Intrusion Inc.

Ladies and gentlemen, thank you for standing by. And welcome to the Intrusion, Inc. fourth quarter and full year 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one.

Thank you. David Freund, you may begin your conference. Thank you, operator, and good afternoon, everyone.

Thank you for joining us to discuss Intrusion's fourth quarter and four-year 2021 results. With me on today's call are Tony Scott, Chief Executive Officer, and Franklin Bird, Chief Financial Officer. The call is being webcast and will be archived on the investor relations section of our website. Before I turn the call over to Tony, I'd like to note that today's discussion will contain four looking statements based on the business environment as we currently see it. And as such, it does include certain risks and uncertainties. please refer to our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in today's conference call. Any forward-looking statements that we make on this call are based upon information that we believe as of today, and we undertake no obligation to update these statements as a result of new information or future events. In addition to U.S. GAF reporting, we report certain financial measures that do not conform to generally accepted accounting principles. During the call, We may use non-GAAP measures if we believe it useful to investors or we believe it will help investors better understand our performance or business trends. And with that, I'd like to turn the call over to Tony.

Good afternoon, everyone, and thank you for joining us today. I'm pleased to update you on our recent performance and our progress with respect to our previously announced strategy. In January 2022, we outlined our strategic priorities and medium term plan for Shield. We enjoyed the opportunity to highlight Shield's unique cybersecurity offering and demonstrate how we are driving the business forward. While there's still much work to be done, I'm pleased to say that we are making tremendous progress on our stated initiatives. First, we took swift and direct action in the fourth quarter to realign our sales and marketing resources while ensuring our ability to participate in the growing demand for cybersecurity threat protection. These actions were necessary to stabilize expenses and to right-side the organization. Second, we are in active and fruitful conversations with several strategic and premier channel partners that can help expand Shield's exposure, generate revenue, and can be a force multiplier for Intrusion's sales and marketing. Additionally, we have realigned our messaging and marketing to highlight how Intrusion Shield products complement existing cybersecurity solutions that an organization may already have in place. And third, as you saw in our 8K and press release, we improved our financial flexibility by entering a 10 million unsecured notes offering with Streeterville Capital in the first quarter of 2022. As a reminder, we aim to raise a total of 15 to 20 million in the year. The proceeds of our fundraising combined with our existing financial tools will enable us to invest in SHIELD and ensure that it's the best position solution to address modern cybersecurity challenges, including zero-day attacks. As a result of these actions, Intrusion is a more stable, efficient, and disciplined enterprise that possesses the ability and agility to respond appropriately to rising demand and customer needs while preserving financial prudence and accountability. We remain focused on driving operational excellence, developing innovative new products, and generating value for our customers and our shareholders. Before I turn the call over to Franklin to discuss our financial performance in more detail, I'd like to take a moment to provide a high-level overview of our progress with Shield and our expectations for our legacy consulting business. Shield adoption continues to gain traction, and we expect it will continue to become a greater portion of our revenue moving forward. Additionally, we are engaged in an increasing number of customer pilots and proof of concept installations working with and through our channel partners. While we are encouraged by the positive early feedback we are receiving, it's still too early to quantify the impact these trials will have on our full 2022 results. Still, we are setting a solid foundation for the company to build upon in 2022 and beyond as we create a solid base of annually recurring revenue. Further, when I introduced myself to everyone in January, I mentioned that we are working on several new innovative Shield products that we plan to unveil in the second half of the year. These offerings include a cloud-based product, a Shield endpoint product, and a high availability, high throughput option that will be hardware-based. I'm pleased to say that the development of these new products remains on track and on schedule. We still expect to roll out these products in the second half of 2022, with some having demo capability in the coming quarter. Finally, let me turn to our consulting business. While that business was limited by a continuing resolution, otherwise known as a CR, from the government sector in 2021, which restricted funding for new projects, This business still performed well in the year and remains a healthy part of our business. We continue to invest and as the CR has now ended and there's a full budget, we expect an increase in revenue for our consulting business. The combination of an increasing number of proof of concept demos and the end of the continuing resolution establish a strong foundation for the business and could result in upside to our 2022 results. In summary, we recognize that we still have work to do along our plan for developing our organization, raising needed capital, developing an enhanced product offering, and delivering sustainable results. However, I'm pleased by all the progress we have made so far. We realigned our sales and marketing resources developed relationships with several strategic and premier channel partners, and improved our financial flexibility by entering into a 10 million financing agreement with Street of Real Capital. Shield continues to accelerate with a growing number of prototypes and demos, and we expect healthy growth in our consulting business in 2022. The cybersecurity landscape is changing rapidly. with zero day attacks being more prevalent. And Shield is uniquely suited to help enterprises adapt to the changing environment and see the previously unseen threats to their networks. Going forward, we will continue to refine our messaging while utilizing value-added channel partners in our executive-led direct sales model to drive Shield's growth. I'm excited about what Intrusion will do in 2022 And I look forward to updating you on our progress. With that, I'd like to turn the call over to Franklin to discuss the financials in more detail. Franklin, over to you.

