Intrusion Inc. (INTZ) Q3 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing-by and welcome to the Intrusion Inc. Third Quarter Financial Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Mike Paxton, Interim CEO and Chief Financial Officer. Please go ahead sir.

Welcome to this afternoon's conference call to review Intrusion's third quarter 2019 financial results. Also participating on the call today is Joe Head, Senior Vice President and Co-Founder of the company. I will discuss financial results and Joe will give a business update and discuss ongoing projects. We will be glad to answer any questions after our prepared remarks. We distributed the earnings release at approximately 3:05 P.M. central today. A replay of today's call will be available at approximately 6:30 P.M. central tonight for a one week period. The replay conference call numbers 855-859-2056, at the replay prompt and our conference ID 2177277. In addition, a live and archived audio webcast of the call is available at our website, intrusion.com. Please be reminded that during this call, including the question-and-answer session, we may be making forward-looking statements with respect to financial results, business strategies, industry trends, and certain other matters. Forward-looking statements are based on management’s current expectations and are subject to risk and uncertainties. We may be discussing our current outlook based on our own internal projections for the current quarter and fiscal year 2019. Actual results may differ substantially from internal projections. We are not responsible to update any forward-looking statements. Many factors could cause our projections not to be achieved, including current economic and market conditions and other factors, which can be found in our most recent filings with the SEC, including our most recent Annual Report, on Form 10-K filed in March 2019 and previous Form 10-Qs. Now, let’s move on to the financial results. Third quarter, 2019 financials from the press release. Revenue for the third quarter was $3.9 million compared to $2.7 million for the third quarter 2018. Q2 2019 sales were $4 million. Gross profit margin was at 62% in the third quarter compared to 64% in the third quarter last year, 61% second quarter 2019. Intrusion’s third quarter 2019 operating expenses were $0.9 million compared to $1 million for the comparable quarter in 2018, $0.7 million in Q2 2019. Net income for the quarter was $1.5 million compared to a net income of $0.62 million for the third quarter 2018, $1.8 million net income Q2 2019. Okay, thank you. And now I'll turn the call over to Senior Vice President, Vice Chairman and Co-Founder Joe Head.

Thanks Mike. Ward and I really enjoyed working together since 1980, since we founded ODS and Intrusion in 1983 we've seen a lot of change and moved the company to newer markets over time. In the past year, we had some uptick in orders in research projects which fully utilized our staff, reducing the overhead staff and working instead on directed R&D across a few interesting new areas. As you all know, we lost Ward three weeks ago. That was bad because Ward was simply wonderful to work with. We always agreed and got along perfectly for the last 39 years. One of the best things was our division of responsibilities. Ward never wanted my job and I never wanted his, which is why I'm very, very happy that Mike Paxton agreed to take on the CEO role. Blake, Mike and I discussed that we'd be reluctantly ready to run the company whenever that was necessary, but with an amazing man like Ward, you're never ready to see him go. Our third quarters are typically light on orders waiting for next year as government budget, which officially starts October 1, each year. So, this year like many others has been a slow year for the new budget to be cascaded down to our customers. Renewals of existing programs happen more or less automatically. So, we see these renewals coming in over the next month. Our Q4 revenues still need a renewal order or two which we expect to come in like they always do but we also need the new 2020 budget for some unfunded projects to turn into orders. As you recall, we received two large orders in late 2018, which was fallout funds which have boosted us to a higher run rate over the last 12 months. But these were funded with fallout funds and not in the automatically renewable category. These most recent two orders are up for renewal in late-2019 and the customers are working on the funding and if completed and submitted the renewal paperwork already. As of now, funds for new projects and non-program of record projects have not been cascaded down to our customers. So, we don't yet know what funding of our two bonus projects from follow-up money last year will be available. We expect this next round of funding just before Thanksgiving. We have a number of other potential upsides with other new orders, which are, we're working to complete our backlog for Q4 in the next four quarters. Over the past year we've built new capabilities into three areas, first improvements to Savant and STA. Two we've built TraceCop machine learning capabilities into a new platform along with adding some new TraceCop datasets. And three, started work on a novel new kind of security solution in the zero trust-space, which compliments Savant STA without competing with it. We've also built cash, paid off our debt and hired some new staff to help in our push into the new areas. I hired a new salesman to push Savant STA into the Department of Defense space and he is onboard now. Far from being just a salesman, our new hire has a bachelor's, master's, and doctorate in electrical engineering and he's one of the best cyber security folks around. As we plan to grow into this new area, I'm excited to see what we can stir-up in new customer prospects in portions of DoD that I've never worked with. To that end, we've completed a list or compiled a list of compromised DoD networks we can call on, but in addition, our new salesman has compiled a list of programs where he has connections and has begun interacting with them for sales opportunities. Further in the last quarter, we've been pondering how to best expand our marketing and sales. To that end, I've been talking to a few potential partners as a way to expand the sales of our products outside our normal customer base. For the next year we have a number of new customers in our sights as well. I'm excited about a number of extra large prospects related to securing infrastructure, which leveraged several of our products. One of those I've been working on for a number of years and we're now nearing the point of creating budgetary quotes for our customers to put in next year's budget. One has the potential of expansion of work with a current customer and two are new customers. One of the new ones, we've just given budgetary quotes last week. In addition, we have our usual assortment of medium prospects we're working for late 2019 and several additional large projects for 2020. By my count, I'm working on 15 new prospects currently and then my new salesman's count is on top of that and expect that pipeline to grow through the year. But count alone doesn't tell the story of just the mix of large and extra large prospects compared to small and mediums. I'm not ignoring folks with smaller, medium size money but working extra hard to ensure that our four really big opportunities get more attention as well as a renewal of old ones. We'll make sure to keep our customers happy as we always do and continue to add new and even larger opportunities to our pipeline for next year. We're excited to see what our new salesman can stir up as well as seeking a sales partner to further add to our sales channel and optimize shareholder value. Mike.

