INTRUSION INC
For the period ended Jun 30, 2025. Filed Aug 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 12, 2025
INTZ$0.65+4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0001683168-25-002943
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-12.
0001683168-25-005985
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 41 previous paragraphs and 43 current paragraphs.
23 unchanged; 12 reworded; 8 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
**Concentration of Revenues.**For the three and six months ended June 30, 2025, revenues from sales to various U.S. government entities totaled $1.8 million and $3.4 million, comprising 95.5% and 93.7% of total revenues, respectively. This compares to $1.3 million and $2.0 million, or 89.0% and 75.7% of total revenues, for the same periods in 2024. The shift in revenue mix was primarily due to the loss of a significant Shield customer, as previously noted, and the addition of a Department of Defense contract in the second half of 2024.
Current report
We expect our revenue concentration among customers to fluctuate in future periods, depending on the timing of sales; however, we anticipate that sales to government customers will continue to represent a significant portion of our revenues. Sales to government entities involve certain risks beyond those associated with commercial customers, including potential disruptions in appropriations and spending, and the government's right to cancel contracts and purchase orders at its convenience. While we do not currently anticipate renegotiations or cancellations of government contracts, the loss of government orders could materially affect our financial results. Given the increased percentage of sales to U.S. government entities in 2025, no individual commercial customer accounted for more than 10% of total revenues, compared to one such customer in the prior year. Our product and service offerings are not managed as separate segments, as management evaluates the business as a whole and does not allocate expenses by product.
Current report
**Gross Profit.**Gross profit was $1.4 and $2.8 million or 76.4% and 76.0% of revenues for the three and six month periods ended June 30, 2025, compared to $1.1 and $2.0 million or 76.0% and 77.8% of revenues for the three and six months ended June 30, 2024. The gross profit margin will vary depending on product mix. INTRUSION Shield revenues represent between 25% and 28% of revenues for the six month periods ended June 30, 2025, and 2024.
Current report
**Operating Expenses.**Operating expenses totaled $3.5 million and $7.0 million for the three- and six-month periods ended June 30, 2025, compared to $3.1 million and $6.5 million for the same periods in 2024. The 2024 figures include one-time negotiated contract savings of $0.1 million for the three-month period and $0.4 million for the six-month period.
Current report
Adjusting for these one-time savings, operating expenses for the three months ended June 30, 2025, increased by $0.3 million, primarily due to higher share-based compensation from equity grants made in the first quarter, timing of merit increases, and the addition of a Sales Engineer and Software Engineer. These increases were partially offset by lower legal fees following the resolution of prior-year litigation matters and increased allocations from operating expenses to cost of sales for resources dedicated to additional consulting work during the quarter.
Current report
For the six months ended June 30, 2025, operating expenses, when adjusted for one-time savings, were $0.1 million higher than the comparable period in 2024.
Current report
Net Loss. Net loss for the three and six month periods ended June 30, 2025, was ($2.0) million and ($4.1) million, respectively compared to ($2.1) million and ($3.8) million for the same periods in the prior year. The increase in net loss for six months ended June 30, 2025, was a result of a net interest credit of $1.0 million recorded in the 2024 period as discussed above.
Current report
Net cash used in operations for the six months ended June 30, 2024, was ($4.0) million primarily resulting from 1) a net loss of ($3.8) million offset partially offset by adjustments for non-cash items of $0.4 million which are mostly comprised of depreciation, stock-based compensation and non-cash interest related to the Streeterville notes, and 2) changes in working capital of ($0.7) million which consisted principally of increased accounts receivable and decreased vendor payables.
Removed paragraphs (6)
Previous report
We believe that the recentINTRUSIONShield transactions booked in the fourth quarter of 2024 and during the first quarter of 2025 and the transactions that we anticipate will close in the second quarter of this year will help driveINTRUSIONShield revenue growth in 2025.
