Q2 2021 Intrusion Inc Earnings Call
Good afternoon, and welcome to intrusions second quarter 2021 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 Azure.
Under today's conference call is being recorded for replay purposes, I would now like to turn the call over to Joe a crowded I'm sure.
Shelton Group Investor Relations Joe. Please go ahead.
Good afternoon, and welcome to the intrusion second quarter 2021 earnings Conference call I'm Joel the Cromwell, its managing director of Shelton Group Intrusions Investor Relations firm joining me today are.
Co founder and CTO Joe had.
The company's CFO Franklin Burn and also the Chief Marketing Officer, Gary Davis also on today's call is a truth as chairman of the board tiny Lovecchio, who will be available for questions. After managements prepared remarks.
Before we begin I want to remind you that todays conference call may contain forward looking statements regarding future events, including but not limited to expectations for intrusion this future business financial performance and goals.
And industry adoption of shield technology successfully bringing to market intrusions design pipeline executing on its business plan anticipated capital needs as well as the engagement of investment professionals to assist the coffee.
These and all 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 2020 Form 10-K filed with the SFC on March 9th.
2021, and other SEC filings made from time to time in which we may discuss risk factors associated with investing in a true.
All forward looking statements are made as of the date of this call Thursday August 12, 2021, 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 intrusions web site at Www Dot intrusion dot com.
With that it's my pleasure to turn the call over to Franklin Franklin. Please go ahead.
Well, thanks, Joe and thank you to everyone, who has joined us on our call today.
Clearly there have been a number of significant developments at the company since our first quarter conference call on.
On July 20th we published a press release in which we provided preliminary revenue results for the second quarter.
As part of this press release, we also announced certain organizational changes and new strategic activities, including the engagement of an investment banking firm to evaluate various funding sources as well as potentially constructive longer term strategic options.
Additionally, we announced that intrusion CEO, Jack Glenn had left the company.
In conjunction with these developments the board asked Joe head and me to assume operating responsibilities until a new CEO could be appointed.
It is our aim to address each of these developments during the course of today's call.
Let me start with a review of the company's second quarter financial results.
Second quarter 2021 revenue was 2.1 million, which was in line with the preliminary revenue results. We reported in our July 20th release.
This compares to $1.9 million in the first quarter of this year and $1.7 million in the second quarter of last year.
The majority of the second quarter revenue consistent of our government business.
Even though our shield revenue was much higher in the second quarter than in the first and only represented approximately 7% of our total second quarter revenue as it was still in the early stages of deployment.
As indicated in our recent announcement the ramping of shield solution has been slower than anticipated due to longer customer evaluation cycles.
We had hoped our appliance model, but allow customers to simply plug the platform in and you shield immediately we found that customers actually wished evaluate additional metrics in this renders the actual time to close more in line with the procurement processes for normal enterprise security software sales.
Activity in our government sector remained stable as reopening has occurred and we expect this recovery to continue in the coming quarters.
Gross margin in the second quarter was 63% as compared to 66% last quarter and 61% in the second quarter of 2020.
Second quarter operating expenses were $6.9 million compared to $5.1 million last quarter and $1.7 million in the same quarter a year ago.
Included in these operating expenses were increases in noncash stock compensation expense of <unk> 6 million, resulting from the rollout of our 2021 stock option plan and <unk> 2 million in legal expense attributable to our annual shareholder meeting and ongoing legal matters.
As indicated last quarter major increase in our operating expenses was primarily due to the additional hiring we had done to expand our sales and leadership team combined with increased marketing spend around the development and launch of shield.
At quarter end, our total head count was 112 compared to 80 in the prior quarter.
In conjunction with the previous mentioned developments on July 30, we took decisive action to significantly reduce expense and our cash burn by implementing a reduction of force.
After the reduction in force and additional recent terminations, our head count has been reduced to 76 rigs.
The reductions were made across the entire company with some of the largest reductions coming from the sales and marketing and general administrative areas.
