Revenue Increases 16% Sequentially; Gross Profit Margin Reaches 60%
RICHARDSON, Texas, Nov. 3 /PRNewswire-FirstCall/ -- Intrusion Inc.
(NASDAQ:INTZ), ("Intrusion") today announced financial results for
the three months ended September 30, 2005. Revenue for the third
quarter 2005 was $2.0 million, compared to $1.7 million for third
quarter 2004. Third quarter revenue increased 16% sequentially from
the second quarter of 2005. Intrusion's net loss was $0.5 million
in the third quarter 2005, compared to $0.9 million in the third
quarter 2004. Third quarter net loss decreased 49% sequentially
from second quarter of 2005. Gross profit margin was 60% of revenue
in the third quarter of 2005 compared to 57% of revenue in the
second quarter of 2005 and 50% of revenue in the third quarter of
2004. Intrusion's third quarter 2005 operating expenses were $1.7
million, compared to $1.9 million for the second quarter 2005 and
$1.8 million for the third quarter 2004. As of September 30, 2005,
Intrusion reported cash, cash equivalents and short-term
investments of $2.9 million, working capital of $2.4 million and no
debt. The net decrease in cash, cash equivalents and short-term
investments in the third quarter was $0.7 million, compared to $0.6
million in the second quarter 2005 and $1.1 million in the third
quarter 2004. "Our financial results continue to improve with
sequential revenue growth and net loss reduction for the past two
quarters," stated G. Ward Paxton, Chairman, President and CEO of
Intrusion. "If the current trend continues, we anticipate we will
reach profitability with revenue between $2.5 and $2.8 million per
quarter. During the third quarter the business momentum related to
Intrusion's new Compliance Commander(TM), Regulated Information
Compliance, Data Privacy and Identity Theft Prevention product
family increased significantly. For example, at the beginning of
the third quarter, we had Compliance Commander(TM) evaluations with
six potential customers with estimated potential revenue of
approximately $145,000. By the end of the third quarter, we had
evaluations with twenty-eight potential customers with estimated
potential revenue of $907,000." Recently, Intrusion announced
Compliance Commander(TM) sales to Atlanta Postal Credit Union and
Texas Bank and Trust. Intrusion's two additional product lines,
SecureNet(TM) Intrusion Prevention/Detection and TraceCop(TM)
Entity Identification systems, continue to generate the majority of
Intrusion's revenue. The U.S. Government is Intrusion's largest
customer with revenue coming from several different government
entities. An additional large U.S. Army base purchased and
installed SecureNet(TM) Intrusion Prevention/Detection systems
during the third quarter. This was the first phase for this new
U.S. Army customer. The majority of Compliance Commander(TM)
systems will be sold to commercial customers, which will shift the
mix between Government and Commercial sales toward the Commercial
side as Compliance Commander(TM) sales increase. 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 November
10, 2005 by calling 1-800-642-1687 (if outside the United States,
1-706-645-9291). At the replay prompt, enter conference
identification number 1650592. Additionally, a live and archived
audio webcast of the conference call will be available at
http://www.intrusion.com/ . About Intrusion Inc. Intrusion Inc. is
a leading global provider of regulated information compliance,
entity identification systems, data privacy protection products,
and network intrusion prevention and detection solutions.
Intrusion's product families include the Compliance Commander(TM)
for regulated information compliance, data privacy protection and
identity theft prevention, TraceCop(TM) identification and location
system, Intrusion SpySnare(TM) for real-time inline blocking of
spyware and unwanted P2P applications, and Intrusion SecureNet(TM)
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
http://www.intrusion.com/ . This release, other than historical
information, may include forward- looking statements regarding
future events or the future financial performance of the Company.
