Intrusion ‘optimistic’ on demand for products, services in consulting business

Intrusion issued a letter to its shareholders from its President & CEO, Tony Scott, which read in part, “In advance of the upcoming shareholder vote on several important matters, I wanted to provide you with my personal perspective of the journey we’ve been on, and the rationale behind the proposals that are before you. Fiscal 2023 was a year marked by multiple key product and financial milestones as we continued to execute our strategy. While the year was filled with its challenges, we are proud of what we were able to accomplish, such as a meaningful increase in bookings, including the finalizing of a major $5 million award, an escalating number of POVs and POCs in our pipeline, our product development team delivering exciting new capabilities to our suite of products, and the successful closing of a private offering…The Company is considering all options available to it to regain compliance and maintain its listing on the Nasdaq Capital Market. In an effort to regain compliance, on December 15, 2023, the Board of Directors unanimously approved and declared advisable a Reverse Stock Split of our issued and outstanding common stock. We are asking shareholders to approve the Reverse Stock Split at our Special Meeting on March 15, 2024. If approved by shareholders, the Board, in its discretion, may effectuate the Reverse Stock Split at a ratio of no less than 1-for-2 and no more than 1-for-20. If approved by shareholders, the effective date of the Reverse Stock Split will be determined by the Board of Directors and may occur shortly after the Special Meeting. As part of our plan to meet the $2.5 million stockholders’ equity standard, the Company is considering its options, including the possible conversion of certain outstanding debt into preferred stock. Such an arrangement would be subject to the Company and the debt holder entering into a definitive agreement and, depending on the amount of debt to be converted, shareholder approval of certain amendments to the Company’s certificate of incorporation that would have the effect of eliminating our currently designated Series 1, 2, and 3 preferred shares, such that we would have 5 million shares of authorized, undesignated, preferred stock…As you may have seen from our recent press release, we are continuing to see an increase in bookings, such as the $5 million multi-year Intrusion Shield agreement with a large telecommunications provider to provide Intrusion Shield support for its data centers. The terms of the award allow for further expansion of the use of Intrusion Shield, with the possibility of generating additional revenue after the completion of the initial set of projects. This new agreement and other contracts signed in recent months are directly related to our growing reseller base which are continuing to lead to new opportunities to showcase our technology and generate new business. Our reseller agreements have also helped us create a robust sales pipeline, and we are focused on converting existing POVs and POCs to revenue-generating customers throughout fiscal year 2024. It is our belief that with this growing traction in the marketplace for Intrusion’s Shield technology, we will be able to provide both proof points and revenue that will help us secure agreements with larger technology players. Finally, while government spending decisions continue to be delayed, we remain optimistic about the demand for our products and services in our consulting business, and we believe that we will see some positive consulting customer growth, as well as the opportunity for rate increases and other revenue generating enhancements to existing customers.”

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