8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to
Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2007

INTRUSION INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-20191	75-1911917
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1101 East Arapaho Road, Sutie 200, Richardson, Texas		75081
(Address of Principal Executive Offices)		(Zip Code)

(972) 234-6400

(Registrant’s Telephone Number, Including Area Code)

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished pursuant to Item 2.02, Disclosure of Results of Operations and Financial Condition.

On November 7, 2007, Intrusion Inc. issued a press release announcing its financial results for the third quarter 2007.  A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(d)   Exhibits

99.1 —  Press release issued by Intrusion Inc. on November 7, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INTRUSION INC.
Dated: November 7, 2007	By:	/s/ MICHAEL L. PAXTON
		Michael L. Paxton
		Chief Financial Officer

2

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press release issued by Intrusion Inc. on November 7, 2007.

3

EX-99.1

Exhibit 99.1

NEWS RELEASE                                                            

                                                                                                                                                     & #160;              1101 East Arapaho Road

                                                                                                                                                     & #160;          Richardson TX 75081 USA

                                                                                                                                                     & #160;                  +1 (972) 234-6400 main

Financial Contact

Michael L. Paxton, VP, CFO

972.301.3658, mpaxton@intrusion.com

Media Contact

Jay Barbour, VP Marketing

972.664.8107, jbarbour@intrusion.com

INTRUSION INC. ANNOUNCES
THIRD QUARTER RESULTS

Richardson, Texas — November 7, 2007 — Intrusion Inc. (OTCBB: INTZ), (“Intrusion”) today announced financial results for the three months ended September 30, 2007.

Revenue for the third quarter 2007 was $0.9 million compared to $1.7 million for the third quarter 2006.

Intrusion’s operating loss was $0.6 million in the third quarter 2007 compared to $0.2 million for the third quarter 2006.

Gross profit margin was 60 percent of revenue in the third quarter of 2007 compared to 55 percent of revenue in the third quarter of 2006.

Intrusion’s third quarter 2007 operating expenses were $1.1 million, approximately the same as the third quarter 2006.

As of September 30, 2007, Intrusion reported cash and cash equivalents of $0.9 million, working capital of $0.4 million and debt of $0.1 million.

Intrusion closed a private placement sale of 1,190,476 shares of common stock at $0.42 per share on September 26, 2007 for a total of $500,000 in net proceeds.  The stock was purchased by G. Ward Paxton, Chairman, President, and CEO.  The price of the common stock was determined by taking 110% of the average closing price for the last 20 trading days up to and including the closing date of September 26, 2007.

“Our 60 percent gross profit margin in the third quarter was outstanding, and we continued our tight control of operating expenses.  Revenue in the third quarter declined due to a delay in receipt of orders,” stated G. Ward Paxton, Chairman, President and CEO of Intrusion.

Intrusion

Third Quarter 2007 Results

Page 2 of 4

Intrusion’s management will host its regularly scheduled quarterly conference call to discuss the Company’s financial and operational progress at 4:00 P.M., CST today.  Interested investors can access the call at 1-800-399-2043 (if outside the United States, 1-706-634-5518).  For those unable to participate in the live conference call, a replay will be accessible beginning today at 7:00 P.M., CST until November 14, 2007 by calling 1-800-642-1687 (if outside the United States, 1-706-645-9291).  At the replay prompt, enter conference identification number 21535598.  Additionally, a live and archived audio webcast of the conference call will be available at www.intrusion.com.

About Intrusion Inc.

Intrusion Inc. is a global provider of entity identification systems, regulated information compliance, and data privacy protection and network intrusion prevention and detection products.  Intrusion’s product families include TraceCop™ for identity identification, the Compliance Commander™ for regulated information and data privacy protection, and Intrusion SecureNet for network intrusion prevention and detection.  Intrusion’s products help protect critical information assets by quickly detecting, protecting, analyzing and reporting attacks or misuse of classified, private and regulated information for government and enterprise networks.  For more information, please visit www.intrusion.com.