All right. Thanks Joe. Thank you for your attendance today and for your continued support of Intrusion. On a personal note, thanks for all the calls, emails, notes, and cards over the last few weeks. It was well received by Intrusion and my family. Ward is going to be missed in many ways, especially his work ethic, incredible business mind and never ending support for all of us here at Intrusion. We have a tremendous team here at Intrusion, very talented and dedicated group. I want to thank all of our employees and associates for their support. Operator, could you please remind the participants how to queue up to ask questions.

Thank you. [Operator Instructions] And your first question comes from line of Howard Brous. Your line is open.

Thank you, Mike. First of all, again my deep condolences from my family to yours. All these calls for all these years, we've certainly enjoyed a relationship with you and with Ward. So again, condolences really.

Thank you.

You're very, very welcome. Congratulations on a good quarter. First of all to both of you. Joe, I have a few questions. When you talked about Savant in the last couple of quarters and talked about two potential contracts that probably move into Q1 of 2020, can you be with some granularity what we’re talking about?

Sure. one of those, I've got penciled in as a couple of million. It's about, it's in the range of $2 million to $5 million depending on the extent that they put it on. And we're still in the scoping piece of it. And it has to be sort of ordered for installation by early summer next year. They supposedly have at least a couple million of that for the budget, but it's not, it's not fixed yet. In addition, we've got a number of DoD ones that I think will move along pretty well. And we've added a few orders along as we go as well.

You had mentioned a specific number of about $10 million. Was that a particular contract or combination of a couple? I understood it to be one...

That was combination of several. One was about five to six and then the other was a composite of a couple.

Those were not DoD contracts. They were state contracts as I remember. Is that correct?

There was two that were state ones and one that was DoD.

And in terms of the state contracts, those still are Q1 potential.

Correct.

Alright. And in addition, just going back to securing the business on a going forward basis, the renewals are in budget or are not in budget for Q4.

Most are in budget with the exception of the two monster ones we got at the end of 2018 and those that are having to, they expect to get almost the same amount that we had initially about three fourths the size of the original two. So we, that was why I made the comment about when we got those, rather than hire a bunch of people, we took all the folks who would have been doing overhead R&D and put them to paid R&D. And so we've had about a year of reasonably good socking away money from the effect of that. And so we've viewed those as a more temporary bubble that may or may not get renewed, but they were in for renewal as well.

Right. Do you have any contracts in procurement?

Several. We have about $3.6 million in procurement for fallout pretty quickly.

And that's for most of those contracts or for a year or six months. What are those?

Correct those are just yearly renewals.

