INTRUSION INC
For the period ended Mar 31, 2026. Filed May 14, 2026.
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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.
Mar 31, 2026 · Filed May 14, 2026
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 2025-09-30; filed 2025-11-12.
0001683168-25-008171
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001683168-26-003931
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 45 previous paragraphs and 40 current paragraphs.
23 unchanged; 13 reworded; 4 added; 9 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 (4)
Current report
Revenues. Revenue for the three month period ended March 31, 2026, was $0.9 million compared to $1.8 million for the same period in 2025. Revenue from consulting services totaled $0.8 million for the three month period ended March 31, 2026, compared to $1.4 million for the three month period ended March 31, 2025.INTRUSIONShield revenues were $0.1 million for the three month period ended March 31, 2026 as compared to $0.4 million for the three month period ended March 31, 2025. The continuing delay in the contract extension of the long-standing U.S. Department of War contract due to timing variability and federal funding and procurement processes resulted in a decline in both consulting revenues andINTRUSIONShield revenues.
Current report
**Gross Profit.**Gross profit was $0.7 million, or 74.2%, of revenues for the quarter ended March 31, 2026, compared to $1.3 million, or 75.7%, of revenues for the quarter ended March 31, 2025. The decrease in gross profit margin for the 2026 period is a result of a change in product mix with INTRUSIONShield revenues representing only 12.7% of our revenue mix compared to 23.4% in the same period in 2025.
Current report
**Operating Expenses.**Operating expenses for the quarter ended March 31, 2026, totaled $4.2 million, a $0.8 million increase compared to the same period in 2025. The increase is primarily related to increased investment in sales and R&D personnel as we continue to expand our product offerings and brand awareness, further impacted by cost of living and merit increases that occurred in the second half of 2025. The increase is also due to a decrease in the allocations out of operating expense to cost of sales due to the underutilization of resources to support the delayed U.S. Department of War contract.
Current report
**Sales and Marketing.**Sales and marketing expenses totaled $1.6 million for the quarter ended March 31, 2026, representing an increase of $0.4 million compared to the same period in 2025. The increase was primarily due to an increased investment in sales and sales support personnel and an increased participation in trade shows and associated marketing spend to continue to create more brand awareness and growth in our pipeline as well as an underutilization of our government sales team due to the delayed U.S. Department of War contract. Certain discretionary marketing spends inclusive of participation in trade shows, utilization of third-party contractors for content and product messaging and travel, are likely to vary over time based on marketing and savings initiatives that may be necessary.
Removed paragraphs (9)
Previous report
Revenue. Revenue for the three and nine months ended September 30, 2025, was $2.0 million and $5.6 million, respectively, compared to $1.5 million and $4.1 million for the same periods in 2024. Consulting revenue totaled $1.5 million and $4.2 million for the three and nine months ended September 30, 2025, up from $1.1 million and $2.9 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 nine months ended September 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 $1.4 million for the three and nine months ended September 30, 2025, compared to $0.4 million and $1.2 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 report
**Concentration of Revenues.**For the three and nine months ended September 30, 2025, revenues from sales to various U.S. government entities totaled $1.9 million and $5.3 million, comprising 96.7% and 94.7% of total revenues, respectively. This compares to $1.3 million and $3.3 million, or 85.9% and 79.5% 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.
Previous report
**Gross Profit.**Gross profit was $1.5 and $4.3 million or 76.6% and 76.2% of revenues for the three and nine month periods ended September 30, 2025, compared to $1.2 and $3.2 million or 77.1% and 77.5% of revenues for the three and nine months ended September 30, 2024. The gross profit margin will vary depending on product mix. INTRUSIONShield revenues represented 25% of revenues for the nine month period ended September 30, 2025 and 30% for the nine month period ended September 30, 2024
Previous report
**Operating Expenses.**Operating expenses totaled $3.6 million and $10.6 million for the three and nine month periods ended September 30, 2025, compared to $3.2 million and $9.7 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 $0.5 million for the nine month period.
