Intrusion Inc.

Good afternoon and welcome to Intrusion's third quarter 2020 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. As a reminder, today's conference call is being recorded for replay purposes. I would now like to turn the call over to Joel Akramowitz of Shelton Group Investor Relations. Joel, please go ahead.

Thank you, Jason. Good afternoon and welcome to Intrusion's third quarter 2020 earnings conference call. I'm Joel Akramovitz, managing director of Shelton Group, Intrusion's investor relations firm. Joining me today are Jack Blunt, Intrusion's president and CEO, Joe Head, Intrusion's co-founder and senior vice president of direct sales, and Michael Paxton, Intrusion's CFO. Before we begin today's call, I want to remind you that today's conference call may contain forward-looking statements regarding future events. including but not limited to expectations for Intrusion's future business, financial performance, and goals, customer and industry adoption of SHIELD technology, successfully bringing to market Intrusion's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We encourage you to review the company's SEC filings, including the 2019 Form 10-K filed with the SEC on March 27, 2020, and other SEC filings made from time to time in which we need to discuss risk factors associated with investing and intrusion. All forward-looking statements are made as of the date of this call, Thursday, November 12, 2020, and except as required by law, we do not intend to update this information. This conference call will be available for audio replay for at least 90 days in the Investor Relations section of Intrusion's website at www.intrusion.com. Now, we'll start off the call with a review of the financial results by Michael, and then Joe will follow with a review of government sales. And finally, Jack will review Intrusion's recent operating developments, progress with Shield, and the company's key operating objectives going forward. Then we'll take your questions. Now, with that, I'd like to turn the call over to Michael. Mike, please go ahead.

Thanks Joel. And thank you to everyone who has joined us today. Now let's get, let's get to the third quarter results. Revenue for the quarter was 1.6 million compared to 1.7 million in a prior quarter and 3.9 million in the same quarter a year ago. Revenue for the third quarter continued to be impacted by extended government shutdowns related to the pandemic. delaying renewals of our legacy business. We expect our legacy business to recover once conditions normalize. Gross margin in third quarter was 58.9% versus 60.7% last quarter and 62.1% in the third quarter of 2019. Operating expenses were 2.3 million compared to 1.7 million last quarter and 0.9 million in the same quarter a year ago. Net loss for the third quarter of 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 third quarter of 2019. After accrual of preferred dividends, net loss per share attributable to common shareholders in the third quarter was $0.10 on 14.45 million shares compared to a net loss per share attributable to common shareholders of $0.05 in the prior quarter and net income to common shareholders of $0.09 per diluted share in the same quarter a year ago. Cash equivalents at the end of the third quarter of 2020 were $1.5 million compared to $2.9 million prior quarter. Working capital was $1 million compared to $2.4 million last quarter. Outstanding debt third quarter was $631,000. Subsequent to the end of the quarter, we raised $18.1 million in net proceeds from a follow-on offering of 3.6 million shares of our common stock, priced at $8 per share, which closed on October 15, 2020. The company offered 2,465,000 shares, which included the underwriter's option to purchase an additional 465,000 shares. and a group of selling stock selling shareholders offered an additional 1.1 million shares. Stockholders' equity in the third quarter of 2020 was 1.3 million compared to 2.5 million last quarter, and total assets were 4.8 million, excluding the new capital from our recent offering, compared to 5.9 million last quarter. Due to the continued effect of the pandemic on our legacy business, We will not be providing quarterly guidance at this time. As our SHIELD offerings enter the market early next year, we will continue to monitor the environment and overall visibility and will consider providing quarterly revenue guidance in future periods. With that, I'd like to turn the call over to Senior VP and Co-Founder, Joe Head. Go ahead, Joe. Thanks, Mike.