Okay. Those are all renewals?

Correct.

Is there anything in procurement for a new contract yet?

Not, not, well, let's see. I would say no. We have several that are hopeful bluebirds that are not in procurement as we would say it yet. The funds haven't been committed. But we're in the chase for a couple of upside ones that are new.

And then the size of those would be roughly a medium $2 million to 4 million.

Those are, yes, I would say those $1 million. One is about $1 million. One is about $2 million.

Alright. That's all I have for the moment. Thank you. And again condolences Mike.

Sure, thank you.

Your next question comes from the line of Walter Schenker. Your line is open.

Well, again, Michael, my condolences also to you Joe and [indiscernible] Ward for every meeting almost I had, but for a long time.

Yes. That's why everybody up here, everybody up here and Intrusions was like family.

So, yes, one thing I didn't mention. We mentioned at the memorial service is, I've worked with him every day since 1980 and I didn't realize until talking to him over the last few years, he never had a sick day in his entire life, never missed a day of work. Yes, that was amazing.

Amazing guy.

In regard to the new salesperson, I know at one point you were looking for one and then you were looking for two, you are going to look for another one or you want to see how this person performs first.

I'm pretty happy with this guy in terms of his scope. We interviewed two, one of the guys had ended up staying at his previous place and this new guy got awesome. So he's one of the 20 or 30 best cyber guys that I know of in the country. And so I'm pretty pleased with him. And will we have to scale it perhaps…

And he work for a customer or you just knew him. I'm just trying to sense how you found him…

I knew him. I've worked with him before and so he was – I knew him through work. So he was one of the wizards that I worked with.

And his role is basically to generate sales more than help develop product?

Correct. Yes. He's a sales guy. So he's an engineer by training and a good cyber guy. But that's our approach. I'd rather – they had all the old jokes with the Joe Isuzu sales guy that would just lie to get an order and didn't even know he was lying. I liked the guys that really know their stuff and that way you're going in there and helping your customer and in exchange for helping them then they're happy to place orders with you. And he's been over on the operational side of DoD from the procurement contracting, new weapons system perspective, which I think he’s got some really nice potential pull through for us.

Good.

Nothing, realistically a new guy like that, I would be shocked if he has anything brand new with budget and procurement in less than about four months. But I think that's about when we should expect to see orders from his connections. So I'm going to start making calls with him on the 25th. He's got a week set up, up there for me seeing people I don't know before.

Good. Mike, this is to you. I know when we spoke last week, you said, you're learning every day and you're working real hard to do it. But just to put it in the transcript and on the call, could you just affirm that you will now be the investor contact going forward?

Yes, I'm the person.

Yes. I had gotten people asking me about it given our history and I was – you told me that. But by putting it in the call, other people know you're the person to contact. Obviously, your father's breadth of experience and knowledge, it's going to take you more than a few days to catch up with where he was – and his knowledge.

Yes. I'll be happy to take some calls.

Good.

And I'm around as well, if you all need me for anything.

Yes, we need some technical support, I'm sure Joe can help out.

Okay.

Yes, if its product technical, feel free to reach out to me as well.

Good. We've had discussions in the past about doing something from an investor relations standpoint. I would guess so I shouldn't put words in your mouth because until things settle down and everyone's comfortable going forward that that's been put on hold.

Yes. I mean, Ward was pretty close to pulling the trigger on the end. And now Joe and myself need to evaluate and prioritize things. So we'll just kind of go from here.

But I guess my input, Walter, would be at this point. I believe there's some good commercial marketing opportunity for STA Savant and the typical investor relations piece doesn't find you the resale partner kind of person that I have on my prior to this hire. So I'm going to try to pivot our attention a little bit toward who do we know that knows people we don't.

Right. No, no. Again, I am happy to have you spend as much time as you feel is appropriate trying to generate additional business and especially, if we can do something which we've discussed for years partnering in the Savant area.

Correct.

That opens up much bigger markets very quickly. As we saw when we did the short trial, how many people theoretically can be touched?

Yes. We just want to make sure we don't get sidetracked and go on in a direction that we're not going to get any benefits from.

Good. And lastly, since I'm still not sure I understand and which may be a normal view toward government procurement and budgeting. Contracts you've had for a number of years and you have many customers you've had for multiple years?