Thanks, Tony. Revenue for the fourth quarter of 2021 was $1.6 million, which is in line with our fourth quarter 2020 results. Full-year revenue of $7.3 million increased 10% year over year. The increase in our full-year revenue was primarily due to the SHIELD revenue that we received in 2021. As a reminder, we introduced SHIELD in 2021, and we are pleased with the early progress we are making with that product. During the fourth quarter, SHIELD accounted for 12% of our revenue, which is relatively in line with the third quarter of 2021. As Tony mentioned, we are pleased with the traction we're seeing on SHIELD, and we expect the revenue contribution to continue to improve moving forward. Gross margin for the fourth quarter was 65%, an improvement from 58% for the fourth quarter of 2020. The full year gross margin was 64%, expanded from 59% in 2020. The improvement in gross margin is primarily due to the increasing SHIELD sales. We expect the gross margin to continue at its healthy levels and possibly improve further as SHIELD adoption continues. Fourth quarter operating expenses were $4.9 million, which is in line with our fourth quarter 2020 results. As a reminder, the fourth quarter 2020 operating expenses included a $1.1 million non-cash write-off for the abandonment of a prior office lease. Operating expenses for the full year were $24.2 million, up 132% from 2020. The increase in operating expenses was largely driven by the higher sales and marketing costs. While our sales and marketing expenses were unaligned with our SHIELD adoption rate for the first part of 2021, we quickly corrected those issues and recalibrated our go-to-market strategy. Operating expenses for the fourth quarter were at the lowest levels in all of 2021, and we expect operating expenses to remain stable following our swift action to right-size our sales and marketing resources. Additionally, we expect headcount trends to be steady for the near future. Net loss for the fourth quarter was 3.9 million, or 20 cents per share, compared to a net loss of 3.9 million, or 23 cents per share, for the fourth quarter of 2020. The full year net loss was 18.8 million, or $1.05 per share, compared to a net loss of 6.5 million, or 45 cents per share, in 2020. Turning to the balance sheet, as of December 31st, 2021, we had cash and cash equivalents of 4.1 million, down from 16.7 million in the prior year. As of December 31st, 2021, working capital was 2.1 million, down from 16.2 million in the prior year. As Tony just highlighted, last week we closed on a financing where we sold a 7% unsecured note under securities purchase agreement with Street of Gold Capital. The aggregate principal amount of this note was $5.4 million, and we received $5 million less certain reimbursed expenses. We also received an option to sell a second 7% unsecured note on similar terms as the first note. Our option to sell the second note is subject to certain conditions, including that within 180 days of issuance, we obtain stockholder approval under NASDAQ rules for the issuance of more than 19.99% of our outstanding common stock in connection with potential redemptions of the notes. Each note has an 18-month maturity, and six months after a note has been issued, the noteholder can submit a redemption notice for up to $500,000 per note, which we can choose to satisfy subject to certain exceptions and limitations in cash comma SOC, or a combination of both. This financing enables us to meet our operational needs while prudently investing in our new SHIELD products. Additionally, our ATM facility remains in place, and we will utilize it opportunistically to finance our operating activities, invest in SHIELD, as well as potential note repayments. Before turning the call over to the operator for Q&A, I'd like to echo some of Tony's early remarks. Despite a challenging 2021, we still delivered double-digit top-line growth and healthy gross margin expansion, driven by our Shield products' growth. We acted swiftly to realign our sales and marketing resources and our go-to-market strategy, and our expenses declined to manageable levels as a result. We are encouraged by the interest in our Shield products, and the ending of the continuing resolution is a tailwind for our consulting business. 2022 will be an exciting year of SHIELD, and I look forward to updating you on our progress.

