Intrusion Inc. (NASDAQ:INTZ) Q1 2022 Earnings Conference Call May 12, 2022 5:00 PM ET Company Participants Sam Cohen - Investor Relations Tony Scott - Chief Executive Officer Franklin Byrd - Chief Financial Officer Conference Call Participants Zach Cummins - B. Riley Securities Ed Woo - Ascendiant Capital Operator Please standby, we’re about to begin. Welcome to the Intrusion Inc. First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participant lines are in a listen-only mode. For thos ...

Revenue and Profitability - Total revenue increased by 9.9% to $7.3 million in 2021 from $6.6 million in 2020, driven by $0.6 million in revenues from the INTRUSION Shield product line [110]. - Gross profit rose 19.0% to $4.7 million in 2021, with gross profit margin increasing from 59.1% in 2020 to 63.9% in 2021 [114]. - Revenues from U.S. government entities totaled $5.2 million, or 71.3% of total revenues in 2021, down from $5.7 million or 86.3% in 2020 [113]. Expenses - Sales and marketing expenses surged to $11.9 million, representing 164.0% of net revenue in 2021, compared to $3.8 million or 57.7% in 2020 [115]. - Research and development expenses increased to $6.3 million, accounting for 87.0% of net revenue in 2021, up from $3.8 million or 57.4% in 2020 [117]. - General and administrative expenses rose to $5.9 million, or 81.0% of revenue in 2021, compared to $2.8 million or 42.5% in 2020 [118]. Net Loss and Financial Position - A net loss of $18.8 million was reported for 2021, compared to a net loss of $6.5 million in 2020, reflecting a significant increase in operating loss [109]. - Net cash used in operating activities for the year ended December 31, 2021, was $16.6 million, compared to $5.2 million in 2020, primarily due to a net loss of $18.8 million in 2021 [125][126]. - As of December 31, 2021, cash and cash equivalents were $4.1 million, down from approximately $16.7 million in 2020, with working capital of $2.1 million compared to $16.2 million in 2020 [132]. Financing Activities - The company raised approximately $5.5 million through an at-the-market stock issuance program initiated in August 2021 [106]. - Net cash provided by financing activities was $5.1 million in 2021, primarily from net proceeds of $5.6 million from an at-the-market program [130]. - The company entered into a securities purchase agreement for the issuance of convertible notes totaling $5.35 million, with proceeds intended for general corporate purposes [135]. - The convertible notes carry an interest rate of 7% per annum and have a maturity date of 18 months from issuance [137]. Product Development and Revenue Recognition - INTRUSION Shield, the company's new product, is offered on a subscription basis, with revenue recognized monthly over the contract term [147][151]. - The company reported a $383 thousand increase in deferred revenue due to cash advances from customers for the INTRUSION Shield product [125]. Future Outlook and Funding Needs - The company anticipates needing to raise additional funds through public or private financings to continue operations beyond March 2023 [140]. - The company maintains allowances for doubtful accounts to estimate losses from customers' inability to make payments, expecting to continue this policy in the future [152]. Fair Value Estimates - The estimated fair value of accounts receivable, accounts payable, and accrued expenses approximates their carrying amounts due to their relatively short maturity [153]. - Financing leases and PPP loans approximate fair value as they bear market rates of interest [153].

Intrusion Inc. (NASDAQ:INTZ) Q4 2021 Results Conference Call March 17, 2022 5:00 PM ET Company Participants Tony Scott - CEO Franklin Byrd - CFO Conference Call Participants Zach Cummins - B. Riley Securities Scott Buck - H.C. Wainwright Russell Cleveland - RENN Capital Walter Schenker - MAZ Partners Ross Taylor - ARS Partners David Freund - Alpha IR Group Ed Woo - Ascendiant Capital Operator Ladies and gentlemen, thank you for standing by, and welcome to the Intrusion Inc. Fourth Quarter and Full Year 2021 ...

Table of Contents 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, 2021 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer 101 East Park Blvd, Suite 1200, Plano, Texas 75074 (Address of principal executive offices) (Zip Code) (972) 234-6400 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES E ...

Intrusion Inc. (NASDAQ:INTZ) Q3 2021 Earnings Conference Call November 11, 2021 5:00 PM ET Company Participants Joel Achramowicz - Managing Director of Shelton Group Joe Head - CTO Franklin Byrd - CFO Gary Davis - Chairman of the Board Anthony LeVecchio - Chairman Conference Call Participants Zach Cummins - B. Riley Securities Ross Taylor - ARS Investment Corporation Operator Good afternoon and welcome to Intrusion’s Third Quarter 2021 Financial Results Conference Call. [Operator Instructions] As a reminder ...

