8-K

UNITED STATES

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): 03/29/2006

INFORMATION ANALYSIS INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 0-22405

VA	54-1167364
(State or Other Jurisdiction Of Incorporation or Organization)	(I.R.S. Employer Identification No.)

11240 Waples Mill Rd Ste 201

Fairfax, VA 22030

(Address of Principal Executive Offices, Including Zip Code)

703-383-3000

(Registrant’s Telephone Number, Including Area Code)

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 (see General Instruction A.2. below):

¨ 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(17CFR240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act(17CFR240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17CFR240.13e-4(c))

Items to be Included in this Report

Item 2.02. Results of Operations and Financial Condition

On March 29, 2006, Information Analysis Incorporated issued a press release reporting earnings and other financial results for its fourth quarter and year ending 2005. A copy of this press release, captioned “Information Analysis Inc. Announces Fourth Quarter Results”, is attached as Exhibit 99.1 to this Current Report on Form 8-K. The information in this Current Report on Form 8-K, including the exhibit, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1 Press Release dated March 29, 2006, captioned:

“Information Analysis Inc. Announces Fourth Quarter Results”

Signature(s)

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.

	INFORMATION ANALYSIS INCORPORATED
Date: March 31, 2006.	By:	/s/ Matthew T. Sands
		Matthew T. Sands
		Controller

Exhibit Index

Exhibit No.	Description
EX-99.1	IAI Press Release dated March 29, 2006, captioned: “Information Analysis, Inc. Announces Fourth Quarter Results”

EX-99.1

Exhibit 99.1

For additional information contact:

Richard S. DeRose (703) 293-7901

For release:

March 29, 2006 at 9:00 a.m.

Information Analysis Inc. Announces Fourth Quarter Results

FAIRFAX, VIRGINIA – Information Analysis Inc. (IAIC:OTCBB) today reported results for the fourth quarter and full year ended December 31, 2005. Revenues were $2,950,000, an increase of 14% from the $2,597,000 reported in the fourth quarter 2004. The Information Technology services company reported net income of $261,000 or $0.02 per share basic and diluted, compared to net income of $105,000 or $0.01 per share basic and diluted in the comparable period in 2004.

For the year ended December 31, 2005, IAI posted revenue of $10,772,000 and net income of $732,000, or $0.07 per share basic and diluted. The Company reported revenue of $9,309,000 and net income of $572,000 or $0.06 per share basic and $0.05 per share diluted for the year ended December 31, 2004.

“This is the third year in a row that the company has grown year over year. In the last two years combined our growth has been nearly 50%. Just as important, our profitability has reached nearly 7%.,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. “We accomplished our initial goals, set in 2002, which were to reach financial stability and gain momentum in increasing profitable revenue. Both accomplishments are critical to our future success. Our return to positive stockholder equity has enabled us to secure a new credit facility of $1,000,000 to finance current and future operations. Our second goal was accomplished through new business relationships. By participating in the Mainframe Migration Alliance (MMA), a consortium of organizations, including Microsoft and Micro Focus, that help customers migrate application workload from the mainframe to the Windows platform, we have been able to build our pipeline of potential customers. We expect to convert that pipeline into additional revenue during 2006 and future years. As a partner with Adobe, we have obtained contracts with the Department of Veterans Affairs and the Internal Revenue Service. As a result, Adobe has brought IAI into more opportunities that should enhance our future business.

“We expect to continue our strong performance and to grow organically, while we also pursue merger/acquisition opportunities with other organizations.”

—more—

Information Analysis Announces Fourth Quarter Results

March 29, 2006

Page 2 of 4

About Information Analysis Incorporated

Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is an information technology services company. The Company is a web solution provider and software conversion specialist, modernizing legacy systems and extending their reach to the internet world.

Additional information for investors

This release may contain forward-looking statements regarding the Company’s business, customer prospects, or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in the Company’s 10-KSB for the fiscal year ended December 31, 2005 and in other filings with the Securities and Exchange Commission.

Information Analysis Announces Fourth Quarter Results

March 29, 2006

Page 3 of 4

Information Analysis Incorporated

Condensed Consolidated Statements of Operations

	Three months ended December 31,
(in thousands, except per share data)	2005			2004
Sales:
Professional fees	$	2,187		$	2,321
Software sales		763			276
Total sales		2,950			2,597
Cost of goods sold and services provided:
Cost of professional fees		1,689			1,819
Cost of software sales		534			106
Total cost of sales		2,223			1,925
Gross profit		727			672
Operating expenses:
Selling, general and administrative		(462	)		(558	)
Income from operations		265			114
Other expenses, net		1			(9	)
Income before provision for income taxes		266			105
Provision for income taxes		5			—
Net income	$	261		$	105
Earnings per Common Share: Basic and Diluted
Basic net income	$	0.02		$	0.01
Diluted net income	$	0.02		$	0.01
Shares used in calculating earnings per share:
Basic		10,620,570			10,283,515
Diluted		11,388,849			10,979,100
	Twelve months ended December 31,
(in thousands, except per share data)	2005			2004
Sales:
Professional fees	$	9,045		$	8,635
Software sales		1,727			674
Total revenue		10,772			9,309
Cost of goods sold and services provided:
Cost of professional fees		6,960			6,917
Cost of software sales		1,348			420
Total cost of sales		8,308			7,337
Gross profit		2,464			1,972
Operating expenses:
Selling, general and administrative		(1,715	)		(1,656	)
Other operating income		—			290
Income (loss) from operations		749			606
Other expenses, net		(12	)		(34	)
Income (loss) before provision for income taxes		737			572
Provision for income taxes		5			—
Net income (loss)	$	732		$	572
Earnings per Common Share: Basic and Diluted
Basic net income (loss)	$	0.07		$	0.06
Diluted net income (loss)	$	0.07		$	0.05
Shares used in calculating earnings per share:
Basic		10,376,247			10,283,515
Diluted		10,968,026			11,015,724

Information Analysis Announces Fourth Quarter Results

March 29, 2006

Page 4 of 4

Information Analysis Incorporated

Consolidated Balance Sheets

(in thousands)	As of December 31, 2005			As of December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	452		$	116
Accounts receivable, net		1,994			2,170
Prepaid expenses		183			47
Note receivable		85			85
Other receivables		15			7
Capitalized Software, net		—			—
Total current assets		2,729			2,425
Fixed assets, net		57			35
Other assets		9			7
Investments		—			3
Total assets	$	2,795		$	2,470
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,175		$	1,567
Accrued payroll and related liabilities		321			277
Deferred revenue		214			83
Other accrued liabilities		125			65
Income taxes payable		4			—
Notes payable		—			125
Revolving line of credit		—			220
Total current liabilities		1,839			2,337
Total liabilities		1,839			2,337
Common stock, par value $0.01, 30,000,000 shares authorized; 12,127,626 shares issued, 10,623,015 outstanding at December 31, 2005, and 11,788,126 shares issued, 10,283,515 outstanding at December 31, 2004,		121			118
Additional paid in capital		14,212			14,122
Accumulated deficit		(12,511	)		(13,244	)
Other comprehensive income		(12	)		(9	)
Less treasury stock; 1,504,611 shares at cost		(854	)		(854	)
Total stockholders’ equity		956			133
Total liabilities and stockholders’ equity	$	2,795		$	2,470

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