With that, we can go to Q&A. Operator?

At this time, I would like to remind everyone, in order to ask a question, please press star, followed by the number one on your telephone keypad. Your first question comes from Zach Cummins with B. Riley Securities. Your line is open.

Hi, good afternoon, Tony and Franklin. Thanks for the update and thanks for taking my questions. Tony, the first one, can you give us a little more insight into some of the feedback you've received from your ongoing pilot programs that you have for Shield? I think in the press release you mentioned that you have 18 pilots or proof of concepts going on right now.

Yeah, I'd be happy to. So let me do a little bit of context setting for it. So In the part of Q4 and early in Q1, we've been focusing on really strengthening the relationship with our channel partners and resellers in particular, and in particular those that have been putting resources in place, going through training, understanding how to sell and use the product, etc., And so that activity has borne fruit and has led to these pilots that we mentioned and proof of concepts. And the feedback has been great. And we've learned a number of things from our customers in terms of how they want to use the product and the value that they see in it. So we're encouraged by that feedback. And, of course, every customer has feedback. special things that they want to see done and we're taking that into account and we'll put those requests into our engineering pipeline but so far i'm i'm quite pleased with the reception that we're getting understood that's that's helpful and and in terms of your new uh marketing and messaging for shield i mean i know it's still

pretty early in terms of the change in approach and how you're marketing this to both people and partners, but is there any insight you can share in terms of maybe the feedback you've received since you've had this change in messaging and kind of how that's opened up your conversations with both potential customers or strategic relationships?

Yeah, and again, just to bring everybody into the same conversation, when I came on board and talked to both people internally and some of our external customers and people we had relationships with, I was getting very mixed messages about what Shield did, what it was good for. And there was no bad answers there, but it was confusing, I think, to the marketplace. And in some cases, people thought we were trying to replace an intrusion detection device prevention device. In other cases, people thought we were a firewall and we were trying to replace whatever firewall technology they had in place and so on. And so our new messaging, which I think is very accurate in terms of where we provide added value, is that we help make all of the other solutions that you may already have in place work better. We help you see things that you're not probably currently seeing and know things about traffic in your network that you probably don't know or see today. And indeed, that's what we're seeing with our customers. They're quite intrigued by the traffic that they now have visibility of that was slipping by before. So as a part of that new sales strategy, approach we're not going in saying we're a better firewall or a better idps or whatever um we're we're saying hey let us show you how we can make all the other stuff that you have even better and that seems to resonate and even at intrusion we use our technology in combination with other technologies as well so we're not unlike I think most other organizations.

Understood. That's helpful.

And final question for me is really around your consulting business. Nice to see that stabilize in a pretty tough environment in 2021. But can you just talk about maybe some of the growth opportunities you see ahead here now that you have the resolution done and out of the way with an official budget in place and Is there opportunities to be able to embed Shield into some of that existing consulting business and maybe some of the cross-selling opportunities you can see with that product?

