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 12, 2019

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. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INTZ	OTCQB Venture Market

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 12, 2019, Intrusion Inc. issued a press release announcing its financial results for the second quarter ended June 30, 2019. 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 12, 2019.

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 12, 2019	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 August 12, 2019.

3

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. REPORTS NET INCOME OF $1.8 MILLION FOR SECOND QUARTER 2019

Richardson, Texas – August 12, 2019 – Intrusion Inc. (OTCQB: INTZ), (“Intrusion”) announced today financial results for the three and six months ended June 30, 2019.

Intrusion’s net income was $1.8 million in the second quarter 2019, compared to a net income of $474 thousand in the second quarter 2018 and net income of $947 thousand in the first quarter 2019.

Revenue for the second quarter 2019 was $4.0 million compared to $2.4 million in the second quarter 2018 and $3.2 million for the first quarter 2019.

Gross profit margin was 60 percent of revenue in the second quarter of 2019 compared to 61 percent in the second quarter 2018 and 60 percent in the first quarter 2019.

Intrusion’s second quarter 2019 operating expenses were $0.7 million compared to $0.9 million in the second quarter 2018 and $0.9 million in the first quarter 2019. Operating expenses benefited from a $200 thousand reduction in second quarter sales and marketing expense due to a reimbursement of a prior period expense from a customer. Operating expenses also benefited from reduced sales and marketing expenses associated with shifting expenses to cost of sales for current projects. It is expected that sales and marketing expense will return to more traditional levels in the third quarter 2019.   

As of June 30, 2019, Intrusion reported cash and cash equivalents of $1.5 million, working capital of $1.4 million and debt of $91 thousand.

“Our balance sheet continues to improve with loan payable to officer paid in full, compared to a balance of $1.8 million at year end 2018, and a cash balance of $1.5 million at June 30, 2019. Orders for the second quarter 2019 totaled $2.9 million, all from existing customers,” stated G. Ward Paxton, President and CEO of Intrusion.

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 1-877-258-4925. 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 19, 2019 by calling 1-855-859-2056 or 1-800-585-8367. At the replay prompt, enter conference identification number 6866927. Additionally, a live and archived audio webcast of the conference call will be available at www.intrusion.com.

Intrusion

Second Quarter 2019 Results

Page 2 of 4

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. We develop, market and support a family of entity identification, high-speed data mining, cybercrime and advanced persistent threat detection products.

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 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

Second Quarter 2019 Results

Page 3 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	June 30,			December 31,
	2019			2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,477		$	1,652
Accounts receivable		2,705			1,967
Prepaid expenses		325			91
Total current assets		4,507			3,710
Noncurrent Assets
Property and equipment, net		314			200
Finance leases right-of-use asset, net		89			121
Operating leases right-of-use asset, net		1,467			—
Other assets		38			38
Total noncurrent assets		1,908			359
TOTAL ASSETS	$	6,415		$	4,069
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses	$	1,568		$	1,596
Dividends payable		20			594
Finance leases liability, current portion		48			58
Operating lease liability, current portion		271			—
Deferred revenue		1,183			1,004
Total current liabilities		3,090			3,252
Noncurrent Liabilities
Loan payable to officer		—			1,815
Finance leases liability, noncurrent portion		43			64
Operating lease liability, noncurrent portion		1,460			—
Total noncurrent liabilities		1,503			1,879
Stockholders' Equity (Deficit):
Preferred stock, $.01 par value:
Authorized shares – 5,000
Series 1 shares issued and outstanding – 200
Liquidation preference of $1,012 in 2019 and $1,213 in 2018		707			707
Series 2 shares issued and outstanding – 460 Liquidation preference of $1,155 in 2019 and $1,385 in 2018		724			724
Series 3 shares issued and outstanding – 289 Liquidation preference of $633 in 2019 and $760 in 2018		412			412
Common stock, $.01 par value:
Authorized shares – 80,000
Issued shares – 13,539 in 2019 and 13,259 in 2018 Outstanding shares – 13,529 in 2019 and 13,249 in 2018		135			133
Common stock held in treasury, at cost – 10 shares		(362	)		(362	)
Additional paid-in capital		56,785			56,609
Accumulated deficit		(56,536	)		(59,242	)
Accumulated other comprehensive loss		(43	)		(43	)
Total stockholders' equity (deficit)		1,822			(1,062	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	6,415		$	4,069

Intrusion

Second Quarter 2019 Results

Page 4 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue	$	4,020		$	2,369		$	7,211		$	4,632
Cost of revenue		1,590			926			2,874			1,778
Gross profit		2,430			1,443			4,337			2,854
Operating expenses:
Sales and marketing		46			431			458			845
Research and development		296			200			477			503
General and administrative		321			290			652			585
Operating income		1,767			522			2,750			921
Interest expense, net		(9	)		(48	)		(44	)		(101	)
Income before income taxes		1,758			474			2,706			820
Income tax provision		—			—			—			—
Net income	$	1,758		$	474		$	2,706		$	820
Preferred stock dividends accrued		(35	)		(35	)		(69	)		(69	)
Net income attributable to common stockholders	$	1,723		$	439		$	2,637		$	751
Net income per share attributable to common stockholders:
Basic	$	0.13		$	0.03		$	0.20		$	0.06
Diluted	$	0.11		$	0.03		$	0.17		$	0.05
Weighted average common shares outstanding:
Basic		13,523			13,017			13,466			12,982
Diluted		15,371			14,791			15,314			14,756