$2.0 Million Government Order Booked; Revenues Increase 41%
Sequentially; Gross Profit Margin Reaches 62% RICHARDSON, Texas,
Aug. 8 /PRNewswire-FirstCall/ -- Intrusion Inc. (NASDAQ:INTZ),
("Intrusion") today announced financial results for the three
months ended June 30, 2006. Revenue for the second quarter 2006 was
$1.2 million compared to $0.9 million for the first quarter 2006
and $1.7 million for the second quarter 2005. Second quarter
revenue increased 41% sequentially from the first quarter of 2006.
Intrusion's operating loss was $1.1 million in the second quarter
2006 compared to $1.5 million in the first quarter 2006 and $1.0
million for the second quarter 2005. Gross profit margin was 62
percent of revenue in the second quarter of 2006 compared to 55
percent of revenue in the first quarter of 2006 and 57 percent of
revenue in the second quarter of 2005. Intrusion's second quarter
2006 operating expenses were $1.8 million, compared to $2.0 million
for the first quarter 2006 and $1.9 million for the second quarter
2005. Operating expenses in the first and second quarters of 2006
include $0.2 million in stock based compensation expenses due to
new accounting treatment for stock options under FAS123R. As of
June 30, 2006, Intrusion reported cash, cash equivalents and short-
term investments of $0.3 million, working capital of $0.4 million
and no debt. "The $2.0 million order for TraceCop(TM) and
SecureNet(TM) from the U.S. Government was clearly the highlight of
the second quarter," stated G. Ward Paxton, Chairman, President and
CEO of Intrusion. "Also, we believe the sequential 41% growth of
revenues and the attainment of 62% gross profit margin in the
second quarter represents significant progress. Our sales of
Compliance Commander(TM) increased from $0.03 million in the first
quarter 2006 to $0.1 million in the second quarter," Paxton
concluded. Intrusion's sales of TraceCop in the second quarter 2006
were $0.8 million, up from $0.3 million in the first quarter.
Intrusion sold Compliance Commander to 6 new customers for a total
of $0.1 million in the second quarter. This brings total sales of
Compliance Commander to $0.5 million with a total of 22 customers.
Intrusion has engaged with a total of 138 potential Compliance
Commander Customers representing potential sales of $3.7 million
since the launch of the product. Intrusion's sales in the second
quarter were spread over three product lines: TraceCop 63 percent,
SecureNet 29 percent and Compliance Commander 8 percent. Sales to
the U.S. Government totaled 63 percent of total sales in the second
quarter. 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 1-800-399-2043 (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., CDT until August 15, 2006 by calling 1-800-642-1687
(if outside the United States, 1-706-645-9291). At the replay
prompt, enter conference identification number 3784325.
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 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. INTRUSION INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands except par value amounts)
June 30, Dec. 31, 2006 2005 ASSETS Current Assets: Cash and cash
equivalents $319 $2,844 Short-term investments --- 500 Accounts
receivable, net of allowance for doubtful accounts of $89 in 2006
and $102 in 2005 838 443 Inventories, net 324 373 Prepaid expenses
144 191 Total current assets 1,625 4,351 Property and equipment,
net 200 256 Other assets 41 41 TOTAL ASSETS $1,866 $4,648
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts
payable and accrued expenses $948 $1,142 Deferred revenue 283 527
Total current liabilities 1,231 1,669 Stockholders' Equity:
Preferred stock, $.01 par value: Authorized shares - 5,000 Series 1
shares issued and outstanding - 260 Liquidation preference of
$1,316 918 918 Series 2 shares issued and outstanding - 460 in 2006
and 500 in 2005 724 787 Liquidation preference of $1,155 Series 3
shares issued and outstanding - 469 in 2006 and 565 in 2005 667 805
Liquidation preference of $1,026 Common stock, $.01 par value:
Authorized shares - 80,000 Issued shares - 7,056 in 2006 and 6,919
in 2005 71 69 Outstanding shares - 7,046 in 2006 and 6,909 in 2005
Common stock held in treasury, at cost - 10 shares (362) (362)
Additional paid-in capital 53,469 52,994 Accumulated deficit
(54,673) (52,053) Accumulated other comprehensive loss (179) (179)
Total stockholders' equity 635 2,979 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,866 $4,648 INTRUSION INC. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands
except per share amounts) Three Months Ended Six Months Ended June
30, June 30, 2006 2005 2006 2005 Revenue $1,204 $1,709 $2,055
$2,894 Cost of revenue 459 740 846 1,267 Gross profit 745 969 1,209
1,627 Operating expenses: Sales and marketing 848 873 1,665 1,632
Research and development 615 703 1,407 1,405 General and
administrative 385 304 733 532 Severance and related costs --- 55
--- 55 Operating loss (1,103) (966) (2,596) (1,997) Interest
income, net 11 29 41 33 Other income (expense), net (53) 2 (65) 2
Loss before income taxes (1,145) (935) (2,620) (1,962) Income tax
provision --- --- --- --- Net loss (1,145) (935) (2,620) (1,962)
Preferred stock dividends accrued (43) (56) (88) (85) Beneficial
conversion feature on preferred stock --- --- --- (919) Net loss
attributable to common stockholders $(1,188) $(991) $(2,708)
$(2,966) Net loss per share attributable to common $(0.17) $(0.16)
$(0.39) $(0.49) stockholders (basic and diluted) Weighted average
shares outstanding - Basic and Diluted 7,046 6,182 7,014 6,110
Financial Contact Michael L. Paxton, VP, CFO 972.301.3658, Media
Contact Jay Barbour, VP Marketing 972.664.8107,
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 , both of
Intrusion Inc. Web site: http://www.intrusion.com/
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