INTRUSION Revenue Jumps 37% Amid Widening Losses, DoD Contract Boosts Cash

TL;DR

**INTRUSION's revenue growth is a mirage; widening losses and constant financing needs make this a risky bet.**

AI Summary

INTRUSION INC. reported a significant increase in revenue for the nine months ended September 30, 2025, reaching $5.614 million, a 37.1% increase from $4.095 million in the same period of 2024. Despite this revenue growth, the company's net loss widened to $6.234 million for the nine months ended September 30, 2025, compared to a net loss of $5.833 million in the prior year, representing a 6.9% increase in losses. The operating loss slightly improved to $(6.315) million from $(6.543) million year-over-year. Cash and cash equivalents decreased from $4.851 million at December 31, 2024, to $2.527 million at September 30, 2025. However, the company received an additional $3.0 million in cash on October 1, 2025, related to a Department of Defense contract extension. Strategic changes include a 1-for-20 reverse stock split on March 22, 2024, and significant financing activities, including a registered direct offering that generated $7.026 million in net proceeds. The company also converted Series A preferred stock into common stock, eliminating preferred stock from its balance sheet by September 30, 2025. Risks include the need for positive cash flow or additional financing to fund operations, as highlighted by the accumulated deficit of $(124.241) million.

Why It Matters

This 10-Q reveals INTRUSION INC.'s struggle to translate revenue growth into profitability, a critical concern for investors. While a 37.1% revenue increase is positive, the expanding net loss and reliance on external financing, including a recent Department of Defense contract extension, signal ongoing operational challenges. The competitive cybersecurity market demands strong financial health, and INTRUSION's need for 'additional debt or equity financing' could dilute existing shareholders or increase debt burden. Employees and customers might view the company's financial instability as a risk to long-term product development and support, potentially impacting market share against more financially robust competitors.

Risk Assessment

Risk Level: high — The company reported a net loss of $6.234 million for the nine months ended September 30, 2025, and explicitly stated, '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.' This direct statement, coupled with an accumulated deficit of $(124.241) million, indicates significant going concern risk.

Analyst Insight

Investors should exercise extreme caution and consider avoiding INTZ given the persistent net losses and explicit going concern warning. Monitor future filings closely for sustained profitability and positive cash flow from operations before considering any investment, as current trends suggest high risk.

Financial Highlights

revenue

$5.614M

total Assets

$13.672M

net Income

$(6.234M)

gross Margin

76.2%

cash Position

$2.527M

revenue Growth

+37.1%

Key Numbers

• $5.614M — Revenue (Increased by 37.1% for nine months ended Sep 30, 2025, from $4.095M in 2024.)
• $(6.234M) — Net Loss (Widened by 6.9% for nine months ended Sep 30, 2025, from $(5.833M) in 2024.)
• $2.527M — Cash and Cash Equivalents (Decreased from $4.851M at Dec 31, 2024, but boosted by $3.0M DoD contract post-period.)
• $(124.241M) — Accumulated Deficit (Increased from $(118.007M) at Dec 31, 2024, indicating continued unprofitability.)
• 20,102,939 — Common Shares Outstanding (As of November 11, 2025, reflecting significant dilution from 15,590,000 at Dec 31, 2024.)
• $7.026M — Registered Direct Offering Proceeds (Net cash provided by financing activities for nine months ended Sep 30, 2025.)
• 1-for-20 — Reverse Stock Split (Effected on March 22, 2024, to adjust share price and outstanding shares.)
• $2.0M — Short-term Investments (New asset as of September 30, 2025, compared to none at December 31, 2024.)

