INTZ Intrusion Inc

RICHARDSON, Texas, Feb. 9 /PRNewswire-FirstCall/ -- Intrusion Inc. (NASDAQ:INTZ), ("Intrusion") today announced financial results for the quarter and year ended December 31, 2005. Revenue for the fourth quarter was $1.1 million, compared to $2.0 million for the fourth quarter 2004. Revenue for the year 2005 was $6.0 million, the same as 2004. Intrusion's net loss was $0.9 million in the fourth quarter 2005, compared to $0.8 million in the fourth quarter 2004. Net loss was $3.3 million for the year 2005, compared to $4.6 million for the year 2004. Gross profit margin was 59% of revenue in the fourth quarter of 2005 compared to 55% of revenue in the fourth quarter 2004. For the year 2005, gross profit margin was 58%, up from 51% in 2004. Intrusion's fourth quarter 2005 operating expenses were $1.6 million, compared to $1.8 million for the fourth quarter 2004. For the year 2005 operating expenses were $6.9 million, down from $7.7 million in 2004. As of December 31, 2005, Intrusion reported cash, cash equivalents and short-term investments of $3.3 million, working capital of $2.7 million and no debt. The net increase in cash, cash equivalents and short-term investments in the fourth quarter was $0.4 million due to a private placement offering of preferred stock which resulted in a net inflow of cash of $1.1 million. Excluding the private placement, the decrease in cash, cash equivalents and short-term investments in the fourth quarter was $0.7 million compared to $1.2 million in the fourth quarter 2004. "We were disappointed with our financial results in the fourth quarter," stated G. Ward Paxton, Chairman, President and CEO of Intrusion. "Revenue from the U.S. Government was negatively impacted by Congress' delay in approving the 2006 Federal Budget. In addition, sales of Compliance Commander(TM) to credit unions and banks were affected by longer than expected sales cycles; however, we expect our pipeline for Compliance Commander(TM) to continue to grow. At the end of the fourth quarter, we were engaged with 83 potential Compliance Commander(TM) customers representing estimated revenue of approximately $2.5 million compared to 28 potential customers representing estimated revenue of $0.9 million at the end of the third quarter," Paxton concluded. Intrusion continues to expand its Compliance Commander sales channel and currently has 21 Value Added Resellers and Service Providers, with 110 sales people, covering the U.S. market. Intrusion plans to continue rapid expansion of sales channels during 2006. The majority of Intrusion's revenue in the fourth quarter came from the Company's other two product lines: TraceCop(TM) Entity Identification Systems and SecureNet(TM) Intrusion Prevention/Detection Systems. The majority of revenue from these two product lines resulted from sales to the U.S. Government. The Company also expects the U.S. Government to be the primary customer for these products in 2006. 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 February 16, 2006 by calling 1-800-642-1687 (if outside the United States, 1-706-645-9291). At the replay prompt, enter conference identification number 4944317. 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, our ability to expand revenues through indirect sales channels, 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. Financial Contact Michael L. Paxton, VP, CFO 972.301.3658, Media Contact Jay Barbour, VP Marketing 972.664.8107, INTRUSION INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except par value amounts) December 31, December 31, 2005 2004 ASSETS Current Assets: Cash and cash equivalents $2,844 $2,315 Short-term investments 500 75 Accounts receivable, net of allowance for doubtful accounts and returns of $102 in 2005 and $508 in 2004 443 1,220 Inventories, net 373 950 Prepaid expenses 191 393 Total current assets 4,351 4,953 Property and equipment, net 256 299 Other assets 41 64 TOTAL ASSETS $4,648 $5,316 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $1,142 $1,667 Deferred revenue 527 799 Total current liabilities 1,669 2,466 Stockholders' Equity: Preferred stock, $.01 par value: Authorized shares - 5,000 Series 1 shares issued and outstanding -- 260 in 2005 and 840 in 2004 Liquidation preference of $1,316 in 2005 918 2,968 Series 2 shares issued and outstanding -- 500 in 2005 Liquidation preference of $1,271 in 2005 787 --- Series 3 shares issued and outstanding -- 565 in 2005 Liquidation preference of $1,236 in 2005 805 --- Common stock, $.01 par value: Authorized shares - 80,000 Issued shares - 6,919 in 2005 and 5,431 in 2004 Outstanding shares - 6,909 in 2005 and 5,421 in 2004 69 54 Common stock held in treasury, at cost -- 10 shares (362) (362) Additional paid-in capital 52,994 49,095 Accumulated deficit (52,053) (48,732) Accumulated other comprehensive loss (179) (173) Total stockholders' equity 2,979 2,850 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,648 $5,316 INTRUSION INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share amounts) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Revenue $1,105 $1,972 $5,978 $6,019 Cost of revenue 449 894 2,514 2,950 Gross profit 656 1,078 3,464 3,069 Operating expenses: Sales and marketing 708 823 3,137 3,690 Research and development 596 602 2,553 2,549 General and administrative 258 262 1,126 1,146 Severance and related costs --- 139 55 273 Operating loss (906) (748) (3,407) (4,589) Interest income, net 28 8 84 42 Other income, net --- (48) 2 19 Loss before income taxes (878) (788) (3,321) (4,528) Income tax provision --- --- --- --- Net loss (878) (788) (3,321) (4,528) Preferred stock dividends accrued (39) (62) (168) (192) Beneficial conversion feature on preferred stock (515) --- (1,434) (938) Net loss attributable to common stockholders $(1,432) $(850) $(4,923) $(5,658) Net loss per share attributable to common stockholders (basic and diluted) $(0.21) $(0.16) $(0.77) $(1.09) Weighted average shares outstanding -- Basic and Diluted 6,880 5,208 6,424 5,177 FCMN Contact: mpaxton@intrusion.com http://www.newscom.com/cgi-bin/prnh/20030703/INTRUSIONLOGO http://photoarchive.ap.org/ DATASOURCE: Intrusion Inc. CONTACT: financial, Michael L. Paxton, VP, CFO, +1-972-301-3658, or , or media, Jay Barbour, VP Marketing, +1-972-664-8107, or , for Intrusion Inc. Web site: http://www.intrusion.com/

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