Previous report
Adjusting for these one-time savings, operating expenses for the three months ended September 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 increased spend on sales and marketing.
Previous report
For the nine months ended September 30, 2025, operating expenses, when adjusted for one-time savings, were $0.4 million higher than the comparable period in 2024.
Previous report
**Sales and Marketing.**Sales and marketing expenses totaled $1.3 million and $3.7 million for three and nine months ended September 30, 2025, respectively. Both 2024 periods includes approximately $0.1 million in one-time negotiated contract savings. When adjusted for the one-time savings, Sales and marketing expenses for the three and nine months ended September 30, 2025 remained flat. The current year spend included increased participation in trade shows and increased spend to create more brand awareness and concise product messaging which was offset by increased allocations out of operating expenses to cost of sales for resources dedicated to additional consulting work during the quarter.
Previous report
**Interest Accretion and Amortization of Debt Issuance Costs.**During the March 2024 quarter, we entered into exchange agreements to convert $9.5 million in Streeterville debt to $9.3 million shares of Series A preferred stock and $0.2 million to common stock and, as a result, we reversed the interest accretion associated with the ability to stock-settle principal redemptions and wrote-off the remaining deferred debt issue costs resulting in a net credit to interest expense of $1.0 million.
Previous report
As of September 30, 2025, we had cash and cash equivalents of $2.5 million and short-term investments in U.S. treasuries of $2.0 million resulting in $4.5 million available to fund operations compared to $4.9 million as of December 31, 2024. Net working capital at September 30, 2025, totaled $5.1 million compared to $1.9 million at December 31, 2024. On October 1, 2025, we received $3.0 million in cash related to the Department of Defense contract extension.
Reworded paragraphs (13)
Previous wording
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 wording
**Concentration of Revenues.**Revenues from sales to various U.S. government entities totaled $0.8 million, or 87.8% of revenues, for the quarter ended March 31, 2026, compared to $1.6 million, or 91.6% of revenues, for the same period in 2025. 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 two customers accounting for 87.3% of total revenue for the three months ended March 31, 2026. We had three customers in the first quarter of 2025 that accounted for 91.4% 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 wording
**Research and Development.**Research and development expenses totaled $1.3 million and $3.9 million for the three and nine months ended September 30, 2025, representing an increase of $0.2 million and $0.7 million when compared to the same periods in the prior year. The increase was primarily due to increased depreciation of $0.1 million on infrastructure hardware purchases and internally developed software and the addition of a Sales Engineer and Software Engineer. 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 $1.5 million for the quarter ended March 31, 2026, representing an increase of $0.2 million compared to the same period in 2025. The increase is primarily due to a $0.3 million decrease in internally developed software as we continue to invest in adding new features and functionality toINTRUSIONShield, partially offset by a $0.1 million decrease in amortization expense associated with the termination of one of our material finance leases at the end 2025. 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 and $3.1 million for the three and nine months ended September 30, 2025, compared to $0.8 and $3.0 million for the three and nine months ended September 30, 2024. The increase is primarily due to one-time negotiated savings of $0.1 million included in the 2024 period.
Current wording
**General and Administrative.**General and administrative expenses totaled $1.1 million for the quarter ended March 31, 2026, compared to $1.0 million for the quarter ended March 31, 2025. The increase is primarily due to an increase in operating lease expenses associated with the Plano office space.
Previous wording
**Interest Expense.**Interest expense for the three and nine month periods ended September 30, 2025, was $17 and $67 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 $12 and $274 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.
Current wording
**Interest Expense.**Interest expense for the three months ended March 31, 2026, was $11 thousand, consisting principally of imputed interest on finance leases. Interest expense for the 2025 period totaled $29 thousand and consisted principally of the stated interest related to the Streeterville note and imputed interest on finance leases.
Previous wording
**Other Income (Expense), Net.**Other income and expense in the 2025 periods consist principally of interest income on cash and short-term investments. Other income and expense for both the three and nine months ended September 30, 2024, were nominal.
Current wording
**Other Income (Expense), Net.**Other income and expense were nominal amounts for both the periods ended March 31, 2026, and 2025.
