby Equity Purchase Agreement (SEPA).
• Financing: The company terminated its previous ATM agreement with B. Riley Securities and entered a new agreement with H.C. Wainwright & Co. on June 12, 2025, allowing for the potential sale of up to $50.0 million of common stock. No sales have been made under the new agreement to date.
• Risks: The company faces high concentration risk with U.S. government contracts, which are subject to budget delays and cancellation rights. The loss of a single major commercial customer previously accounted for 78% of Shield revenue, highlighting vulnerability to customer churn.
• Outlook: Management anticipates continued revenue concentration in government sales and plans to increase sales and marketing spend to drive brand awareness for INTRUSION Shield.

Investor Verification Checklist

• Government Contract Stability: Verify the duration and renewal terms of the Department of Defense contract driving current revenue growth.
• Commercial Customer Acquisition: Assess the pipeline for new commercial customers to reduce reliance on government entities (currently >93% of revenue).
• Cash Burn Rate: Monitor the net cash used in operating activities ($3.25 million for six months) against the current cash balance to determine runway without further equity raises.
• ATM Utilization: Track future sales under the new $50 million ATM facility with H.C. Wainwright to gauge dilution and capital raising strategy.
• Debt-Free Status: Confirm the complete absence of interest-bearing debt obligations following the March 2025 equity-for-debt exchange.