Yes.

They sort of just fall into a regular renewal?

Yes. It's not – hadn't been 100% that way, Walter. We've had a few that would be three or 400,000 and only lasted one year and they didn't renew. But that's only been since I've known you maybe three or four of those that were sort of in the one hit wonder but small, in this last year…

Right. Therefore, once there's a budget where money's allocated, those things sort of roll through pretty straightforward?

Correct. Yes. Most of ours becomes sort of a program of record so that they get automatically renewed every year and they get renewed under – even under the presence of a continuing resolution so they don't have to go fight for funds. But our two biggest ones last year were not in that category where they were automatically renewed. So they're in there scratching for money. And so far none has even come in the door yet to fight for. So the first actually comes the week before Thanksgiving.

I know in the past when has been, Chris has been – unfortunately quite a few of them. Hiatus is caused by federal government budget approval. In some instances you've continued to do work. You don't want to leave your client high and dry with the expectation you'll get paid once they get their money. That's still sort of the process you work under?

Correct.

Okay, good. Well, good luck getting everything approved and through the government budgeting process, hopefully in the next month or so.

Yes. So it's not shockingly different than a lot of years soon when the budget hadn't come down yet. But we do have that big happy bubble from last year. We'd like to renew at some level.

Okay. Thank you.

You bet. Thanks Walter.

Thank you.

Your next question comes from the line of Ross Taylor. Your line is open.

Thank you, first, gentleman condolences on Ward’s passing. Ward was old school, I think in all the right ways and he will be missed.

Yes.

I would like to kind of get down to a little bit more meat on the bones of some of the things you've been talking about with previous questionnaires. Will you kind of give us a summary of what you see the opportunities in front of you, kind of a bid and proposal book. How much do you have out right now? Or are you thinking that you’re close to having out or at close to having funded in the like in aggregate over the next 12 months than in the way of new business?

I'd say our – I didn't compile it all for the call here, but in the order of if we look at a Delta above our last year in a base run rate plus the Delta on top, I've got about a 6.5 million on one, it's a renewal of those two we had last year. We've got another 5 million to 6 million for one DoD, got a couple of state projects that are in the order of 2.4 million for one and the other one let's find about 1 million. And then we have – it's hard to quantify since I just brought my new guy on board, I have a 30 prospects on that list that have not been in the numbers that I read off the sheet here. So that's an...

30?

Yes, 30. And those are all programs that he's worked with before. But I think it's – I'm honestly at the state where I can't make a projection as to what the opportunity there is until I go see him. I've got – it's kind of a double one. The new guy doesn't know what stuff costs and I don't know who is – but I think there's some good upside there. We have about another 3 million that is on the Bluebird list where might come in fourth quarter or early first quarter. That's net new business but in the procurement and the funds aren't committed yet. So I'd say that I wouldn't say we have a gusher built up, but we do have a few more than normal. So if you just kind of looked at a year ago at where we are, I got to make up for a little bit of a whole, but the net definable is probably 5 million or 6 million higher than it has typically been.

Okay. And if you look at the numbers you just ran down, I mean that adds up to just what you've talked about $16 million, $17 million, $18 million in potential if you were able to successfully bring each of those home?

That's true, which is probably – those are probably should be in the 50% likely to close category. That's my comment of it being 5 million to 7 million up over the previous…

But still on your base of run rate, that's a fairly significant increase. And I'd also say that you guys had done a great job converting revenues to cash. Do you expect to go – as we go forward to be able to retain roughly that kind of conversion rate?

I would say so. I think we've got – I mean, we had a big bubble for the last year because our customers said we're going to grow you and give you more money than typical. And so we can put in two orders for almost 8 million, which like I said, are not in the auto renew category. So I would say, we'll have a period of time or the gusher won't be as big.

Yes, we'll have more support people I think in the future, which might bring a number down a little bit. But it'll be gradually.

And it won't be – it wouldn't be substantial or time that you should be able to continue. I mean, you've been converting cash it is what 60% type rating and that's hard to continue. But you would expect to be able to keep it up somewhere around that 50 plus percent level, you would think?

Gross margins, certainly.

