Part I [Business Overview](index=5&type=section&id=Item%201.%20Description%20of%20Business%2E) Intrusion Inc. is a cybersecurity firm offering AI-based solutions like Shield and TraceCop, primarily serving U.S. government clients - The company's cornerstone solution is INTRUSION Shield, a real-time AI-based Security-as-a-Service that inspects all network traffic to neutralize malicious connections, including Zero-Day attacks[21](index=21&type=chunk) - INTRUSION TraceCop is a proprietary big data tool containing a vast repository of IP reputation information, historical domain data, and threat intelligence collected over more than two decades, which informs the Shield solution[24](index=24&type=chunk) Revenue Concentration from U.S. Government | Year | Revenue from U.S. Government Customers | Number of Government Customers >10% of Revenue | | :--- | :--- | :--- | | 2020 | 86.3% | 3 | | 2019 | 87.4% | 3 | Employee Distribution as of December 31, 2020 | Department | Number of Full-Time Employees | | :--- | :--- | | Sales, Marketing & Technical Support | 23 | | Research, Development, Analysis & Engineering | 32 | | Administration & Finance | 8 | | **Total** | **63** | [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including financial losses, new product adoption challenges, reliance on government contracts, and intense market competition Financial Performance and Deficit | Metric | As of/For the Year Ended Dec 31, 2020 | | :--- | :--- | | Net Loss | $6.5 million | | Accumulated Deficit | $61.3 million | - The company identifies significant risks in marketing, promoting, and selling its new INTRUSION Shield solution, which will require substantial financial and management resources[47](index=47&type=chunk) - The COVID-19 pandemic has adversely affected operations, causing decreased demand from government customers who have had to reallocate resources, negatively impacting revenue levels[50](index=50&type=chunk) - There is a high concentration of revenue from U.S. government entities and the TraceCop family of solutions. TraceCop revenues declined significantly from **$13.4 million in 2019 to $6.2 million in 2020**[53](index=53&type=chunk)[54](index=54&type=chunk) - The company faces intense competition from established firms like Niksun, NetScout, FireEye, and Darktrace, which may have greater financial, technical, and marketing resources[29](index=29&type=chunk)[61](index=61&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The company's headquarters are in Plano, Texas, with a lawsuit initiated regarding a previously vacated Richardson, Texas facility - The company's headquarters are in Plano, Texas. A lawsuit has been filed against the landlord of the previously occupied Richardson, Texas facility for breach of contract and constructive eviction[70](index=70&type=chunk) [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings%2E) The company filed a lawsuit against its former landlord, Purple Plaza LLC, seeking over $1 million in damages and lease termination - The company initiated legal proceedings against its former landlord, Purple Plaza LLC, seeking damages over **$1,000,000** and termination of lease obligations[73](index=73&type=chunk) Part II [Market for Registrant's Common Equity and Related Stockholder Matters](index=16&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "INTZ," with details on equity compensation plans provided Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Shares to be Issued Upon Exercise (thousands) | Weighted-Average Exercise Price | Shares Remaining for Future Issuance (thousands) | | :--- | :--- | :--- | :--- | | Approved by security holders | 1,035 | $2.87 | 46 | | Not approved by security holders | – | – | – | | **Total** | **1,035** | **$2.87** | **46** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=16&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, the company faced a significant financial downturn with revenue decline and net loss, despite improved liquidity from a stock offering [Results of Operations](index=19&type=section&id=Results%20of%20Operations) In 2020, total revenue and gross profit significantly declined, leading to an operating loss due to increased expenses and a lease write-off Comparison of Operations (in millions) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $6.6 | $13.6 | -51.5% | | Gross Profit | $3.9 | $8.3 | -52.9% | | Sales and Marketing Expense | $3.8 | $1.3 | +192.3% | | Research and Development Expense | $3.8 | $1.3 | +192.3% | | General and Administrative Expense | $2.8 | $1.2 | +133.3% | | Operating Income (Loss) | ($6.5) | $4.5 | -244.4% | | Net Income (Loss) | ($6.5) | $4.5 | -244.4% | - The increase in sales and marketing expense was primarily for building and training a sales department to sell the new commercial product in 2021 and a dedicated **$1.2 million marketing budget**[102](index=102&type=chunk) - The increase in general and administrative expenses was mainly due to a **$1.1 million non-cash write-off** for an abandoned operating lease asset[104](index=104&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved in 2020 due to a stock offering, despite increased cash usage in operations Key Liquidity Metrics (in millions) | Metric | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $16.7 | $3.3 | | Working capital | $16.2 | $3.1 | Cash Flow Summary (in millions) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from (used in) operations | ($5.2) | $4.3 | | Net cash used in investing | ($0.3) | ($0.3) | | Net cash from (used in) financing | $18.9 | ($2.3) | - Financing activities in 2020 were dominated by **$18.2 million in proceeds from a stock offering** and **$629 thousand from a PPP loan**[111](index=111&type=chunk) [Financial Statements](index=22&type=section&id=Item%208.