Logo NEWS RELEASE INTRUSION Reports Second Quarter 2021 Results 8/12/2021 PLANO, Texas, Aug. 12, 2021 (GLOBE NEWSWIRE) -- INTRUSION, Inc. (NASDAQ: INTZ), a provider of cyberattack prevention solutions including zero-days, announced today nancial results for the second quarter ended June 30, 2021. Revenue for the second quarter 2021 was $2.0 million, compared to $1.9 million for the rst quarter 2021 and $1.7 million for the second quarter 2020. Gross prot margin was 63% of revenue in the second quarter 2021, ...

[Part I – Financial Information](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section details the company's financial performance, condition, and internal controls for the period [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the six months ended June 30, 2021, the company reported a significant net loss increase and weakened financial position [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets decreased to **$13.8 million** from **$19.9 million**, with a significant decline in cash and stockholders' equity Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Item | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,337 | $16,704 | | Total current assets | $11,466 | $18,307 | | Total Assets | $13,843 | $19,882 | | **Liabilities & Equity** | | | | Total current liabilities | $4,165 | $2,142 | | Total Liabilities | $5,858 | $4,221 | | Total stockholders' equity | $7,985 | $15,661 | | **Total Liabilities & Equity** | **$13,843** | **$19,882** | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Despite slight revenue growth, surging operating expenses led to dramatically widened operating and net losses for Q2 and six months 2021 Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2021 (in thousands) | Q2 2020 (in thousands) | Six Months 2021 (in thousands) | Six Months 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,960 | $1,655 | $3,812 | $3,450 | | Gross Profit | $1,227 | $1,004 | $2,454 | $2,052 | | Operating Loss | $(5,651) | $(714) | $(9,554) | $(1,185) | | Net Loss | $(4,951) | $(715) | $(8,854) | $(1,180) | | Net Loss Per Share (Basic & Diluted) | $(0.28) | $(0.05) | $(0.50) | $(0.09) | - A gain on the extinguishment of debt of **$635,000** was recorded in Q2 2021 due to the forgiveness of the SBA PPP loan[18](index=18&type=chunk)[69](index=69&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased for the six months ended June 30, 2021, leading to a substantial overall decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,574) | $(1,026) | | Net cash used in investing activities | $(891) | $(62) | | Net cash provided by financing activities | $98 | $626 | | **Net decrease in cash** | **$(7,367)** | **$(462)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes highlight going concern doubts, a planned stock offering, recent CEO termination and workforce reduction, and high revenue concentration - The company has significant concerns about its ability to meet its cash-flow and liquidity needs, raising doubts about its ability to continue as a going concern It has engaged B. Riley Securities for a potential at-the-market offering of up to **$50.0 million**[34](index=34&type=chunk)[92](index=92&type=chunk) - Subsequent to the quarter end, the company terminated its President and CEO, appointed an interim replacement, and executed a planned reduction in force, terminating approximately **20%** of its employees[71](index=71&type=chunk)[72](index=72&type=chunk) - Sales to the U.S. Government accounted for **69.03%** of total revenues for the six months ended June 30, 2021 One individual commercial customer accounted for **21.50%** of total revenues during the same period[59](index=59&type=chunk) - On April 7, 2021, the company received notice that its **$629,000** PPP loan and accrued interest was forgiven in full, resulting in a recorded gain of **$635,000**[69](index=69&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to new products but notes surging operating expenses, leading to significant losses, liquidity concerns, and cost-cutting - Net revenues for the six months ended June 30, 2021, increased to **$3.8 million** from **$3.5 million** in 2020, primarily due to revenues from the new Shield product (**$0.1 million**) and an increase in TraceCop