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): February 9, 2011

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:

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 February 9, 2011, Intrusion Inc. issued a press release announcing its financial results for the fourth quarter ended December 31, 2010.  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 February 9, 2011.

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: February 9, 2011	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 February 9, 2011.

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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. REACHES PROFITABLITY FOR THE YEAR 2010 DESPITE A LOSS FOR THE FOURTH QUARTER

Richardson, Texas — February 9, 2011 — Intrusion Inc. (OTCBB: INTZ), (“Intrusion”) today announced financial results for the quarter and year ended December 31, 2010.  Intrusion achieved a net profit for the year 2010, the second consecutive year to do so, despite recording a loss for the fourth quarter.

Intrusion’s net loss was $0.3 million in the fourth quarter 2010, compared to a net income of $0.4 million for the fourth quarter 2009.  Net income was $0.2 million for the year 2010, a 22% increase over 2009.

Revenue for the fourth quarter 2010 was $0.9 million, compared to $1.5 million for the fourth quarter 2009.  Revenue for the year 2010 was $5.6 million, a 14% increase over 2009.

Gross profit margin was 61% of revenue in the fourth quarter of 2010, compared to 66% of revenue in the fourth quarter 2009.  For the year, the gross profit margin was 63%, compared to 66% in 2009.  Differences in gross profit margin are primarily the result of changes in product mix.

Intrusion’s fourth quarter 2010 operating expenses were $0.9 million up from $0.6 million in the fourth quarter 2009.  For the year 2010, operating expenses were $3.3 million, up from $3.0 million in 2009.

As of December 31, 2010, Intrusion reported cash and cash equivalents of $0.5 million, a working capital deficiency of $0.7 million and debt of $0.2 million.

“Overall, 2010 was a good year for Intrusion.  Revenue increased 14% over 2009, even though revenue decreased in the fourth quarter due to delays in U.S. Government contracts.  Our total orders booked in the fourth quarter were $1.3 million,” stated G. Ward Paxton, Chairman, President and CEO of Intrusion.  “Total debt decreased to $230,000 at year end,” 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., 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 February 16, 2011 by calling 1-800-642-1687 (if outside the United States, 1-706-645-9291).  At the replay prompt, enter conference identification number 43396005.  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, high speed data mining, regulated information compliance, data leak prevention and data privacy protection, and network intrusion prevention and detection products.  Intrusion’s product families include TraceCop™ for entity identification, Savant™ for network data mining, Compliance Commander™ for regulated information compliance, data leak prevention 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 may contain certain forward-looking statements, which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties.  Such statements include, without limitations, statements regarding future revenue growth and profitability, the difficulties in forecasting future sales caused by current economic and market conditions, the effects of sales and implementation cycles for our products on our quarterly results and difficulties in accurately estimating market growth, the effect of military actions on government and corporate spending on information security products, spending patterns of, and appropriations to, U.S. government departments, as w ell 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.  The factors that could cause actual results to differ materially from expectations are detailed in the Company’s most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”

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INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	December 31,			December 31,
	2010			2009
ASSETS
Current Assets:
Cash and cash equivalents	$	540		$	519
Accounts receivable	222			351
Inventories, net	61			7
Prepaid expenses	23			68
Total current assets	846			945
Property and equipment, net	117			146
Other assets	39			39
TOTAL ASSETS	$	1,002		$	1,130
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	529		$	674
Dividends payable	22			360
Deferred revenue	983			93
Total current liabilities	1,534			1,127
Loan payable to officer	230			970
Stockholders’ Deficit:
Preferred stock, $.01 par value:
Authorized shares — 5,000
Series 1 shares issued and outstanding — 220 Liquidation preference of $1,114 as of December 31, 2010	778			778
Series 2 shares issued and outstanding — 460 Liquidation preference of $1,155 as of December 31, 2010	724			724
Series 3 shares issued and outstanding — 354 Liquidation preference of $775 as of December 31, 2010	504			504
Common stock, $.01 par value:
Authorized shares — 80,000 Issued shares — 11,828 in 2010 and 11,715 in 2009 Outstanding shares — 11,818 in 2010 and 11,705 in 2009	118			117
Common stock held in treasury, at cost — 10 shares	(362		)	(362		)
Additional paid-in capital	55,570			55,545
Accumulated deficit	(57,868		)	(58,094		)
Accumulated other comprehensive loss	(226		)	(179		)
Total stockholders’ deficit	(762		)	(967		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,002		$	1,130

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INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2010			2009			2010			2009
Revenue	$	938		$	1,519		$	5,588		$	4,920
Cost of revenue	364			517			2,060			1,662
Gross profit	574			1,002			3,528			3,258
Operating expenses:
Sales and marketing	281			189			921			922
Research and development	372			202			1,395			1,106
General and administrative	214			213			992			980
Operating income (loss)	(293		)	398			220			250
Other income	—			—			47			—
Interest expense, net	(9		)	(19		)	(41		)	(64		)
Income (loss) before income taxes	(302		)	379			226			186
Income tax provision	—			—			—			—
Net income (loss)	(302		)	379			226			186
Preferred stock dividends accrued	(38		)	(38		)	(136		)	(154		)
Net Income (loss) attributable to common stockholders	$	(340	)	$	341		$	90		$	32
Net income (loss) per share attributable to common stockholders: Basic	$	(0.03	)	$	0.03		$	0.01		$	0.00
Diluted	$	(0.03	)	$	0.03		$	0.01		$	0.00
Weighted average shares outstanding:
Basic	11,798			11,705			11,745			11,678
Diluted	11,798			13,206			13,366			12,873

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