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 13, 2017

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:

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 14, 2017, Intrusion Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2017. 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 14, 2017.

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 13, 2017	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 14, 2017.

3

EX-99.1

Exhibit 99.1

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

Contact

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

INTRUSION INC. REPORTS REVENUE OF $1.7 MILLION IN THE THIRD QUARTER OF 2017

Richardson, Texas – November 13, 2017 – Intrusion Inc. (OTCQB: INTZ), (“Intrusion”) announced today financial results for the three and nine months ended September 30, 2017.

Intrusion’s net income was $568 thousand in the third quarter 2017 compared to a net loss of $280 thousand in the third quarter 2016. Included in the third quarter 2017 net income was $928 thousand of other income, which included $872 thousand from the sale of certain IP addresses that were not currently being used in the Company’s business operations and were not required for the Company’s future business plans.

Intrusion’s revenue for the third quarter 2017 was $1.7 million compared to $1.6 million in the third quarter 2016 and $1.6 million for the second quarter 2017.

Gross profit was $0.9 million or 56 percent of revenue in the third quarter of 2017 compared to $1.0 million or 62 percent of revenue in the third quarter 2016 and $0.9 million or 59% of revenue in the second quarter 2017. The reduction of gross profit percentage is primarily due to projects having more hardware than in past orders. A gross profit margin on these projects is lower than projects composed of software and labor only.

Intrusion’s third quarter 2017 operating expenses were $1.3 million compared to $1.2 million in the third quarter 2016 and $1.3 million in the second quarter 2017.

As of September 30, 2017, Intrusion reported cash and cash equivalents of $0.3 million, a working capital deficiency of $1.0 million and debt of $3.0 million.

“Orders booked in the third quarter 2017 were $1.6 million; however, we have already booked $2.9 million of orders in the fourth quarter. These fourth quarter orders are expected to increase revenue by $0.6 million per quarter,” stated G. Ward Paxton, President and CEO of Intrusion.

Intrusion

Third Quarter 2017 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 1-877-258-4925 (if outside the United States, 1-973-500-2152). 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 20, 2017 by calling 1-855-859-2056 (if outside the United States, 1-404-537-3406). At the replay prompt, enter conference identification number 4649089. 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, high speed data mining, cybercrime and advanced persistent threat detection products. Intrusion’s product families include TraceCop™ for identity discovery and disclosure, and Savant™ for network data mining and advanced persistent threat 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, including significant expected future revenue from orders booked in fourth quarter of this year, forecasted future sales opportunities with potential new customers, 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 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. 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.”

Intrusion

Third Quarter 2017 Results

Page 3 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	September 30,			December 31,
	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents	$	263		$	64
Accounts receivable		879			745
Inventories, net		30			45
Prepaid expenses		37			75
Total current assets		1,209			929
Property and equipment, net		162			308
Other assets		38			40
TOTAL ASSETS	$	1,409		$	1,277
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	1,060		$	896
Dividends payable		411			303
Obligations under capital lease, current portion		70			139
Deferred revenue		658			395
Total current liabilities		2,199			1,733
Loan payable to officer		2,865			2,885
Obligations under capital lease, noncurrent portion		22			61
Stockholders' Deficit:
Preferred stock, $.01 par value:
Authorized shares – 5,000
Series 1 shares issued and outstanding–200 in 2017 and 2016
Liquidation preference of $1,150 in 2017 and $1,113 in 2016		707			707
Series 2 shares issued and outstanding–460 in 2017 and 2016
Liquidation preference of $1,313 in 2017 and $1,270 in 2016		724			724
Series 3 shares issued and outstanding–289 in 2017 and 2016
Liquidation preference of $720 in 2017 and $697 in 2016		412			412
Common stock, $.01 par value:
Authorized shares – 80,000
Issued shares – 12,808 in 2017 and 12,758 in 2016
Outstanding shares – 12,798 in 2017 and 12,748 in 2016		128			128
Common stock held in treasury, at cost – 10 shares		(362	)		(362	)
Additional paid-in capital		56,541			56,595
Accumulated deficit		(61,720	)		(61,499	)
Accumulated other comprehensive loss		(107	)		(107	)
Total stockholders' deficit		(3,677	)		(3,402	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,409		$	1,277

Intrusion

Third Quarter 2017 Results

Page 4 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue	$	1,678		$	1,595		$	4,780		$	4,693
Cost of revenue		736			610			1,951			1,677
Gross profit		942			985			2,829			3,016
Operating expenses:
Sales and marketing		394			429			1,169			1,276
Research and development		617			508			1,797			1,908
General and administrative		242			292			855			941
Operating income (loss)		(311	)		(244	)		(992	)		(1,109	)
Other Income		928			—			928			—
Interest expense, net		(49	)		(36	)		(157	)		(102	)
Net income (loss)	$	568		$	(280	)	$	(221	)	$	(1,211	)
Preferred stock dividends accrued		(35	)		(35	)		(104	)		(104	)
Net income (loss) attributable to common stockholders	$	533		$	(315	)	$	(325	)	$	(1,315	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.04		$	(0.02	)	$	(0.03	)	$	(0.10	)
Diluted	$	0.04		$	(0.02	)	$	(0.03	)	$	(0.10	)
Weighted average common shares outstanding:
Basic		12,798			12,748			12,781			12,733
Diluted		14,076			12,748			12,781			12,733