revenues[80](index=80&type=chunk) Operating Expense Increase (Six Months Ended June 30, 2021 vs 2020, in thousands) | Expense Category | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | Reason for Increase | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $6,341 | $995 | +$5,346 | Aggressive ramp-up in labor, web marketing, and advertising for Shield product | | Research and development | $2,999 | $1,660 | +$1,339 | Increased labor and development/testing costs for legacy and Shield products | | General and administrative | $2,668 | $582 | +$2,086 | Increased labor, legal costs, and stock compensation | - The company's cash position and decreased revenue expectations for the Shield offering have created significant concerns about its ability to meet short-term liquidity needs The company is considering strategic alternatives, including an at-the-market program to sell up to **$50.0 million** of common stock[92](index=92&type=chunk)[119](index=119&type=chunk) - In July 2021, the company implemented cost-saving measures, including a reduction in force, to align expenses with revenue trends The company expects net cost savings of **$1.2 million** for the remainder of the year from this action[72](index=72&type=chunk)[86](index=86&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of June 30, 2021, due to a failure in memorializing board actions - Management evaluated the effectiveness of disclosure controls and procedures and concluded they were not effective as of June 30, 2021[110](index=110&type=chunk) - The specific weakness identified was a failure to maintain appropriate written records to memorialize the formal actions of the board of directors[110](index=110&type=chunk) [Part II – Other Information](index=27&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, critical risk factors, and a list of exhibits filed with the report [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in a lawsuit against its former landlord and is defending two class-action lawsuits alleging federal securities law violations - The company is a plaintiff in a lawsuit against its former landlord, Purple Plaza LLC, seeking damages in excess of **$1,000,000** for breach of contract and constructive eviction[114](index=114&type=chunk) - Two related class-action lawsuits (Celeste v. Intrusion Inc. and Neely v. Intrusion Inc.) have been filed against the company, its CFO, and former CEO, alleging violations of federal securities laws (Section 10(b) and 20(a) of the Exchange Act)[115](index=115&type=chunk)[116](index=116&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) Key risks include going concern uncertainty, management instability, ongoing litigation, a history of net losses, and high revenue concentration - **Going Concern Risk:** The company may not have sufficient cash to implement its business plan and may not be able to raise additional funds, raising the possibility it may not be able to continue as a going concern[119](index=119&type=chunk)[120](index=120&type=chunk) - **Management and Workforce Risk:** The company faces risks related to the search for a new CEO, potential delays in its business plan, and workforce volatility following the termination of approximately **20%** of its employees[121](index=121&type=chunk)[123](index=123&type=chunk) - **Litigation Risk:** The company is defending class-action lawsuits alleging federal securities law violations, which will divert management attention and resources and could result in financial liability[122](index=122&type=chunk) - **Financial Performance Risk:** The company has a history of net losses, with a **$8.9 million** loss for the first six months of 2021 and an accumulated deficit of **$70.1 million** It must increase revenue to improve financial performance[126](index=126&type=chunk) - **Revenue Concentration Risk:** Approximately **91%** of existing revenues come from the TraceCop family of solutions, and the new INTRUSION Shield offering has been slow to generate material revenue[127](index=127&type=chunk)[128](index=128&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - Key exhibits filed include the Intrusion Inc. 2021 Omnibus Incentive Plan and certifications from the CEO and CFO pursuant to the Exchange Act and Sarbanes-Oxley Act[132](index=132&type=chunk)