Key Players & Entities

• INTRUSION INC. (company) — registrant
• Streeterville Capital, LLC (company) — loan agreement counterparty
• Department of Defense (company) — contracting entity
• Nasdaq Capital Market (regulator) — exchange where common stock is registered
• $5.614 million (dollar_amount) — revenue for nine months ended September 30, 2025
• $4.095 million (dollar_amount) — revenue for nine months ended September 30, 2024
• $6.234 million (dollar_amount) — net loss for nine months ended September 30, 2025
• $5.833 million (dollar_amount) — net loss for nine months ended September 30, 2024
• $3.0 million (dollar_amount) — cash received from DoD contract extension on October 1, 2025
• $7.026 million (dollar_amount) — net proceeds from registered direct offering

FAQ

Risk Factors

• Sustained Net Losses and Accumulated Deficit [high — financial]: The company has incurred significant net losses, with the accumulated deficit reaching $(124.241) million as of September 30, 2025. This indicates a history of unprofitability and raises concerns about the company's ability to achieve sustainable positive cash flow without further financing.
• Declining Cash Position [high — financial]: Cash and cash equivalents decreased from $4.851 million at December 31, 2024, to $2.527 million at September 30, 2025. While a $3.0 million DoD contract extension provided a post-period boost, the overall trend highlights the ongoing need for cash to fund operations.
• Dependence on External Financing [high — financial]: The company's ability to continue as a going concern is dependent on its ability to secure additional financing or achieve positive cash flow. The registered direct offering generated $7.026 million in net proceeds, but the widening net loss suggests this may not be sufficient long-term.
• Increased Operating Expenses [medium — operational]: Despite revenue growth, operating expenses have also increased. Sales and marketing rose to $3.664 million, R&D to $3.879 million, and G&A to $3.051 million for the nine months ended September 30, 2025, contributing to the wider net loss.
• Dilution from Share Issuances [medium — financial]: The number of common shares outstanding increased significantly from 15,590,000 at December 31, 2024, to 20,102,939 as of November 11, 2025. This dilution, likely from financing activities, can negatively impact existing shareholders' value.

Industry Context

INTRUSION INC. operates in the cybersecurity market, a sector characterized by rapid technological advancement and increasing threats. The competitive landscape includes established players and emerging startups, all vying for market share. Trends include the growing demand for cloud security, AI-driven threat detection, and data privacy solutions.

Regulatory Implications

As a publicly traded company, INTRUSION INC. is subject to SEC regulations and reporting requirements. Compliance with accounting standards (GAAP) is crucial. Any misstatements or failures in internal controls could lead to SEC investigations and penalties.

What Investors Should Do

1. Monitor Cash Burn and Future Financing Needs
2. Evaluate Revenue Growth Sustainability
3. Assess the Impact of Dilution
4. Scrutinize Operating Expense Management

Key Dates

• 2024-03-22: 1-for-20 Reverse Stock Split — Aimed to increase the per-share trading price and potentially meet exchange listing requirements, but can also signal underlying financial distress.
• 2025-09-30: End of Nine Months Reporting Period — Key period for assessing revenue growth, net loss, and cash burn. Shows revenue up 37.1% but net loss widened by 6.9%.
• 2025-10-01: Department of Defense Contract Extension — Provided an additional $3.0 million in cash post-period, offering some short-term liquidity relief.

Glossary

Accumulated Deficit

The total net losses a company has incurred since its inception, minus any net profits. It represents a negative balance in retained earnings. (Indicates INTRUSION INC.'s long-term unprofitability, with a substantial $(124.241) million deficit as of September 30, 2025.)

Registered Direct Offering

A type of public offering where a company sells securities directly to a select group of institutional investors, often at a discount. (The company raised $7.026 million in net proceeds from such an offering, highlighting its reliance on equity financing to fund operations.)

Reverse Stock Split

A corporate action where a company reduces the total number of its outstanding shares by consolidating existing shares into fewer, proportionally more valuable shares. (INTRUSION INC. executed a 1-for-20 reverse stock split on March 22, 2024, to increase its stock price.)

Capitalized Software Development

Costs incurred in developing software that are capitalized on the balance sheet rather than expensed immediately, typically when technological feasibility is established. (This asset grew from $3.948 million to $5.344 million, indicating investment in product development.)