Yeah, I think those that are familiar with our consulting business know that we're primarily DOD-focused. And we've spent the last, ever since I joined in November in particular, but in January and February, beginning to focus on the civilian side of the federal government, where I have actually strong relationships because of prior roles. And also, I think we have a great opportunity to engage with state and local entities as well. So we think, you know, there's a great potential for upside for that role. legacy sort of consulting business. And we're going to continue to invest in that. And I think one of the values there is that particularly on the federal side, they see a lot of things before anybody else does. So it's a great source for us of understanding where the puck is headed, if you will.

Great. Thanks for that feedback. I appreciate you taking my questions and best of luck with the rest of the quarter. Thanks, appreciate it.

Your next question comes from the line of Scott Buck with HC Wainwright. Your line is open. Hi, good afternoon, guys.

I'm curious, in the current, I don't know, global environment, whether you guys are getting more incoming calls given heightened tensions with a hacker hotbed in Russia?

Well, let me answer it this way. Anytime there are world events that get people's attention, whether it's the hacking of a major institution or anything related to cyber, it tends to increase the number of calls we get and interest in how we might be able to help. So the current situation is no different, and we have noticed a significant increase in calls in people wondering if something that intrusion can do can help them. So you hate to, in some ways, be the beneficiary of some of these world events, but nevertheless, it is absolutely a factor.

That's helpful, Tony. And then in terms of educating your channel partners on the Shield product, I mean, Can you give us a little color on that process and timeline and when those relationships really start to accelerate sales?

Well, in the case of these resellers that we've been very focused on since November and now during the quarter, we're engaging in sales training. We're making sure they have all the support materials that they need. We're making sure we have the support processes in place so that when they sell or they have customer questions or whatever, that they're well prepared to both answer those questions and support their customers. We've spent a lot of time making sure that they're equipped with all the tools that they need to both sell and support prospective customers. And the active ones are getting shield units out into customers' hands and conducting proof of concepts and doing exactly what we hoped they would do. And we'll ramp that up even more in Q2. We just hired a new channel manager who has experience building that kind of capability with cybersecurity products. We're really looking forward to what he can bring to the table in terms of accelerating us even faster in that space.

That's really helpful. And then last one for me, just on the sequential decline in sales and marketing expense, I'm curious, is that all heads or is that lower headcount and a change in how you're actually marketing the product?

It's both. We did a pretty significant reduction in headcount in sales and marketing, but we also eliminated a bunch of expense that, frankly, just was not generating results for us. We had a theory of the case about how to go to market that just wasn't working very well, and so we cut out all of the expense and headcount related to those things that weren't working and And we've kept the things that are working and were working, and we're going to amplify those as previously outlined. So the answer is it was both.

All right. I appreciate the additional color, guys. Thanks again. Thanks. Your next question comes from Ed Blue with Ascension Capital. Your line is open.

Yeah, thanks for taking my question. As the COVID cases seem to be coming down and business returning to normal, have you noticed any significant improvement in your sales cycle?

I don't think we notice any significant changes at this particular point. I do know that we're getting invited to more events in-person kinds of things than we were, obviously, during the height of COVID. There seemed to be more events, you know, being scheduled and people are sort of coming out of whatever cave they've been living in for the last couple of years. So I think that'll translate into good things for us. But in terms of the cycle itself, I think it's probably a little too early to tell. What I do know, though, is with heightened awareness around cybersecurity and as events take place, people have a renewed sense of urgency, I would say, in terms of improving their cybersecurity posture. And I think in the long run, that bodes well for a shortening of sales cycles, if anything.

Great. And as you do your restructuring of sales and marketing, you don't really move towards resellers. Have you noticed any changes in your implementation and sales cycle?