Previous wording
Net Loss. Net loss for the three and nine month periods ended September 30, 2025, was ($2.1) million and ($6.2) million, respectively compared to ($2.1) million and ($5.8) million for the same periods in the prior year. The increase in net loss for nine months ended September 30, 2025, was primarily a result of a net interest credit of $1.0 million recorded in the 2024 period as discussed above.
Current wording
Net Loss. Net loss for the first quarter of 2026 was $3.6 million, or $0.18 per share, compared to a net loss of $2.1 million, or $0.11 per share, for the first quarter of 2025. The increase in net loss for 2026 was primarily a result of the decrease in revenues for the 2026 period as discussed above.
Previous wording
Our principal sources of cash for funding operations for the nine months ended September 30, 2025 were 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 September 2024 period was through proceeds received from the issuance of common stock in a series of transactions which include $4.8 million from ATM sales, $2.6 million from a private placement, and $0.6 million from the exercise of warrants.
Current wording
As of March 31, 2026, we had cash and cash equivalents of $1.4 million. Net working capital at March 31, 2026 totaled ($0.9) million compared to $2.4 million as of December 31, 2025. Our principal sources of cash for funding operations in the March 2026 and March 2025 quarters were 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. On April 6, 2026, we received $3.0 million in cash related to the sale of a promissory note with Streeterville Capital, LLC.
Previous wording
We generated a net loss of $6.2 million and $5.8 million for the nine months ended September 30, 2025, and 2024, respectively. If our operations do not generate positive cash flow in the upcoming year, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.
Current wording
We generated a net loss of $3.6 million and $2.1 million for the three months ended March 31, 2026, and 2025, respectively. If our operations do not generate positive cash flow in the upcoming year, of if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.
Previous wording
Our cash flows for the nine months ended September 30, 2025, and 2024 were (in thousands):
Current wording
Our cash flows for the three months ended March 31, 2026 and 2025 were:
Previous wording
Net cash used in operations for the nine months ended September 30, 2025, was ($6.2) million due primarily to a net loss of ($6.2) million partially offset by 1) adjustments for non-cash items of $2.4 million which were mostly comprised of depreciation and stock-based compensation, and 2) changes in working capital of ($2.4) million driven largely by an increase in contract billings.
Current wording
Net cash used in operations for the quarter ended March 31, 2026, was $(1.8) million due primarily to a net loss of $(3.6) million partially offset by 1) adjustments for non-cash items of $0.7 million which are mostly comprised of depreciation and stock-based compensation, and 2) changes in working capital of $1.1 million.
Previous wording
Net cash used in operations for the nine months ended September 30, 2024, was ($6.1) million primarily resulting from 1) a net loss of ($5.8) million offset by adjustments for non-cash items of $1.0 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 ($1.3) million resulting principally from increased accounts receivable.
Current wording
Net cash used in operations for the quarter ended March 31, 2025, was $(1.7) million principally due 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.
Previous wording
For the nine months ended September 30, 2025, net cash used in investing activities was ($4.2) million, which included short-term investments in highly liquid, investment-grade fixed income securities of ($2.0) million and capitalization of internally developed software and hardware purchases of ($2.2) million. Net cash used in investing activities for the nine months ended September 30, 2024, was ($1.1) million for capitalization of internally developed software and hardware purchases.
Current wording
For the three months ended March 31, 2026, net cash used in investing activities was $(0.3) 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, 2025, was $(0.8) million, which was principally comprised of capitalization of internally developed software and purchases of property and equipment.
Previous wording
For the nine months ended September 30, 2025, net cash provided by financing activities was $8.1 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 ($0.4) million. Net proceeds from financing activities for the September 2024 period totaled $8.1 million which resulted from $8.0 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.
Current wording
For three months ended March 31, 2026, net cash used in financing activities was $0.2 million which was principally comprised of cash paid on tax withholding for net settled restricted stock units. Net cash provided by financing activities for the three months ended March 31, 2025, 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.