Intrusion Inc. (NASDAQ:INTZ) Q2 2021 Earnings Conference Call August 12, 2021 5:00 PM ET Company Participants Joel Achramowicz - Investor Relations Joe Head - Co-Founder and Chief Technology Officer Franklin Byrd - Chief Financial Officer Gary Davis - Chief Marketing Officer Tony LeVecchio - Chairman Conference Call Participants Zach Cummins - B. Riley Securities Russell Cleveland - RENN Capital Howard Brous - Wellington Shield Gary Schade - Gary Schade Auto Operator Good afternoon and welcome to Intrusion’ ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Intrusion Inc. reported a slight revenue increase to $1.85 million but a widened net loss of $3.9 million in Q1 2021 due to increased operating expenses, with U.S. government sales dominating revenue [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $16.8 million by March 31, 2021, from $19.9 million at year-end 2020, primarily due to reduced cash, while liabilities slightly increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $13,072 | $16,704 | | Total current assets | $15,077 | $18,307 | | **Total Assets** | **$16,822** | **$19,882** | | Total current liabilities | $2,746 | $2,142 | | **Total Liabilities** | **$4,699** | **$4,221** | | **Total Stockholders' Equity** | **$12,123** | **$15,661** | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2021 revenue slightly rose to $1.85 million, but operating loss significantly expanded to $3.9 million due to surging sales, marketing, and R&D expenses, leading to a wider net loss Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue | $1,852 | $1,795 | | Gross Profit | $1,227 | $1,048 | | Sales and marketing | $2,689 | $510 | | Research and development | $1,469 | $753 | | Operating loss | $(3,904) | $(471) | | **Net loss attributable to common stockholders** | **$(3,903)** | **$(498)** | | **Net loss per share (Basic & Diluted)** | **$(0.22)** | **$(0.04)** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities surged to $3.6 million in Q1 2021, primarily driven by the increased net loss, resulting in a total cash decrease of $3.6 million Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,588) | $(142) | | Net cash used in investing activities | $(195) | $(40) | | Net cash provided by financing activities | $151 | $65 | | **Net decrease in cash and cash equivalents** | **$(3,632)** | **$(117)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's cybersecurity business, SaaS revenue recognition for Shield, high customer concentration with the U.S. Government, and the full forgiveness of its PPP loan - The company's new product, Shield, is offered on a subscription basis and accounted for as a service obligation (SaaS) under ASC 606, with revenue recognized monthly over the contract term[34](index=34&type=chunk)[35](index=35&type=chunk) - The company has a high concentration of revenue from the U.S. Government, which accounted for **73.9% of total revenues** in Q1 2021, up from 71.4% in Q1 2020. Three government customers represented **68.1% of total revenues**[39](index=39&type=chunk) - The company received a **$629 thousand PPP loan** in April 2020. As of March 31, 2021, the balance was **$635 thousand** including interest. The entire loan and accrued interest were forgiven in full by the SBA on April 7, 2021[47](index=47&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2021's slight revenue increase to TraceCop sales and the significant rise in operating expenses to investments in the new Shield product, while affirming sufficient liquidity for the next year [Results of Operations](index=14&type=section&id=Results%20of%20Operations) Q1 2021 revenues slightly increased to $1.9 million, gross profit margin improved to 66.3%, but operating expenses, particularly sales, marketing, and R&D, surged due to new product investment Operating Expense Comparison (in millions) | Expense Category | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Sales and marketing | $2.7 | $0.5 | | Research and development | $1.5 | $0.8 | | General and administrative | $1.0 | $0.3 | - The increase in sales and marketing expenses was due to building and training a sales force and focused marketing for the new commercial product, Shield[56](index=56&type=chunk) - Gross profit margin improved from **58.4% to 66.3%** year-over-year, primarily due to a favorable TraceCop/Savant product mix[55](index=55&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company held $13.1 million in cash and $12.3 million in working capital, with management confident in funding operations for the next twelve months despite cash usage - The company's cash and cash equivalents decreased from **$16.7 million** at the end of 2020 to **$13.1 million** as of March 31, 2021[60](index=60&type=chunk)[66](index=66&type=chunk) - Net cash used in operations for Q1 2021 was **$3.6 million**, primarily due to the net loss of **$3.9 million**[62](index=62&type=chunk) - Management believes that existing cash resources will be sufficient to fund operations and expected capital expenditures for the next twelve months[67](index=67&type=chunk) [Item 4. Controls and Procedures](index=16&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2021, due to issues with documenting board actions, which the audit committee is addressing - Management concluded that as of March 31, 2021, the company's disclosure controls and procedures were **not effective**[70](index=70&type=chunk) - The ineffectiveness was related to issues with memorializing the formal actions of the board of directors through appropriate written records[70](index=70&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=18&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in a lawsuit against its former landlord for over $1 million and is vigorously defending against a securities class action lawsuit alleging misleading statements - On February 16, 2021, Intrusion sued its former landlord, Purple Plaza LLC, for breach of contract, seeking damages over **$1 million**[74](index=74&type=chunk) - On April 16, 2021, a class action lawsuit was filed against the company, its CEO, and CFO, alleging violations of the Securities Exchange Act. The company plans to defend itself vigorously[75](index=75&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of net losses, heavy reliance on TraceCop and a few customers, potential delays in INTRUSION Shield revenue, and significant control by executive officers and affiliates - The company reported a net loss of **$3.9 million** for Q1 2021 and has an accumulated deficit of **$65.2 million**, underscoring the need to increase revenue to achieve profitability[78](index=78&type=chunk) - A significant risk is the company's dependence on a single cybersecurity solution, TraceCop, which generates almost all existing revenues[79](index=79&type=chunk) - Executive officers and directors beneficially own approximately **9.2% of voting power**, with other related affiliates controlling another **39.1%**, resulting in significant stockholder concentration[81](index=81&type=chunk) [Item 6. Exhibits](index=19&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO and CFO certifications required by Sarbanes-Oxley and XBRL data files - The exhibits filed with the report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[82](index=82&type=chunk)

Intrusion Inc. (NASDAQ:INTZ) Q1 2021 Results Conference Call May 4, 2021 5:00 PM ET Company Participants Joel Achramowicz - MD, Shelton Group IR Jack Blount - President and CEO Franklin Byrd - CFO Conference Call Participants Zach Cummins - B. Riley Securities Scott Buck - H.C. Wainwright Ross Taylor - ARS Investment Partners Howard Brous - Wellington Shields Russell Cleveland - RENN Capital Operator Good afternoon and welcome to the Intrusion’s First Quarter 2021 Results Financial Conference Call. [Operato ...