INTZ

Business Context and Reporting Period

Company: Intrusion Inc. (INTZ)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: September 30, 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 September 30, 2025, the company had 20,102,939 shares of common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 31% year-over-year (YoY) for the quarter and 37% YoY for the nine-month period. This growth was driven primarily by a Department of Defense (DoD) contract awarded in late 2024, which offset the loss of a major commercial customer in March 2024.
• Customer Concentration: Revenue from U.S. government entities rose significantly, comprising 96.7% of Q3 2025 revenue and 94.7% of the nine-month revenue, compared to 85.9% and 79.5% in the prior year periods.
• Debt Elimination: The company fully retired its remaining Streeterville debt ($0.5 million principal) in March 2025 by exchanging it for common stock. Consequently, interest expense decreased significantly compared to 2024, which included a $1.0 million non-cash credit from debt restructuring.
• Operating Expenses: Operating expenses increased 14% for the quarter and 9% for the nine-month period. Adjusted for one-time savings in 2024, expenses were slightly higher due to increased stock-based compensation and R&D investments.
• Cash Flow: Net cash used in operating activities was $6.23 million for the nine months ended Sept 30, 2025, compared to $6.12 million in the prior year. Financing activities provided $8.09 million, primarily from a registered direct offering ($7.0 million) and SEPA proceeds ($1.5 million).

Guidance, Outlook, and Risks

• Liquidity Outlook: Management states that if operations do not generate positive cash flow in the upcoming year or if additional financing cannot be obtained, the company may be unable to continue operations. However, on October 1, 2025 (subsequent to period end), the company received $3.0 million related to a DoD contract extension.
• Financing Activities: The company terminated its previous ATM agreement with B. Riley Securities in June 2025 and entered a new agreement with H.C. Wainwright & Co. to sell up to $50.0 million of common stock. No sales have been made under the new agreement to date.
• Risk Factors: As a smaller reporting company, specific risk factors were omitted from this filing but are referenced from the 2024 Annual Report. Key risks include high concentration of revenue from government contracts (subject to budget delays and cancellations) and the need for continued equity financing to fund operations.
• Product Strategy: The company continues to focus on the INTRUSION Shield commercial product, which is now a SaaS offering, alongside its government-focused TraceCop and Savant solutions.

Investor Verification Checklist

• Government Contract Reliance: Verify the stability and renewal terms of the DoD contract, which now accounts for the vast majority of revenue.
• Cash Burn Rate: Assess the runway provided by the $4.53 million in liquidity against the current operating loss rate of approximately $2.1 million per quarter.
• Equity Dilution: Review the terms of the new $50 million ATM facility and the recent registered direct offering to understand potential future dilution.
• Commercial Recovery: Monitor the replacement of the lost major commercial customer (78% of Shield revenue in 2024) with new commercial clients to reduce government concentration risk.
• Subsequent Cash Receipt: Confirm the impact of the $3.0 million DoD payment received on October 1, 2025, on the company's immediate liquidity position.