Investigation of Intrusion, Inc.
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Intrusion Inc. (INTZ) Misled Investors Regarding its Business Operations
Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose to investors: (1) that Intrusion’s Shield product was merely a repackaging of existing technology in the Company’s portfolio; (2) that Shield lacked the patents, certifications, and insurance critical to the sale of cybersecurity products; (3) that the Company had overstated the efficacy of Shield’s purported ability to protect against cyberattacks; (4) that, as a result of the foregoing, Intrusion’s Shield was reasonably unlikely to generate significant revenue; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On April 14, 2021, White Diamond Research published a report alleging, among other things, that Shield “has no patents, certifications, or insurance, which are all essential for selling cybersecurity products” and that “Shield is based on open-source data already available to the public.” According to the report, “Shield is a repackaging of pre-existing technology rather than an innovative offering.” Moreover, the report alleged that the claims that Shield “stopp[ed] a total of 77,539,801 cyberthreats from 805,110 uniquely malicious entities… in the 90-day beta program” were “outlandish,” leading White Diamond to question “[h]ow have these companies been able to function so far, as they’ve been attacked many times per minute by ransomware, malware, data theft, phishing and DDoS attacks.” On this news, the Company’s share price fell 30% over the next two trading days to close at $20.53 per share on April 15, 2021.