Description of Business	3 Months Ended
Mar. 31, 2013
Description of Business
Description of Business	1. Description of Business We develop, market and support a family of entity identification, high speed data mining, regulated information compliance, data privacy protection and network intrusion prevention/detection products. Our product families include: · TraceCop™ for identity discovery and disclosure, · Savant™ for network data mining, · Compliance Commander™ for regulated information and data privacy protection, and · SecureNet™ for network intrusion prevention and detection. We market and distribute our products through a direct sales force to: · end-users, · value-added resellers, · system integrators, · managed service providers, and · distributors. Our end-user customers include: · U.S. federal government entities, · foreign government entities, · local government entities, · banks, · credit unions, · other financial institutions, · hospitals and other healthcare providers, and · other customers. We were organized in Texas in September 1983 and reincorporated in Delaware in October 1995. For more than 15 years, we provided local area networking equipment and were known as Optical Data Systems or ODS Networks. On April 17, 2000, we announced plans to sell, or otherwise dispose of, our networking divisions, which included our Essential Communications division and our local area networking assets. On June 1, 2000, we changed our name from ODS Networks, Inc. to Intrusion.com, Inc., and our ticker symbol from ODSI to INTZ to reflect our focus on intrusion prevention and detection solutions, along with information compliance and data privacy protection products. On November 1, 2001, we changed our name from Intrusion.com, Inc. to Intrusion Inc. Our principal executive offices are located at 1101 East Arapaho Road, Suite 200, Richardson, Texas 75081, and our telephone number is (972) 234-6400. Our website URL is www.intrusion.com. References to “we”, “us”, “our” or “Intrusion Inc.” refer to Intrusion Inc. and its subsidiaries. Compliance Commander™, SecureNet™ and TraceCop™ are trademarks of Intrusion Inc. As of March 31, 2013, we had cash and cash equivalents of approximately $301,000, up from approximately $52,000 as of December 31, 2012. We generated net income of $57,000 for the quarter ended March 31, 2013 compared to a net loss of $352,000 for the comparable quarter ended March 31, 2012. As of March 31, 2013, in addition to cash and cash equivalents of $301,000, we had $314,000 in funding available under our $0.625 million line of credit at Silicon Valley Bank (“SVB”) and $0.67 million funding available from a promissory note to borrow up to $2.2 million from G. Ward Paxton, the Company’s Chief Executive Officer. We are obligated to make payments of accrued dividends on all our outstanding shares of preferred stock that will reduce our available cash resources. Based on projections of growth in revenue and net income in the coming quarters, and the borrowings available previously mentioned, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months. We expect to fund our operations through Company profits, our line of credit, borrowings from the Company’s CEO, and possibly additional investments of private equity and debt, which, if we are able to obtain, will have the effect of diluting our existing common stockholders, perhaps significantly. Any equity or debt financings, if available at all, may be on terms which are not favorable to us and, in the case of equity financings, may result in dilution to our stockholders. If our operations do not generate positive cash flow in the upcoming year, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, if at all, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.

1. Description of Business

We develop, market and support a family of entity identification, high speed data mining, regulated information compliance, data privacy protection and network intrusion prevention/detection products. Our product families include:

· TraceCop™ for identity discovery and disclosure,

· Savant™ for network data mining,

· Compliance Commander™ for regulated information and data privacy protection, and

· SecureNet™ for network intrusion prevention and detection.

We market and distribute our products through a direct sales force to:

· end-users,

· value-added resellers,

· system integrators,

· managed service providers, and

· distributors.

Our end-user customers include:

· U.S. federal government entities,

· foreign government entities,

· local government entities,

· banks,

· credit unions,

· other financial institutions,

· hospitals and other healthcare providers, and

· other customers.

We were organized in Texas in September 1983 and reincorporated in Delaware in October 1995. For more than 15 years, we provided local area networking equipment and were known as Optical Data Systems or ODS Networks. On April 17, 2000, we announced plans to sell, or otherwise dispose of, our networking divisions, which included our Essential Communications division and our local area networking assets. On June 1, 2000, we changed our name from ODS Networks, Inc. to Intrusion.com, Inc., and our ticker symbol from ODSI to INTZ to reflect our focus on intrusion prevention and detection solutions, along with information compliance and data privacy protection products. On November 1, 2001, we changed our name from Intrusion.com, Inc. to Intrusion Inc.

Our principal executive offices are located at 1101 East Arapaho Road, Suite 200, Richardson, Texas 75081, and our telephone number is (972) 234-6400. Our website URL is www.intrusion.com. References to “we”, “us”, “our” or “Intrusion Inc.” refer to Intrusion Inc. and its subsidiaries. Compliance Commander™, SecureNet™ and TraceCop™ are trademarks of Intrusion Inc.

As of March 31, 2013, we had cash and cash equivalents of approximately $301,000, up from approximately $52,000 as of December 31, 2012. We generated net income of $57,000 for the quarter ended March 31, 2013 compared to a net loss of $352,000 for the comparable quarter ended March 31, 2012. As of March 31, 2013, in addition to cash and cash equivalents of $301,000, we had $314,000 in funding available under our $0.625 million line of credit at Silicon Valley Bank (“SVB”) and $0.67 million funding available from a promissory note to borrow up to $2.2 million from G. Ward Paxton, the Company’s Chief Executive Officer. We are obligated to make payments of accrued dividends on all our outstanding shares of preferred stock that will reduce our available cash resources. Based on projections of growth in revenue and net income in the coming quarters, and the borrowings available previously mentioned, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months. We expect to fund our operations through Company profits, our line of credit, borrowings from the Company’s CEO, and possibly additional investments of private equity and debt, which, if we are able to obtain, will have the effect of diluting our existing common stockholders, perhaps significantly. Any equity or debt financings, if available at all, may be on terms which are not favorable to us and, in the case of equity financings, may result in dilution to our stockholders. If our operations do not generate positive cash flow in the upcoming year, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, if at all, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.