Again, probably a little too early to tell, but I will say in Q1, we saw a pretty significant increase in both interest and, as I was saying before, motivation on the part of end customers to engage and see whether intrusion technology can help them or not. So, you know, the jury's probably still out on that, but I'm encouraged by what I see in Q1.

Great. Well, thank you, and I wish you guys good luck. Thank you. Appreciate it.

Our next question comes from the line of Russell Cleveland with Wren Capital. Your line is open.

Thanks so much for the call, fellows. Two questions. The first one, there seems to be a lot of confusion about this offering, 10 million. I wonder if you could go over the whole conversion price and that, you know, when it was announced, it had a very big impact on the stock. The second question is, will you be able to announce some of our partners and our channel partners that we are relying on. So those two questions, if you would.

Sure. So let me start with kind of our theory of the case, and then I'll have Franklin comment on the specifics of the deal. But when I came in in November and I had done my due diligence, there were a couple of things that stood out and that we actually formed our strategy around. The first one was, it was clear to me that we were going to have to invest in some new product offerings. And as I previously announced, cloud and endpoints and so on. And I knew that it was going to take us, you know, a half a year thereabouts to get those products in a shape where we could demo and ultimately sell them. And so when you do the math, you pretty quickly figure out that they didn't have the money in the bank at that particular point to fund those activities. And so a capital raise becomes a necessity. And so our strategy was, you know, is playing out and we're right on plan with where I thought we needed to be and where we had planned to be. And so our strategy was raise enough capital to get through the cycle of the six-month product development and realignment of resources. We've talked before about fixing messaging and marketing and our go-to-market strategy and all of those kinds of things. So after making the announcement that we planned to raise capital, we were approached by all sorts of different folks with all kinds of different ways that we could satisfy that capital need. And at the end of the day, we chose one that I think best satisfied our cost to capital and our immediate needs. And our whole theory of the case is hinged on The new products that we've announced, particularly the cloud product, revenue comes in the form of annual recurring revenue. And I know from my previous experience that the market values annual recurring revenue at six to eight times more valuable than traditional revenue. So if we have a product that's generating a million in ARR, enterprise value is six to seven times greater than a million of just ordinary income. So our whole strategy is based on products that will generate ARR. And that presumably moves the stock up into a place that it's not been yet. And this vehicle that we've chosen gives us the best return when that happens. So that's kind of the overall arching strategy, and I'll let Franklin cover the specifics of the deal.

Thanks, Tony. Yes, sir, Mr. Cleveland. I'm happy to answer that question. The first thing I would just kind of echo what Tony was saying is our evaluation of this particular vehicle was across several other opportunities. And one of the main thoughts that we looked at was where our price is today versus where we believe it should be. And we truly believe it's lower than what our real valuation is today. So that's a big part of it. This particular structure allows us to to help perform and show our company performance, increase our stock price, and then if we choose, transact at future stock prices. But to answer the specific questions, it's a two-note structure, one that we've executed and one that has a condition precedent that you probably read about. They both have 7% coupons. They both had an original issue discount of around 6%. And they are both 18-month notes with nothing that transpires, no redemptions for the first six months. After six months, the note holder can redeem up to certain amounts per month, and we can decide how we redeem that. If we want to redeem it in cash, we will. If we want to redeem it in stock, we can. If we do it in stock, there'll be a 15% discount on that future stock price. Or we can do a combination of both. And as you know, we still have our ATM product in place today. So that gives us a little bit more flexibility.

Okay, so you have a choice. From your side, you could either pay it off or would be in line with the market at a 15% discount. So I think that's where the confusion comes in. So the discount is only 15% off the market at that time. Yes, sir. That's correct. Okay. And then the second question I had was, you know, we talk about panel partners. Can we start, you know, announcing these and who they are? give us credibility and so forth. What's the answer there?

