Revenue Increases 42% Sequentially; Net Loss Decreases 82%
Sequentially; Cash Burn Near Zero in Third Quarter RICHARDSON,
Texas, Oct. 26 /PRNewswire-FirstCall/ -- Intrusion Inc. (OTC:INTZ)
(BULLETIN BOARD: INTZ) , ("Intrusion") today announced financial
results for the three months ended September 30, 2006. Revenues for
the third quarter 2006 were $1.7 million, compared to $1.2 million
for the second quarter 2006 and $2.0 million for third quarter
2005. Third quarter revenue increased 42% sequentially from the
second quarter. Intrusion's net loss was $0.2 million in the third
quarter 2006, compared to $1.1 million for the second quarter 2006
and $0.5 million in the third quarter 2005. Third quarter net loss
decreased 82% sequentially from the second quarter. Gross profit
margin was 55% of revenue in the third quarter of 2006, compared to
62% for the second quarter 2006 and 60% for the third quarter of
2005. The decline in gross profit margin was primarily a result of
changes in product mix. Intrusion's third quarter 2006 operating
expenses were $1.1 million, compared to $1.8 million for the second
quarter 2006 and $1.7 million for the third quarter 2005. As of
September 30, 2006, Intrusion reported cash, cash equivalents and
short-term investments of $0.3 million, working capital of $0.2
million and no debt. Cash burn was nineteen thousand dollars in the
third quarter 2006. "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 believe we could
achieve profitability when revenues reach between $1.9 and $2.2
million per quarter. TraceCop revenue continued to grow in the
third quarter with revenue reaching $0.9 million compared to $0.75
million in the second quarter. During the third quarter the
business momentum related to the Compliance Commander(TM) product
family increased significantly. Revenue for Compliance Commander in
the third quarter was $0.3 million compared to $0.1 million in the
second quarter," Paxton concluded. Intrusion's revenues in the
third quarter were split among the following product lines:
TraceCop(TM) 53%, SecureNet(TM) 29% and Compliance Commander 18%.
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 November 2, 2006 by calling 1-800-642-1687 (if
outside the United States, 1-706-645-9291). At the replay prompt,
enter conference identification number 9422352. 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.
In addition, Intrusion offers deployment technologies along with
security services for the information- driven economy. 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 service,
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.
Such statements include, without limitations, statements regarding
future revenue growth and profitability, 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, 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
the recent loss of our 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. INTRUSION INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except par
value amounts) September 30, December 31, 2006 2005 ASSETS Current
Assets: Cash and cash equivalents $300 $2,844 Short-term
investments 500 Accounts receivable, net of allowance for doubtful
accounts of $89 in 2006 and $102 in 2005 921 443 Inventories, net
239 373 Prepaid expenses 63 191 Total current assets 1,523 4,351
Property and equipment, net 179 256 Other assets 41 41 TOTAL ASSETS
$1,743 $4,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable and accrued expenses $932 $1,142
Deferred revenue 361 527 Total current liabilities 1,293 1,669
Stockholders' Equity: Preferred stock, $.01 par value: Authorized
shares - 5,000 Series 1 shares issued and outstanding - 260
Liquidation preference of $1,331 918 918 Series 2 shares issued and
outstanding - 460 in 2006 and 500 in 2005 Liquidation preference of
$1,155 724 787 Series 3 shares issued and outstanding - 469 in 2006
and 565 in 2005 Liquidation preference of $1,026 667 805 Common
stock, $.01 par value: Authorized shares - 80,000 Issued shares -
7,056 in 2006 and 6,919 in 2005 Outstanding shares - 7,046 in 2006
and 6,909 in 2005 71 69 Common stock held in treasury, at cost - 10
shares (362) (362) Additional paid-in capital 53,464 52,994
Accumulated deficit (54,853) (52,053) Accumulated other
comprehensive loss (179) (179) Total stockholders' equity 450 2,979
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,743 $4,648 INTRUSION
INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands except per share amounts) Three Months Ended Nine Months
Ended September 30, September 30, 2006 2005 2006 2005 Revenue
$1,736 $1,978 $3,791 $4,872 Cost of revenue 778 797 1,624 2,064
Gross profit 958 1,181 2,167 2,808 Operating expenses: Sales and
marketing 562 797 2,227 2,429 Research and development 272 552
1,679 1,957 General and administrative 306 336 1,039 868 Severance
and related costs --- --- --- 55 Operating loss (182) (504) (2,778)
(2,501) Interest income, net 2 23 43 56 Other income (expense), net
--- --- (65) 2 Loss before income taxes (180) (481) (2,800) (2,443)
Income tax provision --- --- --- --- Net loss (180) (481) (2,800)
(2,443) Preferred stock dividends accrued (44) (44) (132) (129)
Beneficial conversion feature on preferred stock --- --- --- (919)
Net loss attributable to common stockholders $(224) $(525) $(2,932)
$(3,491) Net loss per share attributable to common stockholders
(basic and diluted) $(0.03) $(0.08) $(0.42) $(0.56) Weighted
average shares outstanding - Basic and Diluted 7,046 6,586 7,025
6,270 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:
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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