Yes. Okay. And then as you look at this, obviously the continuing resolution has kind of put a stall on your federal business. Can you – and you don't want, I know you don't want to get too deep into the opportunity in Savant on the commercial side? But that's always seem to be something that should be a home run opportunity if you find the right partner. And so can you give us some color on how you're going about making sure that this – the partner you get this time around is going to be the guy who – the people who actually sell this? Because I would – as I said, I've always thought this was a natural fit for almost any major player suite of cybersecurity offerings and the fact that it's an opportunity that strike me as being able to dwarf the size of your current business potentially.

I think you're correct there. But the truth is I've talked to some guys that should be in the category of a big partner like that. But some of those are lumbering giants. It takes – you look at a telco related one or a major place. Those guys can't decide to order pizza for 24 months. And so I wish I could tell you that I saw that I had the right candidate handy and I've gotten two that are in my candidate categories. But lumbering giant would be a kind term. So I don't know, I think that's going to be a work in progress. And that's why I identified it in my prepared remarks that it's a thing that needs work. And I think the payoff is huge. And we're trying it from a couple of different perspectives. One is you find a resell partner who takes you to their customers. Another way to look at it is there's a number of guys that are in the business in such a way that if we just applied what we know to their business, they would suddenly suck a lot less in the security space. And it would be a more attractive customer for their customers. And like you say, that would dwarf the business opportunities that you have just for selling a few products commercially, then you become an integral part of something truly large.

Yes, that does makes a great deal of sense. Obviously, I mean as I said, the opportunity seems to be rich. When you…

So where I'm at now, just to be transparent with you is that when we look at, we've had some success in the just boring commercial market and our customers in that space do love us. The next step of having those CIOs recommend us to their cousins in industry, we haven't asked them to do that yet because we've been too busy DoD-ing it. And also I see there's a huge push for making sure our military weapons systems don't get disarmed by our enemies before we can shoot them. So I think the conversion rate and the likelihood of us selling those projects successfully with real budgets with people we already know is much higher. And so when I sort of look at the pecking order of things, it's do that and that's why I got my new guy so I can spend more time on funding this commercial dream partner and pinned-in to do.

But I’d say that it's important to get through this – to get past this continuing resolution to bring in these new revenue sources that will drive the business substantially. Will you, as you get and with this, you’ve been asked about in the past, and given that we're in the middle of November, if – will you promise us that, should you get new contracts, you will let us know as they are realized, even in a bleak fashion, simply to reference the fact you have new business? I know in the past at times, it's been a point of some…

We’ve gone back and forth on that, if it's possible, we'll do it.

I think also if it needs to be a material. So, like I said we're trying to claw back up to the level we want to be at and so if you get an order that fills a hole, but then get you above the top is that worthy of an announcement?

Yes. I have to be honest with you, it is, because I think it's a de-risking situation. I mean, if you look at this as a stock you got – you're going to earn somewhere between probably $0.35 and $0.40 for this fiscal – this calendar year. You got a stock trading at $4.50 a share, we own a lot of big cyber companies which trade at higher multiples of revenue than you do on earnings. And I think, part of that's the de-risking concern that people worry about where this company is going to be getting its revenues. So the more you de-risk it, the more likely it is you get fair value. And bluntly, if that means it's more likely when an end game is decided and I would assume that given the changes and what happened in the last – happened a few weeks ago, that there is some thought to what's the next step for this company? Do you retain the banker, do you explore alternatives, do you look to go private? Things of that nature. It's better for your investors that have happened from a fair value, a higher value, which is a fair value, we’d argue the stock is meaningfully undervalued at these prices, given the nature and the unique nature of what you do. The fact so many of your contracts are really no bid contracts only because there is no one else who does what you do.

Right. Yes, that’s a fair comment.

And that should be something that is as of a high value.

All right. We’ll remember the comments as things come in way to report.

Otherwise I'll have to have to sick Walter on you.

There you go. We appreciate that.

Okay. Well, thank you gentlemen. You guys are doing a great job and keep up and keep us in the loop.

Sure. Well, appreciate the questions. Appreciate it.

Thank you.

Your next question comes from the line of [Colin McMahon]. Please go ahead.