Yes, we'll announce channel partners probably in conjunction with significant sales that they make. I don't want to pepper the airwaves with announcements that aren't significant or meaningful to us. The company had the prior experience of announcing that it signed up a bunch of channel partners, and in some cases, you know, some weren't as active as the others, and many of them didn't generate any revenue for us. So I don't want to make not meaningful announcements about channel partners, but as we do significant deals, you will see us mention them and be public about it. And that also... is true for, it may be sort of buried in what we've been saying, but we're also in discussions with some strategic partners, think OEMs and large technology companies. And as material things occur with those kinds of partners, we'll also announce those. Great.

Thank you so much. I appreciate it.

You're welcome.

Thank you.

Your next question comes from the line of Walter Schenker with Mazz Partners. Your line is open.

Get off speaker. Hi, Tony. Hi, how are you? Hello.

Good. Yes. Two unrelated questions. Since you are still selling and marketing a product based on a box, you have 18... people evaluating the product at this point, you said, could you give us some sense as to the range, in broad terms, as to the size of those 18? They range from 50 seats to 1,000 seats, potentially. Obviously, someone may layer into the product 50 seats to 5,000, just some sense as to the types of how big the businesses are that are evaluating this.

It's a pretty broad range, and we have to sort of put some of this in context. Some of these POCs are for organizations that currently have one box, but their actual deployment would involve, if they do the appliance, multiple boxes, and it could be one or 10 or 25, depending on what their bandwidth needs are. When we get the cloud product in the second half of the year, then that's a different model in terms of how it would get installed and the bandwidth it could service. So today with the appliance, we're limited to some degree in terms of the bandwidth we want to service. When we get to the cloud product, the bandwidth issue more or less goes away so it's hard to characterize you know what the actual deployment is in each of these cases really what they're interested in is you know what can you see that's going on in my network that i'm not seeing today or i don't know about and either the cloud product or the appliance product you know shows that kind of information and demonstrates value to the customer. So it could be that some of these current POCs and so on will say, I like what you do, but I want to have the cloud product. Or some may say, this is so valuable right now, I'll go with the current implementation. And it's just too early for us to quantify either way.

And at this point, you're still marketing under the original plan, which is a monthly charge per seat? Yes, for the 18 that you're talking to. The cloud may be marketed differently, but at this point, that's the model. That's right. And then on a totally – go on. I shouldn't cut you off.

Well, I was going to say we also have, and we previously announced, a high-reliability failover, high-throughput, hardware solution, and a number of the customers are also interested in that as well. So I don't, as I've said before, I don't think hardware goes away completely in the new world. I think there are, and even based on my own experience, there's a lot of different needs if you have a large and expansive network, and I see some customers that are going to probably want a combination of hardware and also the cloud solution because they're in a hybrid sort of world with their technology. So we're not going to abandon hardware at all, but we're going to give customers the option of using hardware or cloud or both depending on what's appropriate for their specific environment.

Okay, and then just on a totally unrelated area, you now have the access to 5 million, potential access to 10 million. You've indicated you'd like to get to 15 to 20 million of capital. I know you and I discussed, but you've discussed with other people, the companies discussed with other people, I believe all shareholders would like to see an equity commitment by you and possibly other members of management and other people who you've dealt with over time, you didn't indicate the possibility or the desire at some point for that to happen. Could you just address how we get you to have a bigger stake in the company?

Sure. It's a great question and one that I get asked pretty often these days. So here's the situation. I have a portfolio that's a bit locked up at the moment. I'm doing some things to unlock that, and I will make an investment at a point in the future as soon as I get some flexibility in what I can do with my personal portfolio. And I'm excited about doing that. And you'll see an announcement when that happens. So... But I'll also point out I'm personally subsidizing my existence at Intrusion as well. So every month I'm making a contribution so that I can be here and do the things that we're anticipating doing. And I'm happy to continue doing that as well until we can get this rocket ship really launched.

Okay. Thank you. Good luck, Tony. Thank you.

Your next question comes from the line of Ross Taylor with ARS Partners. Your line is open.