Net loss for the second quarter of 2021 was 5.0 million or -28 per share on $17.6 million weighted average shares.
Compared to a net loss of $3.9 million or -22 per share in the prior quarter.
And a net loss of $1.7 million or minus <unk> <unk> per share in the second quarter of 2020.
Turning to the balance sheet at quarter end June 32021, the company had cash and cash equivalents of $9.3 million, which is down from $13.1 million at the end of the first quarter.
Working capital was $7.3 million and we had no outstanding debt at the end of the quarter.
As previously indicated we believe the company's current cash position combined with a slower ramp of revenue from shield are likely to result in the need for additional capital in order to fund near term operating losses and execute on our strategic growth initiatives before we reach profitability given.
Given these expectations on August 5th the company completed a multipurpose shelf registration, which provides the flexibility to take an additional capital through various types of security transactions.
I would like to emphasize that the primary intended purpose of the shelf is to satisfy the potential requirements for additional capital in the near term at the discretion of the board.
As of today, the registration has not yet become effective.
Separately the company is evaluating other potential funding and long term strategic options.
These valuations are still in the early stages.
Both the company and its board firmly committed to considering all potential options that are consistent with our goals of accelerating intrusions growth achieving improved operating results as well as maximizing shareholder value.
Regarding the company's outlook for the third quarter together with recent developments our near term visibility remains very limited with respect to both the timing of recovery of the government business and the ramp of our shield revenues.
Given the difficulties in forecasting this respective timing some of which is outside the control of the company. We are maintaining our policy of not providing quarterly guidance.
We will however continue to reevaluate our approach on an ongoing basis as the business and the visibility in future.
Quarters.
With that I'd like to turn the call over to Joe head for an update on current market dynamics and our product initiatives Joe.
Franklin I'm pleased to join you on today's call as many of you know I'm a cofounder of intrusion have been at the company since 1983 I am speaking to you. This afternoon, if someone who's deeply invested in the company's success, both professionally and personally therefore, I understand and share in any disappointment felt by my fellow shareholders, but my focus remains on enabling.
Sales by providing technical clarity on what we've accomplished knocking down barriers to sales by completing bug fixes filing new patents and developing new features and shield I remain confident in the long term opportunities for intrusion as I believe we have a highly differentiated cyber security solution that implement zero trust in a Nash.
No way is easier to install and is underpinned with one of the most extensive threat intelligence databases in the world. It's the only product that I am aware of that uses historical IP reputation to determine if you're at risk and it determines immediately if the connection is good or bad that's especially important with zero day in.
Malware free attack techniques, which typically start with a call home from an agent that is already on your network. It is covered by two existing patents.
Last August we filed a provisional patent and this provisional will be supplemented as a formal filing this month.
Which isn't divided into two patents following up on a provisional filings last August I've.
Witness the technology work in the lab and the federal government and D O D to defend against some of the world's most sophisticated adversaries and also successfully deployed and apply that private enterprise customers to stop cyber attacks. The point I want to make unmistakably clear is shield works, it's simply a matter of ramping up our go to market.
And reducing the sales cycle time, my predominant focus at the company over the last several years has been on our core government business. So I'll start with a brief update on this area for our base government business has remained more or less flat for a long time. This business is steady and renewing with long standing customers.
To continue renewing as they have for years, some have slight increases expected, including a few new program starts in the last half of the year. So this business is expected to continue at historical run rates with a slight trend up ship.
Shifting to our enterprise business over the last several quarters, we've made substantial progress with the launch and commercialization of our shield solution. We took shield from a concept in late 2019 to working beta in early 2020, and finally, the general availability in January of 2021, as with all new product.
As we had early customers, who were patient and supportive while helping us get the solution to market, but some customers found certain bugs and corner cases, which they felt needed fixing.
For March 10th through early July 2021 we made upgrades to shield fixed several bugs and started shipping the latest version in July.
We've also separated our core shields code updates from our reputation whitelist updates. So these can be made daily or as needed.