Hi guys. Colin McMahon here. Hey, thanks for taking the call, you made condolences as well. And Mike, I know we've spoken a couple of times. I had – I haven't called in before, but yes, my questions are more just around kind of better understand the product and the revenue stream and how it's priced and whatnot. And I don't have any questions on what results are going to be in the next quarter or next year or anything. But just generally like when you think about – you talk about contract, some contracts that are $1 million and some contracts that are $6 million. Like, what are the, I guess elements of – and you talked about your new sales guy, you’re teaching him how to price the product. Like, what are the kind of elements go into pricing, offering for a new customer? I imagine there's different levels of complexity and stuff, but I look at other SaaS companies in summary are priced are number of servers out there, some are priced on number of seats and like how is Intrusion’s TraceCop software price generally?

Yes, fair question. So let me start with the Savant STA, and then we can go to the TraceCop side. The Savant sensor goes with the Savant threat analysis service, which we instrument a customer's network by putting one or more sensors to watch his traffic flow lie, and we charge them for the sensors and those are typically $20,000, $30,000 worth of hardware and then when you add the license fee of the Savant and the monthly reporting for a year, the first order for a minimal installation is about $200,000. Renewals are in the range of $180,000 without the hardware for subsequent years for just a sensor, a report. Where some of the numbers get larger for this year, is that our typical model in the past has been – we're monitoring an unclassified network and the data flows here at Richardson and we do the reporting on our secure servers in a house here. A couple of our new opportunities do the same thing for classified networks. And so we want to be able to monitor top secret and the secret in other networks. And so all of that data will be flowing to a duplicate of our analysis system that exist at top secret level, so everything goes up instead of down in terms of classification. And that starts out at about $1.2 million a year for the base infrastructure. And then once you put the instrumentation it ends up being about $2.4 million to $3.5 million for just a reasonably division headquarters kind of thing. And then those kind of things tend to get bigger in a hurry, so there's that. The other side of our business TraceCop varies greatly, we have some licensed datasets that we sell and the average one is about $100,000 month or $1.2 million a year for a licensed dataset. We also have a series of analytic services that we do for our customers that are priced out on a FTE basis, and typically those are $400,000 or $800,000 a year per customer, per engagement. And we basically just answer questions for them and like words that find and trace bad guys is the general category.

Okay, great. That's really helpful. And so in situations where the customer – for TraceCop in situations where the customer stops paying you and lapses, do they have all of your historical data, locations of all the servers and who owns them and those sorts of things, like saved on their servers and basically they wouldn't get real-time updates for the current kind of ownership of those? Or do they kind of access your data and your data stays on your database? Or are they buying the historical datasets from you?

In most cases our customers get a copy of it on their servers, which are not connected to the Internet. And we haven't at this point made them delete the old copy while we wait on renewal. But if they didn't renew, they would have to delete our data.

Got it.

In other words, they can't use our historical as a seed source for prime, the pump of a competitor to shortcut decades of discovery.

Right. Okay, great. And then is there any way to think about how many – I know you have a couple handful of five or whatever larger paying customers. Is there any way to think about like the number of paying customers that you have? Like, is it like 15 or is it like 45 or just like a ballpark kind of how many invoices you send out on a monthly basis or whatever it is?

I'd have to get, I don't think we give that out.

Yes.

I don't remember the number, but it's not 45, I think it's under 20.

Less than 45, how’s that.

Yes.

Okay, great. Got it. Okay, great. And then is there, I guess maybe in the past you talked about potentially like Mandiant being a competitor. Is there – I am sure there's other people that maybe don't have the same datasets as you or don't have as much history or whatnot. Like, if – I guess looking you crossing on public or private, like who else out there would have datasets that maybe could be somewhat similar to yours or at least do sort of similar things to the thing that you do?

So far, I mean, when our customers have done their evaluation, if there is any competition, then they have to go open bid and compete it. And so far every one of them have sole sourced it to us and that there isn't a viable competitor. When you get into the STA Savant analysis service, I think you get into shades of gray there. And that everybody falls into different categories, there's some that are signature-based folks and then there is IDS, IPS, firewalls and that kind of stuff. And we're doing a behavioral flow analysis approach with our own enrichment that's reasonably unique. I certainly – I'm not one of those that believes that what one person does another can't, but they haven't. And I think to the degree that ours finds things that others don't and stops things that go on for years undetected that's the boat that will help us rise a bunch in terms of market share over time. So I think we've got a reasonably different enough approach in the flow analysis stuff and I'll be – as we start going more commercial you'll see more of that where we can send it to you in the literature because…

Okay.