Yes, thank you for the chance to ask the question. When I listen to you describe the financing, it strikes me as it makes sense if you believe that you are within six months to a year of a major revenue ramp that's going to push you to where you actually become a free cash flow generating business. Is that a safe assumption to make?

I think it's safe if you take it in the context of annual recurring revenue being the force multiplier, if you will, on the stock price. So in that sense, we believe that the current stock price way undervalues the company, and I'm counting on the fact that In the second half of the year, we can demonstrate that with annual recurring revenue and what that foretells for the future. In terms of actual cash flows, there's any number of scenarios that it's a little too early to predict. With success with the products, we would probably increase our R&D expense. We could consider doing acquisitions. We could consider any number of things, and all of those have impacts on cash flow. So a little too early at this point to forecast that, but our plan is to be responsible with the resources that we have and do what's prudent and always focus on enterprise value for our shareholders.

Now, do you foresee any of the channel or strategic partners that you are looking at working with and who are looking at utilizing Shield, providing capital up front in any way?

That could be a scenario. You know, with the big strategic partners, to make this successful, there's always going to need to be some investment on their part. and some investment on our part to bring this solution to market jointly. And part of that formula could be a capital investment. We're not requiring that at this particular point, but we're not ruling it out either, and it's been a part of the discussion.

Okay. Obviously, given what the stock price is, getting a strategic investor would probably send an exceptionally powerful message.

I agree.

I look at this company and really see it as what I'll call a late stage venture cap. But unlike many late stage venture caps, you have the product, you have another product consulting that has the potential to return to where it was prior to COVID, which was generating north of $10 million a year in revenues, which would be a meaningful increase. And as a result, this strikes me as, you would be able to find strategic investors. I mean, you're not looking for a lot of money. You're really looking at starting this $10, $15 million, $20 million, you were saying. It strikes me as this would be a real, I mean, it almost might be too small a deal, but it's a very lucrative deal, it sounds. What kind of response have you gotten when you've approached strategics?

They've been very enthusiastic. And then The devil is always in the details. We're now into the details and figuring out how to work together and what makes sense and those kinds of things. I agree with you. We're optimistic in terms of where we can go. I'm not going to belittle it. We've got work to do. We're all going to be working real hard to make sure we get there. energy and focus in the company that I'm very pleased with and morale is high and we're, you know, we're ready to take the hill. So I'm pretty excited about that.

Speaking of taking the hill, the call that announced your hiring also announced that the company had a shield system in place, at least one with the Pentagon or the DOD, however you wish to refer to it. Can you tell us what that system is doing there and who it's being used by?

I'm afraid that's not something we can discuss in this kind of a forum, unfortunately.

But it's safe to say that, I mean, as an outsider looking in and with people I know involved in cybersecurity in the Pentagon, it would strike me as this product is actually being utilized. The fact that it's being utilized by the Pentagon, says that you've passed a pretty strenuous testing hurdle.

Yeah, I wish I could comment on this, but I think that I would get myself.

Your inability to comment says a lot. Your inability to comment says a lot because it's just sitting in the back room being tested. It probably isn't a big deal, and you would be able to comment on that. So thank you very much for that. Now I'll pass it on to the next question. All right.

Thanks for your questions.

You're welcome. Thank you.

There are no further questions at this time. I'll turn the call back to Tony Scott for closing remarks.

Well, I'd like to just conclude the call today by saying that I really appreciate the support that I feel from our investors and many of you have called and offered your insight and sharing your thoughts on the company and things that we could do going forward. And I'm grateful for that. As I said in my remarks, I think the team is energized and we're ready to scale to new heights. So we're looking forward to what we can do together as a team in the next few months and show the world what we've been working on. So I appreciate all the support. Keep the cards and letters coming, as they used to say, and I'll look forward to talking to you in the near future. Thanks so much.

This concludes today's conference call. Thank you for joining. You may now disconnect.