8-K

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): February 11, 2019

INTRUSION INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware	000-20191	75-1911917
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1101 East Arapaho Road, Suite 200, Richardson, Texas	75081
(Address of Principal Executive Offices)	(Zip Code)
(972) 234-6400
(Registrant’s Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

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:

☐  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 (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished pursuant to Item 2.02, Disclosure of Results of Operations and Financial Condition.

On February 11, 2019, Intrusion Inc. issued a press release announcing its financial results for the fourth quarter ended December 31, 2018. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d)     Exhibits

  99.1 — Press release issued by Intrusion Inc. on February 11, 2019.

SIGNATURES

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.

	INTRUSION INC.
Dated: February 11, 2019	By:	/s/ MICHAEL L. PAXTON
		Michael L. Paxton
		Chief Financial Officer

2

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press release issued by Intrusion Inc. on February 11, 2019.

3

EX-99.1

Exhibit 99.1

NEWS RELEASE
	1101 East Arapaho Road  Suite 200  Richardson TX 75081 USA (972) 234-6400 main

Financial Contact

Michael L. Paxton, VP, CFO
972.301.3658, mpaxton@intrusion.com

INTRUSION INC. REPORTS NET INCOME OF $0.9 MILLION AND

REVENUE OF $3.0 MILLION FOR FOURTH QUARTER 2018

Richardson, Texas – February 11, 2019 – Intrusion Inc. (OTCQB: INTZ), (“Intrusion”) today announced financial results for the quarter and year ended December 31, 2018.

Intrusion’s net income for the fourth quarter 2018 was $0.9 million, compared to net income of $0.2 million for the fourth quarter 2017. Net income for the year 2018 was $2.3 million, compared to a net loss of $30 thousand for 2017.

Revenue for the fourth quarter 2018 was $3.0 million, compared to $2.1 million in the fourth quarter 2017. Revenue for the year 2018 was $10.3 million, compared to $6.9 million in 2017.

Gross profit margin was 63% of revenue in the fourth quarter of 2018, compared to 58% of revenue in the fourth quarter 2017. For the year, the gross profit margin increased to 63%, compared to 59% in 2017.

Intrusion’s fourth quarter 2018 operating expenses were $1.0 million, compared to $1.0 million in the fourth quarter 2017. For the year 2018, operating expenses were $4.0 million, compared to $4.8 million in 2017.

As of December 31, 2018, Intrusion reported cash and cash equivalents of $1.7 million, working capital of $0.5 million, and debt of $1.9 million. Comparably, as of December 31, 2017, Intrusion reported cash and cash equivalents of $0.2 million, a working capital deficiency of $0.8 million and debt of $2.9 million.

“Orders booked in the fourth quarter 2018 totaled $5.2 million consisting primarily from renewals of existing projects. For the year 2018 orders totaled $14.4 million, compared to $9.8 million in 2017,” stated G. Ward Paxton, Chairman, President and CEO of Intrusion.

Intrusion

Fourth Quarter 2018 Results

Page 2 of 4

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 1-877-258-4925. 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 18, 2019 by calling 1-855-859-2056 or 1-404-537-3406. At the replay prompt, enter conference identification number 1298823. Additionally, a live and archived audio webcast of the conference call will be available at www.intrusion.com.

About Intrusion Inc.

Intrusion Inc. is a global provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products. Intrusion’s product families include TraceCop™ for identity discovery and disclosure, and Savant™ for network data mining and advanced persistent threat 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 www.intrusion.com.

This release may contain certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties.  Such statements include, without limitations, statements regarding future revenue growth and profitability, forecasted future sales opportunities with potential new customers, the difficulties in forecasting future sales caused by current economic and market conditions, the effects of sales and implementation cycles for our products on our quarterly results and difficulties in accurately estimating market growth, the effect of military actions on government and corporate spending on information security products, spending patterns of, and appropriations to, U.S. government departments, 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. The factors that could cause actual results to differ materially from expectations are detailed in the Company's most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”

Intrusion

Fourth Quarter 2018 Results

Page 3 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except par value amounts)

	December 31,			December 31,
	2018			2017
ASSETS
Current Assets:
Cash and cash equivalents	$	1,652		$	224
Accounts receivable		1,967			962
Inventories, net		—			15
Prepaid expenses		91			89
Total current assets		3,710			1.290
Property and equipment, net		321			124
Other assets		38			38
TOTAL ASSETS	$	4,069		$	1,452
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	1,596		$	1,182
Dividends payable		594			447
Obligations under capital lease, current portion		58			44
Deferred revenue		1,004			406
Total current liabilities		3,252			2,079
Loan payable to officer		1,815			2,865
Obligations under capital lease, noncurrent portion		64			17
Stockholders' Deficit:
Preferred stock, $.01 par value:
Authorized shares – 5,000
Series 1 shares issued/outstanding–200 Liquidation preference of $1,213 in 2018 and $1,163 in 2017		707			707
Series 2 shares issued/outstanding–460 Liquidation preference of $1,385 in 2018 and $1,328 in 2017		724			724
Series 3 shares issued/outstanding–289 Liquidation preference of $760 in 2018 and $728 in 2017		412			412
Common stock, $.01 par value:
Authorized shares – 80,000
Issued shares – 13,259 in 2018 and 12,808 in 2017
Outstanding shares – 13,249 in 2018 and 12,798 in 2017		133			128
Common stock held in treasury, at cost – 10 shares		(362	)		(362	)
Additional paid-in capital		56,609			56,518
Accumulated deficit		(59,242	)		(61,529	)
Accumulated other comprehensive loss		(43	)		(107	)
Total stockholders' deficit		(1,062	)		(3,509	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	4,069		$	1,452

Intrusion

Fourth Quarter 2018 Results

Page 4 of 4

INTRUSION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share amounts)

	Three Months Ended December 31,						Year Ended December 31,
	2018			2017			2018			2017
Revenue	$	2,979		$	2,081		$	10,276		$	6,862
Cost of revenue		1,102			872			3,847			2,824
Gross profit		1,877			1,209			6,429			4,038
Operating expenses:
Sales and marketing		293			362			1,604			1,531
Research and development		405			365			1,237			2,162
General and administrative		283			239			1,112			1,094
Operating income (loss)		896			243			2,476			(749	)
Interest expense, net		(45	)		(52	)		(189	)		(209	)
Other income (expense)		—			—			—			928
Income (loss) before income taxes		851			191			2,287			(30	)
Income tax provision		—			—			—			—
Net income (loss)	$	851		$	191		$	2,287		$	(30	)
Preferred stock dividends accrued		(35	)		(35	)		(139	)		(139	)
Net income (loss) attributable to common stockholders	$	816		$	156		$	2,148		$	(169	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.06		$	0.01		$	0.16		$	(0.01	)
Diluted	$	0.05		$	0.01		$	0.14		$	(0.01	)
Weighted average common shares outstanding:
Basic		13,168			12,798			13,049			12,785
Diluted		15,182			14,369			15,063			12,785