Intrusion Inc.

Welcome to Intrusion, Inc.' 's first quarter 2024 earnings conference call and webcast. At this time, all participants 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 this conference is being recorded. An audio replay of this conference call will be available on the company's website within a few hours after this 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. This 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 related to the company's expected future performance Future business prospects, future events, or plans may include forward-looking statements as defined under the Private Security Litigation Reform Act of 1995. 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 US GAAP 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 is useful to investors or if we believe it will help investors better understand our performance or business trends. With that, Let me now turn the call over to Tony for a few opening remarks.

Thank you, Josh, and good afternoon, and thank you all for joining us today. As I think many of you know, the first quarter and the first few weeks of the second quarter have been filled with multiple milestones as we've worked through the many challenges presented to us. I'll cover many of the specifics in greater detail shortly, but I'd like to first begin by discussing our current stock price and market cap, which I believe are grossly undervalued and are not reflective of the true comparative value of our company and our technology. This issue remains top of mind for me and I'm sure for all of you. Multiple members of our executive team, including myself, and many of our existing long-term shareholders have continued to increase their investments in Intrusion stock, for which I am grateful. You've heard from me on multiple occasions about my optimism for the future of Intrusion. based on our unique core technology and based on our continued investment in and development of our unparalleled technology to ensure that we can address the most challenging cybersecurity issues of our time. And we've recently announced some important customer wins which validate that optimism. And I want you to know that my optimism for our future is only increasing. Turning now to our sales activity, during the last call, we discussed the addition of seven new logos, and we continue to build off this strong bookings momentum with the addition of five new logos. These new customers operate in a variety of different sectors, including natural gas exploration and development, water utilities, and the government sector. The deployment of our technology and the revenue associated with these deployments will ramp up over the next few quarters. This is a pattern we expect to see more of with respect to the larger enterprises that we're engaged with. Now for an update on some of our recent partnership activity. As you may recall from our fourth quarter earnings call, we were notified that through our partner I-1 Resources in the Philippines, Our technology had been down-selected to be a part of an award that would help protect the cybersecurity and integrity of the national elections in the Philippines. We're happy to announce that we've received confirmation a few weeks ago that our partner, I-1 Resources, was awarded the final contract to supply secure electronic transmission services for the 2025 midterm elections in the Philippines. This is an important contract for both I-1 and Intrusion and has a total bid price of approximately $25 million. The secure electronic transmission services are scheduled to be fully operational by November 2024 and will begin contributing to our earnings in the second half of this year. We are working with all the relevant parties to determine the optimal deployment architecture for this solution, and we will know much more about the specific quantities and deployment timeline for our solutions shortly. We anticipate the revenue from this one contract will be a minimum of 1 million ARR, with the likelihood that it will become greater over time. We are continuing to see additional momentum from some of our other partnerships as well, which is evident by our announcement last week with our partner, Total Information Management, with whom we announced an agreement to enhance the supply chain security for their customer, Orca Cold Chain Solutions. Under the terms of the agreement, TIM will provide intrusions advanced threat detection and prevention solutions to ORCA cold chain solutions to help protect their sensitive data and prevent disruption to the cold chain, ensuring the integrity and safety of perishable goods. This new agreement comes after a successful pilot program with ORCA cold chain solutions and resulted in the company deciding to purchase Intrusion's applied threat intelligence for three years. This agreement is already in effect, and we will begin to see the revenue benefits of this agreement begin in our second quarter. We've also been awarded a new order for intrusion sealed from our traditional government customer base. We began servicing this in Q2, and the revenue from this new order is expected to more than offset the lost shield revenue we discussed in last quarter's call. but it also marks a milestone in terms of government adoption of shield technology above and beyond the traditional consulting business we've long enjoyed. To wrap up on the partnership front, we also announced back in April that we'd agreed to acquire a minority stake in Clever AI, a Houston, Texas-based artificial intelligence company in an all-stock transaction. CleverAI is a cutting-edge technology company at the forefront of the artificial intelligence revolution and has been helping organizations thrive in the digital age by developing innovative and practical AI and machine learning solutions that assist in transforming businesses generally. CleverAI currently operates in a wide range of industries, such as healthcare, security, finance, and IoT. Over the past two years, Clever AI has been both a partner and a customer of Intrusion, assisting with both the design and development of Shield endpoint and cloud solutions, as well as incorporating Shield technology as a part of its customer solutions. We are excited to make this investment in Clever AI, which will not only continue to help improve our shield technology in our evolving marketplace, but will also help broaden our customer penetration into multiple industries. Last week at the RSA conference, every supplier of cybersecurity technology in attendance was touting its AI capabilities. and we will not be left behind in this important area. With respect to our product development efforts, we're continuing to invest in our Shield technology overall, and specifically in our efforts to strengthen the multi-instance management aspects of Shield, as well as additional capabilities in our endpoint and cloud solutions. including continuing to enhance our AI and machine learning capabilities. All of this development is driven by customer input and market demands, and as I've said before, gives me confidence that we can be relevant for a long time in the future. Now, briefly on to our financials, as you'll hear from Kim later in greater detail, total revenue for the first quarter was 1.1 million, representing a 0.2 million decrease on a sequential basis. The decline in revenue during the first quarter of 2024 was driven by a decrease in consulting revenue. It was primarily the result of the continuing resolution with the federal budget not being approved until the last week of the first quarter. That hindered the timing of task awards on existing contracts and the issuance of new contract awards. With the recent awards I've mentioned, we expect that we will see meaningful growth in the second half of 2024. And finally, before I turn the call over to Kim to cover our financial results in greater detail, I would first like to spend a few minutes discussing the recent steps that we've taken to regain compliance with NASDAQ for continued listing on the NASDAQ capital markets as it relates to the minimum bid price of $1 and the equity standard. On April 22nd, we announced that we had closed on a private offering pursuant to which we sold an aggregate of 1.3 million shares of our common stock, each of which is coupled with a warrant to purchase two shares of common stock at an aggregate offering price of $1.95 per share. The private offering resulted in net proceeds to intrusion of $2.6 million. And we intend to use the net proceeds from the private offering for working capital and general corporate purposes. This offering was the final step in our plan to achieve compliance with the NASDAQ minimum equity standard. And as a result of this private offering, our recently effectuated one for 20 reverse stock split, and our exchange agreement of debt to preferred stock with Streeter Real Capital, we received notice from NASDAQ on May 1st, notifying us that we had regained compliance with the minimum bid price and the equity requirements for continued listing on the NASDAQ capital markets. I would like to thank our staff, our partners, and our long-term shareholders for helping us execute our plan to regain compliance. With that, I'd like to turn the call over to Kim for a more detailed review of our first quarter financials. Kim?