Previous report
**Concentration of Revenues.**Revenues from sales to various U.S. government entities totaled $1.6 million, or 91.6% of revenues, for the quarter ended March 31, 2025, compared to $0.7 million, or 58.6% of revenues, for the same period in 2024. The change in revenue mix primarily resulted from the loss of the large INTRUSIONShield customer mentioned above, and the addition of the Department of Defense contract award in the second half of 2024. Although we expect our concentration of revenues to vary among customers in future periods depending upon the timing of certain sales, we anticipate that sales to government customers will continue to account for a significant portion of our revenues in future periods. Sales to the government present risks in addition to those involved in sales to commercial customers which could adversely affect our revenues, including, without limitation, potential disruption to appropriation and spending patterns and the government’s reservation of the right to cancel contracts and purchase orders for its convenience. Although we do not anticipate contracts with government customers will be renegotiated or cancelled, the loss of government orders could have a material adverse effect on our financial results. We had three customers accounting for 91.4% of total revenue for the three months ended March 31, 2025. We had three customers in the first quarter of 2024 that accounted for 85.2% of total revenue. Our similar product and service offerings are not viewed as individual segments, as our management analyzes the business as a whole and expenses are not allocated to each product offering.
Previous report
**Gross Profit.**Gross profit was $1.3 million or 75.7% of revenues for the quarter ended March 31, 2025, compared to $0.9 million or 80.0% of revenues for the quarter ended March 31, 2024. The decrease in gross profit margin for the 2025 period is a result of a change in product mix with INTRUSIONShield revenues representing 23.4% of our revenue mix compared to 39.1% in the same period in 2024.
Previous report
**Operating Expenses.**Operating expenses for the quarter ended March 31, 2025, totaled $3.4 million, remaining unchanged from the same period in 2024. The 2024 period included $0.3 million in one-time negotiated contract savings. When adjusted for these one-time savings, operating expense for the three months ended March 31, 2025 is $0.3 million lower principally due to decreased legal fees of $0.1 million as a result of litigation matters from prior years being resolved, and increased allocations out of operating expense to cost of sales for resources dedicated to the increased consulting work performed in quarter of $0.2 million.
Previous report
Net Loss. Net loss for the first quarter of 2025 was $2.1 million, or $0.11 per share, compared to a net loss of $1.7 million, or $0.94 per share, for the first quarter of 2024. The increase in net loss for 2025 was a result of a net interest credit of $0.8 million recorded in the 2024 period resulting from the exchange of $9.3 million in senior debt for Series A preferred stock and the associated reversal of interest accretion for the ability to stock-settle principal redemptions on the debt.
Previous report
Net cash used in operations for the quarter ended March 31, 2024, was ($1.1) million principally due to a net loss of ($1.7) million partially offset by changes in working capital which consisted principally of reductions in prepaid expenses.
Reworded paragraphs (12)
Previous wording
Revenues. Revenue for the three month period ended March 31, 2025, was $1.8 million compared to $1.1 million for the same period in 2024. Revenue from consulting services totaled $1.4 million for the three month period ended March 31, 2025, compared to $0.7 million for the three month period ended March 31, 2024. The continuing resolution and delay in the approval of a federal budget for the 2024 year impacted renewals and task orders received for long-standing contracts which resulted in a decline in consulting revenues.INTRUSIONShield revenues were $0.4 million for both the three month period ended March 31, 2025 and 2024. On March 31, 2024, we lost a largeINTRUSIONShield customer that was utilizing a highly customized and non-standard configuration of the product. The loss of revenues from this customer, which represented 78% ofINTRUSIONShield revenues, has been fully backfilled with the addition of new customers, inclusive of the Department of Defense contract awarded in the second half of 2024.
Current wording
Revenue. Revenue for the three and six months ended June 30, 2025, was $1.9 million and $3.6 million, respectively, compared to $1.5 million and $2.6 million for the same periods in 2024. Consulting revenue totaled $1.4 million and $2.7 million for the three and six months ended June 30, 2025, up from $1.2 million and $1.9 million for the corresponding periods in 2024. The increase in consulting revenue in 2025 primarily reflects work performed under a Department of Defense contract awarded in the second half of 2024. In contrast, consulting revenue for the six months ended June 30, 2024, was negatively impacted by a continuing resolution and delays in the approval of the federal budget. The budget was not passed until March 22, 2024, which affected the timing of contract renewals and task orders and led to lower consulting revenues in the first half of 2024. INTRUSIONShield revenue was $0.5 million and $0.9 million for the three and six months ended June 30, 2025, compared to $0.3 million and $0.7 million for the same periods in 2024. On March 31, 2024, we lost a major INTRUSIONShield customer who used a highly customized product configuration. This customer accounted for 78% of INTRUSIONShieldrevenues; this loss has been fully offset by new customers inclusive of the Department of Defense contract awarded in late 2024.