%20Financial%20Statements%20for%20years%20ended%20December%2031%2C%202020%20and%202019) This section presents the audited consolidated financial statements for 2020 and 2019, detailing financial position, operations, and cash flows [Consolidated Balance Sheets](index=29&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity significantly increased in 2020, driven by higher cash and a public stock offering Selected Balance Sheet Data (in thousands) | Account | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,704 | $3,334 | | Total current assets | $18,307 | $5,052 | | **Total Assets** | **$19,882** | **$6,835** | | Total current liabilities | $2,142 | $1,943 | | **Total Liabilities** | **$4,221** | **$3,279** | | **Total Stockholders' Equity** | **$15,661** | **$3,556** | [Consolidated Statements of Operations](index=31&type=section&id=Consolidated%20Statements%20of%20Operations) Net product revenue sharply declined in 2020, resulting in a net loss compared to net income in 2019 Statement of Operations Highlights (in thousands, except per share data) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net product revenue | $6,619 | $13,643 | | Gross profit | $3,910 | $8,301 | | Operating income (loss) | ($6,523) | $4,507 | | **Net income (loss)** | **($6,518)** | **$4,465** | | Net income (loss) per share, diluted | ($0.45) | $0.28 | [Consolidated Statements of Cash Flows](index=33&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from operations was negative in 2020, but a public stock offering significantly boosted overall cash Cash Flow Summary (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($5,177) | $4,290 | | Net cash used in investing activities | ($320) | ($260) | | Net cash provided by (used in) financing activities | $18,867 | ($2,348) | | **Net increase in cash and cash equivalents** | **$13,370** | **$1,682** | | Cash and cash equivalents at end of year | $16,704 | $3,334 | [Notes to Consolidated Financial Statements](index=34&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue concentration, a PPP loan, preferred stock conversion, a public offering, and a lease abandonment charge - Sales to U.S. Government entities, through direct and indirect channels, accounted for **86.3% of total revenues in 2020** and **87.4% in 2019**[228](index=228&type=chunk) - The company received a **$629,000 loan** under the Paycheck Protection Program (PPP) on April 30, 2020, and has applied for full forgiveness[207](index=207&type=chunk) - In October 2020, the company completed a secondary public offering, raising net proceeds of approximately **$18.2 million** to fund growth initiatives, including the commercialization of the Intrusion Shield solution[223](index=223&type=chunk) - All outstanding preferred stock was voluntarily converted into **1,004,249 shares of common stock** in August 2020[225](index=225&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[120](index=120&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[123](index=123&type=chunk) [Part III](index=24&type=section&id=PART%20III) Part III information regarding directors, executive compensation, and related matters is incorporated by reference from the upcoming Proxy Statement [Directors, Executive Compensation, Security Ownership, and Related Matters](index=24&type=section&id=Items%2010-14) Information for Items 10-14 is incorporated by reference from the definitive Proxy Statement for the 2021 annual meeting - Information for Part III (Items 10-14) is omitted from the Form 10-K and will be included in the definitive Proxy Statement to be filed within **120 days** of the fiscal year-end[129](index=129&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=25&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements and a detailed schedule of all exhibits filed with the Form 10-K - This section provides a list of the consolidated financial statements and a schedule of all exhibits filed with the Form 10-K[137](index=137&type=chunk)[139](index=139&type=chunk)

Intrusion Inc. (NASDAQ:INTZ) Q4 2020 Earnings Conference Call February 25, 2021 5:00 PM ET Company Participants Joel Achramowicz - Managing Director, IR, Shelton Group Franklin Byrd - CFO Jack Blount - President and CEO Conference Call Participants Zach Cummins - B. Riley Securities Ross Taylor - ARS Investment Howard Brous - Wellington Shields Operator Good afternoon, and welcome to Intrusion's Fourth Quarter 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. [ ...

