Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 14, 2023

INTRUSION INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	001-39608	75-1911917
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

101 East Park Blvd, Suite 1200 Plano, Texas	75074
(Address of Principal Executive Offices)	(Zip Code)

(888) 637-7770

(Registrant’s Telephone Number, Including Area Code)

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INTZ	NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished pursuant to Item 2.02, Disclosure of Results of Operations and Financial Condition.

On November 14, 2023, Intrusion Inc. issued a press release announcing its financial results for the quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit No.		Description

99.1		Press Release Issued by Intrusion Inc. on November 14, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	INTRUSION INC.

Dated: November 14, 2023	By:	/s/ Kimberly Pinson
		Kimberly Pinson
		Chief Financial Officer

Exhibit 99.1

Intrusion, Inc. Reports Third Quarter 2023 Results

Intrusion Shield gaining traction

PLANO, Texas, November 14, 2023 (ACCESSWIRE) -- Intrusion Inc. (NASDAQ: INTZ), a leader in cyberattack prevention solutions, announced today financial results for the third quarter ended September 30, 2023.

Recent Financial & Business Highlights:

Improved third quarter EPS to $(0.14) per share from $(0.15) per share in the second quarter 2023.

Announced the award of a $5 million agreement with a large telecommunications company to provide Intrusion Shield support for its data centers.

Announced a Securities Purchase Agreement though a Private Offering resulted in net proceeds of approximately $2.4 million.

“During the third quarter, we made great progress toward growing our business and overcoming our short-term liquidity issues,” said Tony Scott, CEO of Intrusion. “We continued to see promising signs that our go-to-market strategy for Intrusion Shield with our partners is working, which is evident by our recent $5 million multi-year Shield agreement with a large telecommunications provider, as well as the booking of four other new contracts across a diverse range of industries, which are all expected to grow over time. Our sales pipeline continues to remain solid, as we are seeing a growing demand for both our Shield family of products and our Consulting business due to customers continuing to seek better and more cost-effective cybersecurity solutions for their enterprises. This gives us confidence that we are well positioned to improve our revenue and booking performance in future periods.”

Mr. Scott continued, “Last week, we announced that we entered into a Securities Purchase Agreement through a Private Offering, through which we received net proceeds of approximately $2.4 million. The Private Offering was heavily participated in by members of our Executive Team, Board of Directors, and existing shareholders, which we believe demonstrates the confidence that both our organization and shareholders have in our unique technology. In addition to the Private Offering, we also agreed to exchange $0.4 million aggregate principal of our Streeterville Capital debt for an aggregate of approximately one million shares of common stock. We believe that these combined efforts will provide us with the liquidity and runway needed to execute our strategy to grow the business.”

Third Quarter Financial Results

Revenue for the third quarter of 2023 was $1.5 million, a decrease of $0.7 million compared with the third quarter of the prior year. The decrease resulted from the loss of a contract in the fourth quarter of 2022 in which Intrusion’s prime sponsor chose not to renew the final option year of a contract. While the loss of this contract significantly impacted top-line revenue, the gross margin on this contract was 14% and, as a result, had a marginal impact on profitability.

The gross profit margin was 78% for the third quarter of 2023, compared to 55% in the third quarter of 2022.

Operating expenses in the third quarter of 2023 were $3.8 million, a decrease from $5.0 million in the comparable quarter of last year.

The net loss for the third quarter of 2023 was $(3.2) million, or $(0.14) per share, compared to a loss of $(2.9) million, or $(0.15) per share for the third quarter of 2022.

As of September 30, 2023, cash and cash equivalents were $0.2 million, down from $3.0 million on December 31, 2022. Subsequent to the quarter end, the Company received approximately $2.4 million in net proceeds from the sale of 4.4 million shares of common stock and warrants in a private offering. The Company intends to use the net proceeds from the Offering for working capital, general corporate purposes, and the potential partial repayment of outstanding indebtedness to Streeterville Capital, LLC.

Conference Call

Intrusion’s management will host a conference call today at 4:00 P.M., CST. Interested investors can access the live call by dialing 1-404-975-4839, or 1-833-470-1428 for international callers, and providing the following access code: 996917. The call will also be webcast live LINK. For those unable to participate in the live conference call, a replay will be accessible beginning tonight at 6:00 P.M. CST until November 21, 2023, by dialing 1-929-458-6194, or 1-866-813-9403 for international callers, and entering the following access code: 302412. Additionally, a live and archived audio webcast of the conference call will be available at www.intrusion.com.

About Intrusion, Inc.