Deferred Revenue

Revenue that has been received by a company for goods or services that have not yet been delivered or rendered. (Increased from $730,000 to $1.177 million, suggesting a growing backlog of unfulfilled services or products.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, INTRUSION INC. has achieved a notable 37.1% revenue increase, reaching $5.614 million. However, this top-line growth has not translated into improved profitability, as the net loss widened by 6.9% to $(6.234) million. The company's cash position has also weakened, with cash and cash equivalents decreasing significantly, although new financing and contract extensions provide some relief. New risks related to increased operating expenses and share dilution have emerged alongside the ongoing concern of sustained unprofitability.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share INTZ Nasdaq Capital Market
• $0.5 million — sions after six months in amounts up to $0.5 million per calendar month at the noteholder's
• $0.5 m — in, the remaining balance on Note 1 was $0.5 million, Note 2 was paid in full, the int
• $9.5 million — n March 2024, as a result of exchanging $9.5 million principal in aggregate for equity, the
• $101 — principal balance due under the note by $101 thousand, which reflected the amount du
• $50.0 million — ht & Co., LLC to potentially sell up to $50.0 million of the Company's common stock using a s

Filing Documents

• intrusion_i10q-093025.htm (10-Q) — 799KB
• intrusion_ex3101.htm (EX-31.1) — 11KB
• intrusion_ex3102.htm (EX-31.2) — 12KB
• intrusion_ex3201.htm (EX-32.1) — 5KB
• 0001683168-25-008171.txt ( ) — 3898KB
• intz-20250930.xsd (EX-101.SCH) — 36KB
• intz-20250930_cal.xml (EX-101.CAL) — 46KB
• intz-20250930_def.xml (EX-101.DEF) — 111KB
• intz-20250930_lab.xml (EX-101.LAB) — 304KB
• intz-20250930_pre.xml (EX-101.PRE) — 235KB
• intrusion_i10q-093025_htm.xml (XML) — 412KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3

Financial Statements

Item 1. Financial Statements 3 Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited), and December 31, 2024 3 Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025, and 2024 4 Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the three and nine months ended September 30, 2025, and 2024 5 Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025, and 2024 7 Notes to Unaudited Condensed Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 22

Controls and Procedures

Item 4. Controls and Procedures 22

– OTHER INFORMATION

PART II – OTHER INFORMATION 23

Legal Proceedings

Item 1. Legal Proceedings 23

Risk Factors

Item 1A. Risk Factors 23

Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities 23

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 23

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 23

Other Information

Item 5. Other Information 23

Exhibits

Item 6. Exhibits 24 Signature Page 25 2

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS INTRUSION INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value amounts) September 30, 2025 December 31, 2024 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 2,527 $ 4,851 Short-term investments 2,000 – Accounts receivable, net 2,378 169 Prepaid expenses and other assets 666 514 Total current assets 7,571 5,534 Noncurrent Assets: Property and equipment: Equipment 2,899 2,690 Capitalized software development 5,344 3,948 Leasehold improvements 18 18 Property and equipment, gross 8,261 6,656 Accumulated depreciation and amortization ( 3,937 ) ( 2,809 ) Property and equipment, net 4,324 3,847 Finance leases, right-of-use assets, net 249 491 Operating leases, right-of-use assets, net 1,243 1,356 Other assets 285 281 Total noncurrent assets 6,101 5,975 TOTAL ASSETS $ 13,672 $ 11,509 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, trade $ 541 $ 1,508 Accrued expenses 550 291 Finance lease liabilities, current portion 113 405 Operating lease liabilities, current portion 54 209 Notes payable – 529 Deferred revenue 1,177 730 Total current liabilities 2,435 3,672 Noncurrent Liabilities: Finance lease liabilities, noncurrent portion 85 172 Operating lease liabilities, noncurrent portion 1,343 1,414 Total noncurrent liabilities 1,428 1,586 Commitments and Contingencies – (See Note 5) – – Stockholders' Equity: Preferred stock, $ 0.01 par value: Authorized shares – 5,000 ; Issued shares – 0 in 2025 and 4 in 2024 – 3,827 Common stock, $ 0.01 par value: Authorized shares – 80,000 ; Issued shares – 20,103 in 2025 and 15,591 in 2024; Outstanding shares – 20,102 in 2025 and 15,590 in 2024 201 156 Common stock held in treasury, at cost – 1 share ( 362 ) ( 362 ) Additional paid-in capital 134,254 122,552 Stock subscription recei

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