Things, we upgraded the most important one was related to a future Google tracking change where DNS common names are beginning to be used instead of cookies to track users. This was a fundamental change in how DNS redirect chains are used in this change in shield rules prevent false positives blocking otherwise good sites to ensure our false positive.
Rates stay very low going forward.
As for the non Geek summary, I've told the Salesforce there are no showstoppers or reasons to hold back.
Was good when we launched it and is far superior with the July 2021 release, we will continue to evolve shield to meet the needs of the market.
We continue to be committed to a channel first distribution model for shield, both domestically and internationally to help reduce sales cycle times and barriers to entry. We're also seeing strong demand in the federal government and we will continue our focus there.
I think it's critical that we better leverage our distribution partners to introduce prospective customers to the benefits that shield offers to their security.
Although we have secured a few early customers, we're working diligently on signing more customers of our initial two large customers. One is proceeded with a deployment plan and the other has changed at sea ISO and hasn't committed to a deployment schedule yet, but the overall process of launching a new cyber security solution to the marketplace.
And the implementation of our solution across a global organization has been slower than we anticipated, but that has not changed our focus or belief in the efficacy of shield and the valuable protection. It offers customers in helping them fight the growing war on cyber crime with so many recent global network breaches, it's very clear the market needs a more effective.
<unk> solution to these threats, we remain convinced that shield stands to be a critically important part of the solution.
Overall interest in our solution remains high and the recognition we are receiving is increasing.
You should know that we're establishing a new advisory board of technical cyber security experts and executives who are collectively serve as a valuable resource to help us further refine and optimize our go to market strategy. There are already opening doors for us in assisting us in new opportunities. We have also reached out recently to independent labs and.
Product reviewers such as Idc's, former research Vice President Charles Khalaji doing currently to cyber security consulting and should have his review of shield by the end of the month and 10 mile Square a product testing company has just published its findings from their testing of shield that we can make available to customers we hope.
These new reports will add new objective perspectives will further validate our claims regarding shield. Finally, we've asked our CMO Gary Davis to apply the data driven rigor and go to market discipline. He brought to our marketing efforts to lead our sales team and build a more consistent and predictable sales forecast driving higher closed.
Deal volumes. He will also drive tighter alignment between our sales and marketing teams. He started in this capacity earlier. This week now Gary will share a few words about participation at the black hat event last week.
Thank you Joe I look forward to applying the techniques they use that companies like Mcafee Intel to help propel shield efforts on the cell surface going forward.
Let me now share some results from our presence at the important Black hat Security conference last week for those unfamiliar.
I'm here with our space Blackout is one of the most significant conferences and cyber security.
This year it had both the physical and virtual presence.
Our booth was between crowd strike and dark trace it's difficult to say, specifically, but I would say we had over twice as much traffic either of those companies. In fact, we had such a long line at our booth that some of the dark <unk> boost that started the survey those waiting in our line.
We had four live demo stations, which are busy nonstop.
Some verbatim comments from those attending include you guys look like you're here for business I've seen you guys everywhere here at the event and want to find out more about your product and that's just a sampling I could not be happier with how the event went we are still working on the numbers, but between the virtual and live event I would say that we now have over 200 qualified <unk>.
<unk> and our new channel partner leads to work on back to you Joe. Thanks, Gary closing I want you to know that we understand how difficult. This period has been for you our valued investors. We want you to know that we still believe firmly that shield is a powerful and effective solution for helping organizations fight cyber crime, which as of May.
<unk> global crisis today, although the sales cycle for shield will take longer than we anticipated. The feedback we continue to receive from our customers and prospects remains encouraging.
More details will become available regarding our progress in the areas of outlined we will provide them to you as soon as we can.
On behalf of intrusions employees and the board I want to thank you sincerely for your patients Trust and support as we continue our efforts to grow our government business. Once again, while we also are working to establish shield is a unique and powerful tool for fighting the increasing prevalence of global cyber crime with that we will open the call to your questions.
Operator.