Intrusion, Inc. is a cybersecurity company based in Plano, Texas. The Company offers its customers access to its exclusive threat intelligence database containing the historical data, known associations, and reputational behavior of over 8.5 billion IP addresses. After years of gathering global internet intelligence and working with government entities, the company released its first commercial product in 2021. Intrusion Shield allows businesses to incorporate a Zero Trust, reputation-based security solution into their existing infrastructure. Intrusion Shield observes traffic flow and instantly blocks known or unknown malicious connections from entering or exiting a network to help protect against zero-day and ransomware attacks. Incorporating Intrusion Shield into a network elevates an organization's overall security posture by enhancing the performance and decision-making of other solutions in its cybersecurity architecture.

Cautionary Statement Regarding Forward-Looking Information

This release may contain certain forward-looking statements, including, without limitations, comments about the performance of protections provided by our Intrusion Shield product and any other words that react to management’s expectations regarding future events and operating performance. These forward-looking statements speak only as of the date hereof. They involve several risks and uncertainties, including, without limitation, the chances that our products and solutions do not perform as anticipated or do not meet with widespread market acceptance. These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including risks that we have detailed in the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors."

IR Contact:

Alpha IR Group

Mike Cummings or Josh Carroll

INTZ@alpha-ir.com

Source: Intrusion, Inc.

INTRUSION INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Revenue	$	1,468		$	2,192		$	4,245		$	6,085
Cost of revenue		324			995			967			2,814

Gross profit		1,144			1,197			3,278			3,271

Operating expenses:
Sales and marketing		1,357			1,711			4,518			4,485
Research and development		1,171			1,456			4,418			4,592
General and administrative		1,309			1,852			4,000			5,961

Operating loss		(2,693	)		(3,822	)		(9,658	)		(11,767	)

Interest and other income		2			2,002			43			2,004
Interest expense		(520	)		(1,061	)		(1,459	)		(1,657	)
Gain (loss) on lease termination		–			(35	)		–			385

Net loss	$	(3,211	)		(2,916	)	$	(11,074	)		(11.035	)

Net loss per share:
Basic	$	(0.14	)	$	(0.15	)	$	(0.51	)	$	(0.57	)
Diluted	$	(0.14	)	$	(0.15	)	$	(0.51	)	$	(0.57	)

Weighted average common shares outstanding:
Basic		23,061			19,826			21,844			19,433
Diluted		23,061			19,826			21,844			19,433

INTRUSION INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

	September 30, 2023			December 31, 2022
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	177		$	3,015
Accounts receivable, net		450			530
Prepaid expenses and other assets		305			1,877
Total current assets		932			5,422
Noncurrent Assets:
Property and equipment:
Equipment		3,115			2,865
Capitalized software development		2,527			1,380
Furniture and fixtures		43			43
Leasehold improvements		78			78
Property and equipment, gross		5,763			4,366
Accumulated depreciation and amortization		(2,921	)		(2,208	)
Property and equipment, net		2,842			2,158
Finance leases, right-of-use assets, net		549			1,048
Operating leases, right-of-use assets, net		237			504
Other assets		161			143
Total noncurrent assets		3,789			3,853
TOTAL ASSETS	$	4,721		$	9,275

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable, trade	$	2,497		$	1,273
Accrued expenses		635			446
Finance lease liabilities, current portion		617			667
Operating lease liabilities, current portion		113			294
Notes payable, current portion		11,021			10,114
Deferred revenue		862			455
Total current liabilities		15,745			13,249

Noncurrent Liabilities:
Finance lease liabilities, noncurrent portion		4			10
Operating lease liabilities, noncurrent portion		135			231
Notes payable, noncurrent portion		370			–
Total noncurrent liabilities		509			241

Commitments and Contingencies

Stockholders’ Deficit:
Preferred stock, $0.01 par value: Authorized shares – 5,000 Issued shares – 0 in 2023 and 2022		–			–
Common stock, $0.01 par value: Authorized shares – 80,000; Issued shares – 24,620 in 2023 and 21,198 in 2022; Outstanding shares – 24,610 in 2023 and 21,188 in 2022		246			212
Common stock held in treasury, at cost – 10 shares		(362	)		(362	)
Additional paid-in capital		96,026			92,304
Accumulated deficit		(107,400	)		(96,326	)
Accumulated other comprehensive loss		(43	)		(43	)
Total stockholders’ deficit		(11,533	)		(4,215	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,721		$	9,275

Cover	Nov. 14, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 14, 2023
Entity File Number	001-39608
Entity Registrant Name	INTRUSION INC.
Entity Central Index Key	0000736012
Entity Tax Identification Number	75-1911917
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	101 East Park Blvd
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75074
City Area Code	(888)
Local Phone Number	637-7770
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	INTZ
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false