Previous wording
**Sales and Marketing.**Sales and marketing expenses totaled $1.2 million for both the quarters ended March 31, 2025, and 2024. The 2024 period includes approximately $0.1 million in one-time negotiated contract savings. We anticipate increasing our spend to create more brand awareness, concise product messaging and drive increased sales through the remainder of 2025.
Current wording
**Sales and Marketing.**Sales and marketing expenses totaled $1.2 million and $2.4 million for three and six months ended June 30, 2025, respectively. The 2024 period includes approximately $0.1 million in one-time negotiated contract savings. We anticipate increasing our spend to create more brand awareness, concise product messaging and drive increased sales through the remainder of 2025.
Previous wording
**Research and Development.**Research and development expenses totaled $1.2 million for the quarter ended March 31, 2025, representing an increase of $0.2 million compared to the same period in 2024. The increase is primarily due to increased depreciation of $0.1 million on internally developed software as we continue to invest in adding new features and functionality to the INTRUSIONShieldand higher expense due to the 2024 period including one-time negotiated savings of $0.1 million. Research and development costs may vary over time as we determine the frequency of new releases, improved functionality and enhancements needed to be competitive with our product offering.
Current wording
**Research and Development.**Research and development expenses totaled $1.3 million and $2.6 million for the three and six months ended June 30, 2025, representing an increase of $0.3 million and $0.5 million when compared to the same periods in the prior year. The increase is primarily due to increased depreciation of $0.1 million on infrastructure hardware purchases and internally developed software as we continue to invest in adding new features and functionality to the INTRUSIONShieldand higher expense due to the 2024 period including one-time negotiated savings of $0.1 million. Research and development costs may vary over time as we determine the frequency of new releases, improved functionality and enhancements needed to be competitive with our product offering.
Previous wording
**General and Administrative.**General and administrative expenses totaled $1.0 million for the quarter ended March 31, 2025, compared to $1.2 million for the quarter ended March 31, 2024. The reduction is primarily due to decreased legal expenses as a result of the prior year’s litigation matters being fully resolved.
Current wording
**General and Administrative.**General and administrative expenses totaled $1.0 and $2.0 million for the three and six months ended June 30, 2025, compared to $1.0 and $2.1 million for the three and six months ended June 30, 2024. The reduction is primarily due to decreased legal expenses as a result of the prior year’s litigation matters being fully resolved and one-time negotiated savings included in the 2024 period.
Previous wording
**Interest Expense.**Interest expense for the period March 31, 2025, was $29 thousand and consisting principally of the stated interest related to the Streeterville note and imputed interest on finance leases. Interest expense for the 2024 period totaled $228 thousand and consisted principally of the stated interest related to the Streeterville notes, interest associated with the note’s payable issued to Scott and finance leases.
Current wording
**Interest Expense.**Interest expense for the three and six month periods ended June 30, 2025, was $21 and $50 thousand, respectively, consisting principally of imputed interest on finance leases and the stated interest related to the Streeterville note that was fully retired in the first quarter of 2025. Interest expense for the 2024 periods totaled $34 and $262 thousand and consisted principally of the stated interest related to the Streeterville notes, interest associated with the notes payable issued to Anthony Scott, the Company’s President and Chief Executive Officer and a member of the Company’s Board of Directors, and finance leases.
Previous wording
**Other Income (Expense), Net.**Other income and expense were nominal amounts for both the periods ended March 31, 2025, and 2024.
Current wording
**Other Income (Expense), Net.**Other income and expense were nominal amounts for both the three and six months ended June 30, 2025, and 2024.
Previous wording
As of March 31, 2025, we had cash and cash equivalents of $10.7 million, representing an increase of $5.8 million from $4.9 million as of December 31, 2024, and net working capital of $9.0 million compared to $1.9 million as of December 31, 2024. Our principal sources of cash for funding operations in the March 2025 quarter was receipt of proceeds from the sale of common stock pursuant to the SEPA $1.5 million, recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025. Our principal source for funding operations in the March 2024 quarter was through the issuance of notes payable to Scott of $1.3 million and the issuance of common stock using our ATM program (defined below) which provided $0.5 million.