Thank you Sir we will now begin the question and answer session. If you would like to ask a question. Please do so by pressing star one on your phone once again that is star one on your phone to ask a question.
Your first question is from Zach Cummins with B Riley Securities.
Great.
Franklin Hi, Joe Hi, Gary Thanks for taking my questions and I appreciate all the incremental information around the recent changes at the company.
Franklin just starting off.
Nice to see that some revenue is generated from children this quarter.
Any sense you can give us on kind of the average monthly price being paid is it still safe to assume somewhere around 20 Bucks 20 Bucks a month.
Yes, I know you know our policy is not to really talk about what's in the customer contracts.
We're not going to do so here, but.
Yes.
Joe any more of a you want to add to that I don't know.
And then I got much more to add to that Jack.
Got it understood.
In general, though we're quoting it at the 20 and then our resellers get a discount off of it. So you know in general that's our our going in is it sort of 'twenty or.
14, if you look at the 30 off thing.
Got it that's helpful.
And in terms of the backlog I guess of signing seats.
Last up.
The other comment I'd make though is that there's certain markets that we've had a little progress in education, where you start looking at the ratio of SaaS to students and so there is some.
Price suggests and you have to do in the educational market that's reasonably.
Same across the industry if that makes sense.
No understood completely that's that's helpful Ed.
I mean in terms of the last time, you updated on kind of the backlog that your average yield I think it was over 50000.
Any update you could give around that it sounds like at least one of those customers is moving forward while while the other is still kind of re gathering itself. After a change in leadership.
Yeah.
I think the best answer is where.
He is in the process re stack and all of our opportunities as well as the things on the backlog to see how those will progress and I think our idea is to get get that stuff.
Less fuzzy state and then you gave you guys some periodic update on how thats, how thats proceeding.
Like Gary said at Black hat and in the commercial World. We're chasing a lot of nice opportunities. The question is how do you put numbers on them and when exactly I think your question is more tied to past deals that we've closed right.
Yes, that's correct.
Yes so.
Yes one's got a schedule in some good clarity for you on revenues as the quarter's click buy.
But once once preceding ones pausing, but then we have some others that we're working on it'll be.
Falling in place as we go forward.
Understood that's helpful and Gary I mean with you taking over the sales motion now I mean can you give us a sense of maybe some of the changes that you're thinking of making and some of the techniques that you've used in your prior experience here that you wanted to adopt and triggered.
Well certainly were.
We're going to stay channel first that gives us the quicker time to market.
Typically resellers and distributors have a network of customers that can bring to the table. So we're going to stay committed to that.
I have noticed just to be transparent change happened. This week, so still kind of working through and understanding where we need to lean in a bit more.
One of the areas I think that we could.
Drive more traction is coming up with a comp plan, it's more compelling for our reps as well as our channel partners, we need to make sure that they're properly incentive and so I'm looking to things. They can do there to make sure. They have the proper motivation incentives to go sell.
As possible that's one thing.
We're also looking at finalizing a value added distributor that covers Europe and the middle East.
We're also having discussions with a top five distributor that has some 31100 resellers in their network and are really close to signing them as well. So there are several things we're doing to make sure that we get.
As many retailers as possible getting shields in front of their end user customers.
Understood. That's helpful. I appreciate the context and Franklin I saw a bit of a nice jump in differed revenue here in Q2 on the balance sheet is that related to shield revenue being booked.
No that's not that's actually our legacy product.
Okay.
From a cash receipt.
Yeah got it okay helpful and I guess on that legacy business it sounds like.
It's starting to stabilize and maybe even see an uptick there.
What's the overall strategy I guess in terms of trying to leverage that to drive more shield adoption in the government.
Yeah, I'll tell you a little bit about the the way I'm seeing it moving and what I'm hearing and then Joe might have some more input on Hana.
Leverage that into the shield business, but.
Yes, we are seeing an uptick in.
I Hope and believe you will see an uptick in as we actually move more into Q4 on that.