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, including
but not limited to the following: the difficulties in forecasting
future sales caused by current economic and market conditions, the
effect of military actions on government and corporate spending on
information security products, spending patterns of, and
appropriations to, U.S. government departments, the impact of our
cost reduction programs and our refocused product line, the
difficulties and uncertainties in successfully developing and
introducing new products in emerging markets, market acceptance of
our products, the impact of our sustained losses on our ability to
successfully operate and grow our business, our stock price and our
ongoing Nasdaq eligibility, our ability to generate sufficient cash
flow or obtain additional financing on acceptable terms in order to
fund ongoing liquidity needs, the highly competitive market for our
products, the effects of sales and implementation cycles for our
products on our quarterly results, difficulties in accurately
estimating market growth, the consolidation of the information
security industry, the impact of changing economic conditions,
business conditions in the information security industry, our
ability to manage acquisitions effectively, our ability to manage
discontinued operations effectively, the impact of market peers and
their products as well as risks concerning future technology and
others identified in our Annual Report on Form 10-KSB, as amended,
and other Securities and Exchange Commission filings. These filings
can be obtained by contacting Intrusion Investor Relations. This
release may include various non-GAAP financial measures (as defined
by SEC Regulation G). The Company's management believes these
measures provide useful information to investors about the
Company's financial condition and results of operations for the
period presented by eliminating the effects of one-time and other
transactions that can distort underlying operational results in
order to provide greater comparability of the Company's quarterly
financial performance on a year-to-year basis. The most directly
comparable GAAP financial measures and reconciliation of the
differences between the GAAP financial measures can be found in the
text of this release and the Company's Unaudited Condensed
Consolidated Statements of Operations attached to this release.
INTRUSION INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands except par value amounts) September 30, December 31, 2005
2004 ASSETS Current Assets: Cash and cash equivalents $ 2,398 $
2,315 Short-term investments 500 75 Accounts receivable, net of
allowance for doubtful accounts of $223 in 2005 and $508 in 2004
902 1,220 Inventories, net 519 950 Prepaid expenses 189 393 Total
current assets 4,508 4,953 Property and equipment, net 294 299
Other assets 43 64 TOTAL ASSETS $ 4,845 $ 5,316 LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and
accrued expenses $ 1,368 $ 1,667 Deferred revenue 713 799 Total
current liabilities 2,081 2,466 Stockholders' Equity: Preferred
stock, $.01 par value: Authorized shares - 5,000 Series 1 shares
issued and outstanding - 389 in 2005 and 840 in 2004 Liquidation
preference of $1,994 in 2005 1,375 2,968 Series 2 shares issued and
outstanding - 500 in 2005 Liquidation preference of $1,256 in 2005
787 --- Common stock, $.01 par value: Authorized shares - 80,000
Issued shares - 6,714 in 2005 and 5,431 in 2004 Outstanding shares
- 6,704 in 2005 and 5,421 in 2004 67 54 Common stock held in
treasury, at cost - 10 shares (362) (362) Additional paid-in
capital 52,251 49,095 Accumulated deficit (51,175) (48,732)
Accumulated other comprehensive loss (179) (173) Total
stockholders' equity 2,764 2,850 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,845 $ 5,316 INTRUSION INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands
except per share amounts) Three Months Ended Nine Months Ended
September 30, September 30, 2005 2004 2005 2004 Revenue $1,978
$1,677 $4,872 $4,047 Cost of revenue 797 843 2,064 2,056 Gross
profit 1,181 834 2,808 1,991 Operating expenses: Sales and
marketing 797 894 2,429 2,867 Research and development 552 613
1,957 1,947 General and administrative 336 304 868 884 Severance
and related costs --- 5 55 134 Operating loss (504) (982) (2,501)
(3,841) Interest income, net 23 9 56 34 Other income, net --- 26 2
67 Loss before income taxes (481) (947) (2,443) (3,740) Income tax
provision --- --- --- --- Net loss (481) (947) (2,443) (3,740)
Preferred stock dividends accrued (44) (67) (129) (129) Beneficial
conversion feature on preferred stock --- --- (919) (938) Net loss
attributable to common stockholders $(525) $(1,014) $(3,491)
$(4,807) Net loss per share attributable to common stockholders
(basic and diluted) $(0.08) $(0.20) $(0.56) $(0.93) Weighted
average shares outstanding - Basic and Diluted 6,586 5,166 6,270
5,166 Contact Michael L. Paxton, VP, CFO 972.301.3658,
http://www.newscom.com/cgi-bin/prnh/20030703/INTRUSIONLOGO
http://photoarchive.ap.org/ DATASOURCE: Intrusion Inc. CONTACT:
Michael L. Paxton, VP, CFO of Intrusion Inc., +1-972-301-3658, or
Web site: http://www.intrusion.com/
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