Current wording
As of June 30, 2025, we had cash and cash equivalents of $4.7 million, representing a decrease of ($0.2) million from $4.9 million as of December 31, 2024, and net working capital of $7.2 million compared to $1.9 million as of December 31, 2024. Our principal sources of cash for funding operations for the six months ended June 30, 2025 was receipt of $1.5 million in proceeds from the sale of common stock pursuant to the SEPA, recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025. Our principal source for funding operations in the June 2024 period was through proceeds received from the issuance of common stock in a series of transactions which include $3.3 million from ATM sales, $2.6 million from a private placement, and $0.6 million from the exercise of warrants.
Previous wording
B. Riley Securities, Inc. acts as sales agent for our ATM program. In December 2024, we closed out sales of common stock on the our ATM program under the shelf registration statement on Form S-3 that was filed on August 5, 2021, and declared effective by the SEC on August 16, 2021. On January 31, 2025, we filed a new shelf registration on Form S-3/A that was declared effective by the SEC on February 10, 2025, which allows us to potentially sell up to $50.0 million of our common stock on a delayed or continuous basis utilizing the ATM program. No sales under the new shelf registration have been made to date.
Current wording
On June 11, 2025, we terminated our At Market Sales Agreement with B. Riley Securities, Inc. The following day, on June 12, 2025, we entered into a new At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC to potentially sell up to $50.0 million of the Company’s common stock using a shelf registration statement on Form S-3/A (File No. 333-281565) which was filed on January 31, 2025 and became effective on February 10, 2025. No sales under the new shelf registration have been made to date.
Previous wording
Our cash flows for the three months ended March 31, 2025 and 2024 were:
Current wording
Our cash flows for the six months ended June 30, 2025, and 2024 were (in thousands):
Previous wording
Net cash used in operations for the quarter ended March 31, 2025, was ($1.7) million due primarily to a net loss of ($2.1) million partially offset by 1) adjustments for non-cash items of $0.8 million which are mostly comprised of depreciation and stock-based compensation, and 2) changes in working capital of (0.4) million.
Current wording
Net cash used in operations for the six months ended June 30, 2025, was ($3.3) million due primarily to a net loss of ($4.1) million partially offset by 1) adjustments for non-cash items of $1.5 million which were mostly comprised of depreciation and stock-based compensation, and 2) changes in working capital of ($0.7) million.
Previous wording
For the three months ended March 31, 2025, net cash used in investing activities was ($0.8) million, which was comprised of capitalization of internally developed software and hardware purchases. Net cash used by investing activities for the three months ended March 31, 2024, was ($0.4) million principally for capitalization of internally developed software.
Current wording
For the six months ended June 30, 2025, net cash used in investing activities was ($5.2) million, which included short-term investments in highly liquid, investment-grade fixed income securities of ($3.7) million and capitalization of internally developed software and hardware purchases of ($1.4) million. Net cash used by investing activities for the six months ended June 30, 2024, was ($0.7) million for capitalization of internally developed software and hardware purchases.
Previous wording
For three months ended March 31, 2025, net cash provided by financing activities was $8.4 million which resulted from the receipt of proceeds from the sale of common stock pursuant to the SEPA of $1.5 million, previously recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025. Net proceeds from financing activities for the March 2024 period totaled $1.5 million which was primarily the result of net proceeds from issuance of the Scott notes $1.1 million and ATM program public offerings of $0.5 million.
Current wording
For the six months ended June 30, 2025, net cash provided by financing activities was $8.2 million which resulted from the receipt of proceeds from the sale of common stock pursuant to the SEPA of $1.5 million, previously recorded as stock subscription receivable at December 31, 2024, and net proceeds of $7.0 million from a registered direct offering that closed on January 6, 2025, partially offset by payments on financing leases of ($0.2) million. Net proceeds from financing activities for the June 2024 period totaled $6.1 million which resulted from $6.5 million in net proceeds from the sale of common stock through the use our ATM program, a private placement offering, and the exercise of warrants partially offset by finance lease payments.