As you probably know some of the congressional budget had been on kind of on hold for a little while sitting behind infrastructure budget that was just approved so we're here and it's starting to get calls about.
Potential new business there so.
<unk>.
But.
Joe you want to put some words in my prepared remarks about the government business you know, but it's been relatively flat for a while with.
Reasonable contribution to the bottom line on the on the profit.
The G P M side.
We do see.
A couple of new program, but one new program start that.
That's a good one plus we've got some increased spin and some legacy ones. So you know I mentioned in the comments that we expect an uptick in revenues from the legacy and then if you turn to the shield government side.
I guess the center of me and Gary <unk> focus has been taken that to the commercial the boring commercial world. If you come out from a government Guy's perspective, However, I've got a number of government programs that they say they're picking us.
And they are rumored.
Amounts which are.
Which are non zero and appreciable.
Selling I would say.
But those haven't made their way through.
Wins, who's going to place an order for what but I do think there's some good uptick there and thats and Thats, particularly.
Leverages, both because of our long history, knowing the people that are making the choices.
They know that you need a product like shiel to get it done and were.
Yes.
We're already working from the side of being friends of the government Techies that know what works and what can't.
Understood that's helpful and Franklin in terms of I guess, just restructuring your overall operating expenses I mean head count down to 76, I believe you said now.
I mean, how should I be thinking about operating expenses, but as we kind of go forward here in terms of what you guys need to continue to pursue growth opportunities for shield.
No.
It's a great question, if you kind of look at our head count it kind of resembles on Q1 head count.
So.
I see right now by Q4, we're going to be our opex and employees et cetera.
It will be more in the Q1.
Range.
And that kind of makes sense.
I think we're kind of.
We're launching again, almost we're still different strategies different people different structures, a little bit, but we're we're launching just like we were in Q1. So Q4, I think is going to look a lot like Q1.
Q3 is going to be a hybrid REIT because we started a lot of this.
A reduction in force was.
Not quite midway in but a third way into the Q3 and.
And the winding down of some of the.
We're doing some cost initiatives that we've under under gone in Q3 that you'll see the full benefit for in Q4, So Q3 will be kind of a mixture between Q2 and Q.
Four.
Understood.
Yeah, absolutely I appreciate at Franklin and then in terms of.
You're funding for going forward I mean, it seems like you have some initiatives in place, but I mean can you just give us a sense of kind of where youre at from a cash perspective now.
And kind of how we should be thinking about the necessary funding going forward.
Sure sure and then.
You saw that.
We closed the quarter with a little over $9 million on the balance sheet.
We're going to be very judicious with our spend and so a little bit change of.
A approach here and.
We're going to find other ways to supplement that as we rollout the new shield product just a little slower than we originally anticipated so I know.
You've seen in and modeled and commented in your release today that.
About the shelf registration that we.
Last week, we do expect to use some of the funding from that to kind of help fund.
Some of the negative cash until.
Comes online fully in.
Feel pretty comfortable about it.
We've also talked about.
Other strategic options that are a little less.
At this time, which is kind of like.
Early discussion, so I'm not going to talk about those today, but im happy to talk anymore about the shelf.
Got it no that's.
Extremely helpful. I appreciate the insight and thanks again, guys for taking my questions.
Absolutely. Thanks Heng.
Your next question is from Russell Cleveland with Renn capital. Your line is open.
Turning to protocol once suggestion you know I do a lot of these calls so limit the questions to people, where you don't have something I'm talking for 20 minutes, but I've got a very simple question it.
It seems like shield and so that's a great idea.
And the sales cycle seems to be way off here. So give me some flavor about.
The sales cycle I mean, it seems like a no brainer for companies to do.
Join this.
You mentioned in your comments that it was.
More like other software.
Definitely some thoughts on why the sales cycle is long and how.
What do we think we're gonna have to do here to get the feel moving.
As it should be so it's all about the sales cycle, if you could comment on that.
Yes, 100%.
This is a product which is <unk>.