I mean, the strange thing about us is, since we've been sole source government usually as our customer, then we don't have a lot of slick data sheets that are commercial since you just don't want to tell everybody what you do. But in the case of STA Savant, I think you'll see a lot more coherent explanations of what makes us different, what makes us good and that'll – you'll see a lot more of that in the next – in the coming months.

Okay, great. And one last one for me, if you guys don't mind. The – so like – if a customer, like for example, the bigger customers you won a little over a year ago or whatever it was. So if they like lapse and don't renew, like what is the – I guess like, what is the practical impact for their business? Is it like they're buying your product to add an extra layer of cybersecurity that they currently don't have, so that, if it lapses, then they have a higher probability of being breached. Or is there any sort of just practice, you do a lot of things and it's kind of – it's complicated, I understand that. But just like is it –like, what is the – like if they don't pay you $5 million, whatever is the next 12 months like, what is the negative impact on their operations of their agency?

That was in the category of – they had us do a thing that they hadn't done before, so addressing a new class of challenge problems. And several of those were the new categories of stuff I mentioned, like building a zero trust-based security solution. So some of the – I would say it's all in the category of– it's something that needs doing and nobody's done before and they grabbed some funds and had us make a good down payment and they love what we've done. And so I think…

Yes, I think there’s plenty more to do.

Yes, I think they’re going to renew it just because they see the need for it. Will, it take them some time to get the money script together, that's the question. But it’s – yes, I’d say it’s a new in the school of big things in the world, there's a lot of big things that need doing, that don't get done for a long time, like witness NASA versus SpaceX, everybody would like to go to Mars, but nobody did. And same thing in the security space, people know that certain things suck about the way things do it and they have a good hand as to what needs doing next, but not specifically. And we've been working in that space of really, really, how do you do this and made some good progress. So I think that'll pay off for us, but it's not forecastable yet.

Okay, great. Well, thank you guys so much for the time and love to follow-up afterward a few minutes to catch up that'd be great. I really appreciate it. Great job.

Thank you, Colin.

[Operator Instructions] Your next question comes from the line of Howard Brous. Your line is open.

Joe, I just have a question about procurement again, just got about 36 in procurement and these are all renewals is that correct?

Correct.

And because it's a continuing resolution for the moment, what if we had a budget? Would that free up funds?

Yes, it'd be on top of the 36 some additional stuff. So I've got another 6.5 that are in the, I wish they'd get the funds fixed so we could fight for it.

So if we have a budget, you would expect these two big ones to be renewed an additional couple of million. Is that a fair comment?

Yes, it'd be the 3.6 plus another 6.5.

6.5.

Yes.

And that's – I assume, that we have a budget, if we have a continuing resolution, what would be the impact then?

It gets more difficult for them to…

No, it'd be about the same difference, I think if they got a CR, there'll be some funds I can fight for. So I'm thinking that – it's just a matter of fighting for scraps and whenever you go to a committee and there is a two or three people fighting for unspent funds, it can go multiple ways.

All right. Fair enough. Just to repeat what Ross was referring to. It is certainly important enough that we would love to see announcements, small, medium or large as you see them. And that would really be important for all of us. Last but not least, we had talked several conference calls ago about up-listing with Ward's passing, I know there's a critical need for time. Is this something that would be on the near-term, now that you have the capital?

Brous, you're talking about NASDAQ.

Yes.

Yes. I'll have to look at the parameters, I haven't looked at it in a while. I don’t know…

If we meet all the requirements, but that'd be the fundamental question. Do we meet them, I don’t know.

I still think we might be a little short on one requirement, but I can't say it for sure.

Was that [indiscernible]

Yes, I’ll take a look at it, Howard.

I appreciate that. Again, condolences.

Thanks, Howard.

Thank you.

You take care of yourself.

Thank you.

All right. Okay, operator. At this time, we would like to wrap up the call. Thank you for participating in today's call. If you did not receive a copy of the press release or if you have further questions, you can call me at 972-301-3658 or e-mail mpaxton@intrusion.com.

Thanks everybody.

This concludes today's conference call. Thank you for your participation. You may now disconnect.