• Intrusion has filed to raise $44 million in a U.S. IPO for itself and selling shareholders.
• The firm provides cybersecurity data and software to U.S. government agencies.
• INTZ has suffered declining revenue and the IPO looks pricey, so I'll watch it from the sidelines.
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Quick Take

Intrusion (OTCQB:INTZ) has filed to raise $44 million for the company and selling shareholders from the sale of its common stock in an IPO, according to an amended registration statement.

The company provides security data and software to U.S. government entities.

INTZ has contracted in the first half of 2020 and the IPO appears quite excessively priced, so I'll avoid it.

Company & Technology

Richardson, Texas-based Intrusion was founded to develop a database of global IP addresses and related information for monitoring cyber threat sources.

Management is headed by president and Chief Executive Officer Mr. Jack Blount, who has been with the firm since May 2020 and was previously CIO in the U.S. federal government and founder of a strategic consultancy for various organizations.

The company’s primary offerings include:

• TraceCop - IP database
• Savant - Network data mining
• Shield - Intrusion detection (in development)

Intrusion has received at least $58 million from investors including ARS Investment Partners, Patsy Paxton, Michael Paxton, Julie Paxton Puckett and Mark Paxton. The Paxtons collectively own 50.2% of company stock pre-IPO.

Customer Acquisition

The firm markets its products through an in-house direct sales force and through value-added reseller organizations.

Intrusion counts as customers a variety of 'U.S. Federal government entities, state and local government entities, large and diverse conglomerates, manufacturing entities, and other customers.'

Sales & Marketing expenses as a percentage of total revenue have fluctuated as revenues have varied, as the figures below indicate:

Sales & Marketing	Expenses vs. Revenue
Period	Percentage
Six Mos. Ended June 30, 2020	28.8%
2019	9.5%
2018	15.6%

Source: Company registration statementThe Sales & Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Sales & Marketing spend, dropped to a negative (3.8x) in the most recent reporting period, as shown in the table below:

Sales & Marketing	Efficiency Rate
Period	Multiple
Six Mos. Ended June 30, 2020	-3.8
2019	2.6

Source: Company registration statement

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