Our highly differentiated from anything we've ever seen before and I've been in the market for years and years as trials as well.
The distinction is the buying centers are the buying centers right and they're accustomed to buying software and services in a certain way right. So no matter how innovative shield is youre still going to have to be beholden to the process that a typical large company procurement would go through and I think that was the thing that we didn't.
Really respect when we were doing some more early planning and again I think youre spot on that.
The thing that we need that's going to kind of break through the impasse is once we get enough momentum with early adopters and those early adopters are kind of parroting, what we say it does along with these reviews and independent test that that's going to be the thing that's going to really help open up the the dam have you.
And really start driving a huge amount of opportunities to shield does that answer your question.
Well Yeah is it are we talking 30 days 90 days six months a year, what's your thought on the process now or maybe maybe we just don't know.
Well I think the typical sales cycle right now is closer to six months.
I think once we get that critical mass of customers under our belt is going to shrink significantly.
Probably the most aggressive we would ever see it was going to be probably 30 days and that's once you're well established well known and your value is well understood and in fact last quarter. I believe we had one customer that cradle to grave was less than 60 days. So some of those are happening now, but I wouldn't say that that's the norm that's more.
The outlier than what we are seeing a cradle. The wording is so great. Yeah, I guess cradle to whether you get the order.
Back towards of words.
Okay. Thank you so much I appreciate it.
Thanks, a lot thanks Ross.
Once again, ladies and gentlemen, if you have a question. Please press star one on your telephone keypad again.
Please press star one now.
Your next question is from Howard.
Perhaps with Wellington Shields.
Joe You had mentioned earlier.
How is everyone today.
Sure.
Say again.
Doug we were doing great go ahead sorry.
Two things one tell me about you mentioned two specific reports one from IDC and one from CMO that talks about shield and that it works.
You mentioned that.
Okay, you talk I'll, let me clarify that.
So let's start with element.
What we said we had an independent testing company called 10 mile Square, which.
Actually compared.
Shield to our marketing claims and we got the report back and I'm happy to report that.
I'm happy to say that the report was very favorable in that we.
She'll does in fact do what we claim it does which is really what we expect of the other group, we're talking to our product reviewers and one of those reviewers whose name is Charles ecology easy former VP of research at IDC. He's now has its own company and does security research and things of that nature, but that was just.
To give context to the type of companies and people are reaching out to do these reviews and test.
Okay given that.
Kenzie 10 mile Square report be put on the website center customers prospects.
Absolutely yes.
Isn't it for that and how do we know one of our goals was to have that ready before we went into blackout and we had.
A number of our resellers were there some of them were actually looking for independent confirmation.
We have that we can lock in low then they started bringing their customers by the by the booth So that was a.
Helpful thing to have.
Someone I know tended black hat and said that you guys were absolutely mobbed.
Tell me about it.
And a good way in a good way it was.
It was funny because we had.
This is our big coming out.
I think everybody would agree the intrusion forever had been kind of sitting in the wings waiting for something to happen.
And it was literally refreshing to be between crowd strike and dark trees, which are two goliath in this space right now.
All the traffic kind of going by them right to our booth.
And we were busy nonstop we had for demonstrations there are constantly being engaged we have a line for people wanted to get coffee. It was just the energy at 20 to 40 in the booth.
Time, the low ebb I saw was 30 minutes before close we had four people there and then we've got mobbed again, yes.
From a from a pure marketing and sales perspective, that's what you want when you leave that event and everybody's high Fiving in there.
And how we got to get all these new opportunities and start closing deals.
It's a good position to be in for sure.
Alright, let me go off on a tangent and get back to the original business.
<unk> Kop and savant.
You are several years ago before the before Covid before the government basically shut down you were generating 15% to $16 million in revenue.
What are your chances coming to that level say in Q4 annualized for of course.
We won't be that high again.
That that when we hit 15 that was sort of an aberration of a gift where we got nine three in unspent funds in 2019, if I remember correctly right. So if you look at our steady state. If we're in about 885 million a year and we'll do better than that this year, because we've got some new program starts.