This release, other than historical information, may include forward-looking statements regarding future events or the future financial performance of the Company.  Such statements include, without limitations, statements regarding future revenue growth and profitability, as well as other statements.  These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including but not limited to the following: the difficulties in forecasting future sales caused by current economic and market conditions, the effect of military actions on government and corporate spending on information security products, spending patterns of, and appropriations to, U.S. government departments, the impact of our cost reduction programs and our refocused product line, the difficulties and uncertainties in successfully developing and introducing new products in emerging markets, market acceptance of our products, the impact of our sustained losses on our ability to successfully operate and grow our business, our stock price and the recent loss of our Nasdaq listing, our ability to generate sufficient cash flow or obtain additional financing on acceptable terms in order to fund ongoing liquidity needs, the highly competitive market for our products, the effects of sales and implementation cycles for our products on our quarterly results, difficulties in accurately estimating market growth, the consolidation of the information security industry, the impact of changing economic conditions, business conditions in the information security industry, our ability to manage acquisitions effectively, the impact of market peers and their products as well as risks concerning future technology and others identified in our Annual Report on Form 10-KSB, as amended, and other Securities and Exchange Commission filings. These filings can be obtained by contacting Intrusion Investor Relations.

Intrusion

Third Quarter 2007 Results

Page 3 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	September 30, 2007		December 31, 2006
ASSETS
Current Assets:
Cash and cash equivalents	$	947	$	933
Accounts receivable, net of allowance for doubtful accounts of $76 in 2007 and $90 in 2006	407		844
Inventories, net	228		209
Prepaid expenses	83		198
Total current assets	1,665		2,184
Property and equipment, net	156		162
Other assets	39		41
TOTAL ASSETS	$	1,860	$	2,387

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	809	$	1,099
Line of credit	100		200
Deferred revenue	351		367
Total current liabilities	1,260		1,666

Stockholders’ Equity:
Preferred stock, $.01 par value:
Authorized shares — 5,000
Series 1 shares issued and outstanding — 260
Liquidation preference of $1,331	918			918
Series 2 shares issued and outstanding — 460 Liquidation preference of $1,155	724			724
Series 3 shares issued and outstanding — 469 Liquidation preference of $1,026	667			667
Common stock, $.01 par value:
Authorized shares — 80,000
Issued shares — 11,534 in 2007 and 8,306 in 2006
Outstanding shares — 11,524 in 2007 and 8,296 in 2006	115			83
Common stock held in treasury, at cost — 10 shares	(362		)	(362		)
Additional paid-in capital	55,378			53,947
Accumulated deficit	(56,661		)	(55,077		)
Accumulated other comprehensive loss	(179		)	(179		)
Total stockholders’ equity	600			721
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,860		$	2,387

Intrusion

Third Quarter 2007 Results

Page 4 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Revenue	$	919		$	1,736		$	3,014		$	3,791
Cost of revenue	370			778			1,184			1,624
Gross profit	549			958			1,830			2,167
Operating expenses:
Sales and marketing	499			562			1,518			2,227
Research and development	358			272			1,169			1,679
General and administrative	255			306			730			1,039
Operating loss	(563		)	(182		)	(1,587		)	(2,778		)
Interest income, net	1			2			2			43
Other income (expense), net	—			—			1			(65		)
Loss before income taxes	(562		)	(180		)	(1,584		)	(2,800		)
Income tax provision	—			—			—			—
Net loss	(562		)	(180		)	(1,584		)	(2,800		)
Preferred stock dividends accrued	(44		)	(44		)	(130		)	(132		)
Net loss attributable to common stockholders	$	(606	)	$	(224	)	$	(1,714	)	$	(2,932	)
Net loss per share attributable to common stockholders (basic and diluted)	$	(0.06	)	$	(0.03	)	$	(0.18	)	$	(0.42	)
Weighted average shares outstanding -Basic and Diluted	10,397			7,046			9,387			7,025