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): August 13, 2008

INTRUSION INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-20191	75-1911917
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	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:

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

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

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

o   Pre-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 August 13, 2008, Intrusion Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2008.  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 August 13, 2008.

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: August 13, 2008	By:	/s/ MICHAEL L. PAXTON
		Michael L. Paxton
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press release issued by Intrusion Inc. on August 13, 2008.

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EX-99.1

Exhibit 99.1

NEWS RELEASE
	1101 East Arapaho Road
	Suite 200
	Richardson TX 75081 USA
	(972) 234-6400 main

Financial Contact

Michael L. Paxton, VP, CFO
972.301.3658, mpaxton@intrusion.com

INTRUSION INC. ACHIEVES PROFITABILITY
IN SECOND QUARTER

Richardson, Texas – August 13, 2008 – Intrusion Inc. (OTCBB: INTZ), (“Intrusion”) announced today financial results for the three and six months ended June 30, 2008.

Intrusion’s net income was $41 thousand in the second quarter 2008 compared to a $0.5 million net loss for the second quarter 2007.

Revenue for the second quarter 2008 was $1.3 million compared to $1.0 million for the second quarter 2007.

Gross profit margin was 66 percent of revenue in the second quarter of 2008 compared to 61 percent of revenue in the second quarter of 2007.

Intrusion’s second quarter 2008 operating expenses were $0.8 million, compared to $1.1 million for the second quarter 2007.

As of June 30, 2008, Intrusion reported cash and cash equivalents of $0.2 million, working capital of $(1.3) million and debt of $1.2 million.

 “Revenue increased 28%, gross profit margin increased from 61% to 66% and operating expenses decreased 31% in the second quarter of 2008 compared to the second quarter of 2007.  These positive achievements resulted in net income for the second quarter of 2008,” stated G. Ward Paxton, Chairman, President and CEO of Intrusion.  “The growth in revenue and profit in the second quarter was primarily driven by the $2.5 million of orders booked in the first half of the year.  We entered the third quarter with a backlog of $1.0 million,” Paxton concluded.

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., CDT 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., CDT until August 20, 2008 by calling 1-800-642-1687 (if outside the United States, 1-706-645-9291).  At the replay prompt, enter conference identification number 58845317.  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 regulated information compliance, entity identification systems, data privacy protection products, and network intrusion prevention and detection solutions.  In addition, Intrusion offers deployment technologies along with security services for the information-driven economy.  Intrusion’s product families include the Compliance CommanderÔ for regulated information compliance, data privacy protection and identity theft prevention, TraceCop™ identification and location service, Intrusion SpySnareÔ for real-time inline blocking of spyware and unwanted P2P applications, and Intrusion SecureNetÔ 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.

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INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	June 30,			December 31,
	2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	212		$	362
Accounts receivable, net of allowance for doubtful accounts of $40 in 2008 and 2007	554			110
Inventories, net	83			146
Prepaid expenses	64			75
Total current assets	913			693
Property and equipment, net	121			144
Other assets	39			39
TOTAL ASSETS	$	1,073		$	876
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Line of credit	$	—		$	100
Loan payable to officer	1,180			—
Accounts payable and accrued expenses	736			688
Deferred revenue	266			312
Total current liabilities	2,182			1,100
Stockholders’ Deficit:
Preferred stock, $.01 par value:
Authorized shares – 5,000
Series 1 shares issued and outstanding – 260
Liquidation preference of $1,347 as of June 30, 2008	918			918
Series 2 shares issued and outstanding – 460
Liquidation preference of $1,184 as of June 30, 2008	724			724
Series 3 shares issued and outstanding – 354 in 2008
Liquidation preference of $795 as of June 30, 2008	504			504
Common stock, $.01 par value:
Authorized shares – 80,000
Issued shares – 11,648
Outstanding shares – 11,638	116			116
Common stock held in treasury, at cost – 10 shares	(362		)	(362		)
Additional paid-in capital	55,475			55,527
Accumulated deficit	(58,305		)	(57,472		)
Accumulated other comprehensive loss	(179		)	(179		)
Total stockholders’ deficit	(1,109		)	(224		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,073		$	876

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INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenue	$	1,283		$	1,003		$	1,746		$	2,095
Cost of revenue	440			393			620			814
Gross profit	843			610			1,126			1,281
Operating expenses:
Sales and marketing	361			504			732			1,019
Research and development	195			388			710			811
General and administrative	230			248			496			475
Operating income (loss)	57			(530		)	(812		)	(1,024		)
Interest income (expense), net	(16		)	(1		)	(22		)	1
Other income	—			1			—			1
Income (loss) before income taxes	41			(530		)	(834		)	(1,022		)
Income tax provision	—			—			—			—
Net income (loss)	41			(530		)	(834		)	(1,022		)
Preferred stock dividends accrued	(40		)	(43		)	(105		)	(86		)
Net income (loss) attributable to common stockholders	$	1		$	(573	)	$	(939	)	$	(1,108	)
Net income (loss) per share attributable to common stockholders (basic and diluted)	$	0.00		$	(0.06	)	$	(0.08	)	$	(0.12	)
Weighted average shares outstanding
- Basic and Diluted	11,638			9,271			11,638			8,873

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