But currently won't be I don't think it will be above 10 based on what we see right now.
So it's up like I said up a little but not stunningly.
So I think nine five rather where we get to with what we see alright.
Alright fair enough and at similar gross margins that you've experienced in the past is that it.
Correct statement, yes, no change there and then I do think you hinted at one thing we.
We do believe that.
Savant as a supplement to shield in the government space will be a thing.
Do deeper analysis, and we we've actually been so busy with shield and every other thing we've been doing that we haven't gotten around to come out with a new pricing model for savant, but I do believe that's the essential and will contribute and be an upside for us.
Two more comments, one trade Scott, how many bad IP addresses curran.
Currently have in your background of trace comp.
Last time I spoke with you you're talking about $3.5 billion.
Yes, I'd tell you address those are still those are still conservative and roughly correct. So that $8.5 billion. We've been quoting that has the 3.15.0.4 right is still about correct. However, we understated it to the extreme so theres a lot of IPV six in there.
It's actually like to turn to the 42nd power.
Of the Whitelist, that's already loaded, but even if people take off their shoes and socks I can't count that high. So we've stayed with the $8.5 billion for marketing purposes, but its conservative and amazingly lower than what we actually load. It's important from a marketing perspective that we have you highly defensible numbers right and you can come in.
Those type of numbers, they're easy for people to get their heads around and so we tend to lean into that number but to Joe's point the numbers much higher than that it's just you've got to be careful that you're marketing claims or something that people can understand right.
Yeah. So there is a very conservative numbers and part of the thing is I'm not going to give somebody a whole list. So they can jacket because that's.
That's a very valuable list.
Last but not least given the number.
The valuation of trace Scott whichever you and I go back many many years about the same question.
Certainly could I assume that is infinitely greater than it was last sale.
The stock.
$4.70.
Kind of February.
I believe so yes.
Thank you that's all I have I mean, if you look at our space just to add a little more color to that please most all the cyber security companies, that's what the value right that the threat intelligence. They have that informs our products is how they work and our threat intelligence to Joe's point is very unique and very substantial compared.
To every site period of companies I'm aware of so I think that that the share price and this is just my opinion is not reflective of just the value of that whats trace cop alone yes.
If you had it at shield.
If you had a competitor.
Who had something similar to trace Cup.
What number would you think he would have in terms of the number of bad IP addresses.
Well just to be clear most.
Cyber security companies don't use IP these signatures and it's very different.
And my last company, we talked about our global threat intelligence, having a petabyte of data, but it was all signatures. It was all based on a known malware we would create a signature to help stop that malware from infecting our customers' devices and what we do with shield and <unk> is very different from them that we're looking at IP. So we're.
Getting ahead of when something could attack you wouldn't affect you negatively so it's a very different type of threat intelligence its values no less it's just different.
But most I mean, most of the most of the block lists range about 300000, when you start looking at what's known by signature some of them.
Flower that up to $1 million, but we kind of start.
I think that.
The thing is it's really wrong about most people's approaches if you list all the things that you know are bad that's different than being the guard at the White house and only letting people in that you know that have a badge and so a white list says I know and I Trust. This IP in this house name a black lists as I know you were at <unk>.
Just a shooter.
Tonight for <unk>.
Bomber, but then there's that whole vast area of people that you don't let in your house.
They are just I don't know you so goodbye.
<unk> been quite list oriented.
As I have good reputation for these I just don't know the rest of these and as.
That space that lets us block.
Notable things because they come from.
Space for which there is no reputation so sorry for all the words on that but I think that that fundamental difference between.
Small blacklist and immense.
Trust.
Ratings.
Our secret lies.
Thank you both good luck to all of US are much appreciate it. Thanks. Thank you.
That's all I have.
Your next question is from Gary shade with Garry seed Auto your line is open.
Hey, guys.
Hi.
I was looking at our July 23rd at SEC report talked about Jack.