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $1.6 million, down from $1.7 million in the prior quarter and $3.9 million in the same quarter a year ago, impacted by government shutdowns due to the pandemic [9][10] - Gross margin decreased to 58.9% from 60.7% in the prior quarter and 62.1% in Q3 2019 [10] - Operating expenses increased to $2.3 million from $1.7 million in the prior quarter and $0.9 million in the same quarter a year ago [10] - Net loss for Q3 2020 was $1.4 million, compared to a net loss of $0.7 million in the prior quarter and net income of $1.5 million in Q3 2019 [10][11] - Cash equivalents at the end of Q3 2020 were $1.5 million, down from $2.9 million in the prior quarter [12] - Working capital decreased to $1 million from $2.4 million in the prior quarter [12] Business Line Data and Key Metrics Changes - The legacy business continued to be affected by pandemic-related government shutdowns, delaying renewals [9] - The company expects recovery in the legacy business once conditions normalize [9] Market Data and Key Metrics Changes - The company is experiencing a mixed state with government customers, with many still working from home and procurement departments not processing new contracts [19] - A $1.2 million renewal and an additional $1.7 million renewal were secured, with expectations for more small commercial orders [20] Company Strategy and Development Direction - The company is focused on the Shield product, which is in beta testing and has shown promising results in blocking malware attacks [25][29] - The sales team is being built to target both government and commercial markets, with a significant focus on the SMB space [22][30] - The company plans to grow its traditional business while selling Shield across all markets [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the traditional business post-pandemic and post-election [55] - The company is preparing for a significant rollout of the Shield product in early 2021, with expectations of converting beta customers to paying customers [66] Other Important Information - The company raised $18.1 million in net proceeds from a follow-on offering of 3.6 million shares priced at $8 per share [12] - The company is actively hiring to build a sales force and has made several key hires in recent weeks [31][32] Q&A Session Summary Question: What is the strategy for the reseller program? - The company is initially focusing on technology resellers who are aware of the cybersecurity problem, with plans to expand to integrators and consulting firms later [42][43] Question: What is the typical ramp time for reseller partners? - The learning curve for resellers is expected to be very short, with initial productivity within 30 days [44][45] Question: What types of customers will the direct sales force target? - The direct sales force will focus on high-end complex accounts, particularly Fortune 500 companies [46] Question: What feedback has been received from beta testing? - Management expects all beta customers to sign contracts, with positive feedback indicating a desire to roll out the product across multiple subsidiaries [48] Question: How is the company addressing ransomware threats? - The Shield product effectively neutralizes ransomware by preventing it from calling home, thus stopping potential attacks [57][59] Question: When will beta customers convert to paying customers? - Most beta customers are expected to convert to paying customers starting January 4, 2021 [65]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-20191 INTRUSION INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporati ...

INTRUSION Inc. (NASDAQ:INTZ) Q2 2020 Results Conference Call August 13, 2020 5:00 PM ET Company Participants Mike Paxton - VP, CFO Jack Blount - President and CEO Joe Head - Senior Vice President and Co-Founder Conference Call Participants Howard Brous - Wellington Shields Operator Ladies and gentlemen, thank you for standing-by and welcome to the INTRUSION Inc. Second Quarter 2020 Financial Results. At this time, all participants are in a listen-only mode. And after the speakers’ presentation, there wil ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-20191 INTRUSION INC. (Exact name of registrant as specified in its charter) Delaware 75-1911917 (State or other jurisdiction of incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-20191 INTRUSION INC. (Exact name of registrant as specified in its charter) Delaware 75-1911917 (State or other jurisdiction of incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 0-20191 Intrusion Inc. (Exact name of registrant as specified in its charter) DELAWARE 75-1911917 (State or other jurisdiction of incorpo ...

Call Start: 17:00 January 1, 0000 5:32 PM ET Intrusion, Inc. (NASDAQ:INTZ) Q4 2019 Earnings Conference Call February 24, 2020 17:00 ET Company Participants Michael Paxton - Chairman, President, CEO & CFO Joe Head - SVP, Vice Chairman & Co-Founder Conference Call Participants Howard Brous - Wunderlich Securities Operator Hi everyone, my name is Jeff and I will be your conference operator today. At this time, I would like to welcome everyone to the Intrusion Fourth Quarter 2019 Financial Conference Call. All ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-20191 INTRUSION INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization ...