Intrusion Inc.

Thank you. Welcome to Intrusions, first quarter 2023 earnings conference call and webcast. At this time, all participant lines are in a listen-only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared comments. Please note, that this conference is being recorded. An audio replay of this conference call will be available on the company's webcast within a few hours of this live call. I would now like to turn the call over to Josh Carroll with Investor Relations.

Thank you and welcome. Joining me today are Tony Scott, Chief Executive Officer and Kimberly Pinson, 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 remind everyone that statements made during this conference call relating to the company's expected future performance, future business prospects, future events, future performance from our business partnerships, future terms or agreements relating to financing or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Please refer to our SEC filings including our 10-K 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. GAAP reporting, we report certain financial measures that do not conform to generally accepted accounting principles. During the call, we may use GAAP measures if we believe it is useful to investors or we believe it will help investors better understand our performance or business trends. With that, I'll turn the call over to Tony.

Thank you, Josh. Good afternoon, everyone. And thank you all for joining us today. In today's call, I'll cover our Q1 results as well as provide an update on our strategic, operational, and financial objectives, each of which I'll talk about in greater detail. Total revenue for the first quarter was $1.3 million, a decrease of $0.5 million compared to the first quarter of 2022, and down $0.1 million compared to Q4 2022 revenue. The decline in total revenue for the quarter was largely due to the full quarter effects of the loss of a consulting contract that we previously disclosed in Q4. And while the revenue growth that we expected as a result of our sales and marketing efforts related to our Shield family of products is taking significantly longer than I expected or desired, I feel positive about the underlying progress in our business. from a product and partner perspective, and we continue to receive very positive feedback on our underlying technology and the efficacy of our solutions. Turning now specifically to our Shield family of products, Shield revenues for the first quarter were 0.3 million, which was flat sequentially, and up 0.1 million compared to the first quarter of 2022. Intrusion Shield revenues for the first quarter represented 24% of total revenue. And while it's still too early to project the full year impact of the new Shield branded products we introduced last year, Cloud and Endpoint, we are seeing clear and growing interest in these new products in addition to our hardware solutions. In addition to the interest we are seeing in our suite of Shield products, we announced in early March that Intrusion had entered into a reseller agreement with NetGate, the provider of the PFSense Plus family of firewall products. This agreement allows Intrusion to sell the NetGate PFSense Plus firewall and Intrusion Shield as a package. PFSense is trusted by individuals, businesses, and governments all over the world. A combination of our two products is an exciting entry into the cybersecurity marketplace. I believe that this combination will be welcomed by new customers as well as our installed base due to the customer awareness and adoption of PFSense, which is already very high. I'm hopeful that we will be able to share with you some new customer announcements as a result of this partnership in the near future. In addition, we recently signed an agreement to partner with SEI Investments Company, or SEI, to jointly market our products to SEI's client base as well as new prospective customers. SEI is the leading provider of technology and investment solutions in the financial services industry. They serve 10 of the top 20 US banks and 49 of the top 100 investment managers worldwide. With capabilities across investment processing, operations, and asset management, SEI works with corporations, financial institutions, financial professionals, and ultra-high net worth families to manage, change, and help protect their assets for growth today and in the future. And SEI also manages, advises, or administers approximately $1.2 trillion in assets. In addition to these services, SEI assists its client base with cybersecurity protection through their SEI Sphere Division, which offers a managed cybersecurity service capability to SEI customers. This partnership is moving quickly, and we've already made several customer presentations with SEI. We anticipate that this partnership will grow into a meaningful relationship and additional revenue for both Intrusion and SEI. We've also engaged with an alliance of business development professionals who are leveraging decades of experience with the cyber and consulting divisions of one of the big four consulting firms. This alliance has quickly expanded our base of qualified leads and opportunities and brings the potential for significantly larger deals. And like our SEI partnership, we've moved quickly to operationalize this aspect of our sales motion and have already had very positive feedback from several potential customers that we've jointly presented to. Turning now to our consulting business, we experienced a decline of 0.6 million in revenue year over year and a decline of 0.1 million sequentially. And as I noted earlier, Q1 consulting revenue now reflects the full quarter impact of the loss of that one consulting contract in Q4. However, through our team's hard work, we've been able to fill much of the revenue gap from this loss, and we continue to expect growth over the course of the year from our consulting business as a result of our partnerships, our business development efforts, and referrals from our business advisory board. As you may have seen last week, we announced a significant renewal in our consulting business from a major purchaser of our services utilizing our applied threat intelligence engine. And this renewal further exemplifies the confidence in the ongoing need for Intrusion's critical cybersecurity solutions and validates the need to be proactive in protecting vital networks, utilizing tools with strong intelligence, and staying focused on emerging threats. We also announced in early March that Intrusion had partnered with NetFoundry to support Zero Trust cybersecurity standards and principles in our endpoint products. This Zero Trust approach has been strongly endorsed by the US government and is increasingly popular in the private sector as well. We've been working together with NetFoundry for some time now to integrate NetFoundry Zero Trust networking into our Shield endpoint, which will give immediate benefits to customers seeking better protection for their endpoint devices. In particular, this technology approach eliminates the potential for compromise as the result of man-in-the-middle based attack vectors. Now, during the first quarter, we made the difficult decision to further reduce our headcount and eliminate certain contractor spending as we deliberately moved to reduce our cash burn rate. We also reduced our spending in other non-headcount areas to better align our available cash with the realities in our business from a revenue perspective. This is never an easy decision, as many of you know, and we greatly value all of our employees and contract partners. I believe we've taken swift and appropriate and adequate actions without sacrificing our long-term growth for our objectives for the business. Finally, we've continued to work closely with Streeterville regarding potential modifications to our existing debt agreements to provide more flexibility for our business. Kim will provide more details on our financial positions. However, it's worth noting that we believe our expected capital needs have been significantly reduced as a result of our lower cost structure and our anticipated pipeline of new business combined with the various funding levers and tools that are at our disposal. I recently attended the annual RSA Cybersecurity Conference in San Francisco and had a chance to observe firsthand the state of the cybersecurity industry. My takeaway from that event is that Intrusion is technically well positioned to provide complementary enhanced capabilities for a wide variety of solutions. And at the same time, there's an abundance of solutions in the marketplace, often with very little objective differentiation in terms of capabilities or effectiveness, for that matter. I heard repeatedly from buyers that they're exhausted by the complexity of managing a complicated set of solutions that they're seeking to consolidate to fewer suppliers with more objectively provable value for the solutions that they do invest in. And what I continue to have confirmed from partners and customers is that our unrivaled applied threat intelligence capabilities provide a much needed and unique layer of protection and help illuminate where existing tools fall short in protecting the network and critical organizational assets. I believe that while we have to earn our place in the set of solutions a customer may choose, we do have the right combination of ingredients with our NetGate and NetFoundry partners to satisfy the needs of any customer seeking better and more cost-effective cybersecurity solutions for their enterprise. I'll have a few more comments later, but with that, I'd now like to turn the call over to Kim for a detailed review of our first quarter financials.