<unk> being terminated.
I wondered if you could tell me why.
Yes, this is Tony with Vecchio.
We've got.
Hi, how are you.
We basically have filed an 8-K and all that detail is in there.
Yes, I read it and it didn't explained very well.
To me what happened.
Yeah.
Oh, sorry go ahead.
One of them.
<unk>.
I mean, if you kind of look at what's happened.
Our short on revenue.
Went far beyond our expense levels, and we really need to recalibrate and fundamentally the the board and the CEO didn't necessarily agree on the strategy.
Sure.
I certainly wish that shield.
Taken off.
With the volumes that we had initially.
Hope for but it didn't so we're going to need it.
We needed to pare back our expenses accordingly.
What we've done.
We've also gotten a lot of interesting opportunities at Gary and Joe.
We will address in tactical for us so.
Tony do you <unk>.
Plan on staying on as the CEO or do your does your board have.
Who will carry on as CEO in the future.
Yes, it won't be me I'm, not an operating guy excuse me and I'm doing this until we kind of sort through all the plans and strategies.
And then we'll have a replacement.
Sure.
I can't tell you exactly where I think right now we're trying to get our arms around all the things that Gary and Joe Franklin have talked about.
Sure.
I've listened to.
Jack speak of Europe product and.
Artificial intelligence angle and the advantage that your products have over other companies in.
I've run my own companies, then certainly had the loan the money for years and years keep them afloat, while the the.
The sales are ramping up.
And so I was just concerned because I've invested $400000 of my money in infusion and I got to be honest with you.
The elephant in the room is.
I invested in Jack blunt.
Joe head or Franklin bird so.
I'm just worried about my investment and I just would like some insurance.
The board.
Is it going to take care of my investments.
Well.
We're definitely is interested in taking care of your investment in every other shareholders' investment.
I mean quite honestly.
We got behind on the revenue we got way ahead on hiring and we also had to have some fiscal responsibility here.
And.
If things are going to be slower we have to slow down the spread that's exactly what we're going to do.
And that's exactly what we've done.
That doesn't mean, we've lost interest I think if anything we have.
Additional validation that the product works.
Products as dynamic as Jack described so we don't disagree with that at all.
It's just that when things are slower you just can't necessarily.
Spending at a level that you can sustain.
So that's that's sort of the group.
Yeah, and borrow the money to.
To do just that well a lot of them.
Big companies.
Hey, you look excuse me that we compete with.
Hundreds of millions of dollars.
We raised 18 million were down to half of that.
So.
You got to live within what you can afford and we have.
I'm very very interesting opportunities and we're going to pursue those it may not go as fast as we had hoped it would go but what we really found is that the customers because our approach is a little bit unique compared to what the industry has seen said Gee I don't know if I want to let you inside my firewall initially.
Secondly.
We want to evaluate just a little bit longer so the overall picture that Jack painted a good picture, it's just going to take longer and we're going to probably have to slow down the spend which will take longer time to to get to where.
We would all hope we would've done sooner.
One last question.
The company opened a rehearing Jack.
We havent entertained that one way or the other.
Yes.
Well some of your shareholders Hope you do.
Okay.
Thank you you didn't know mhm.
And that concludes the question and answer session for today I'll hand, the conference over to Joe <unk> for closing remarks.
Thank you operator before closing the call I want to quickly highlight several upcoming events, which intrusion will be participating we plan to host meetings with investors at the HC Wainwright conference on September 14th.
And we will also attend two important cyber security technology conferences, the Gartner security and risk Management Conference September 'twenty through 'twenty.
And global Security Exchange September 27th the 29th then we're also planning to participate at Black hat in Europe in November please contact the Shelton group, if you'd like to schedule a meeting with us during the HC Wainwright Investor event. Thank you again for joining us on today's call and for your continued support of intrusion operator you.
You may now disconnect the call.
All participants. Thank you for joining this concludes today's conference call you may now disconnect stay safe and well.
Okay.
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Sure.
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Sure.
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