Information Analysis Inc. Reports Third Quarter Profitable Results

FAIRFAX, Va.--(BUSINESS WIRE)-- Information Analysis Inc. (IAIC:OTCBB) today reported results for its third fiscal quarter ended September 30, 2010. Revenues were $1,952,000 compared to $1,988,000 reported in the third quarter 2009. The information technology services company reported net income of $42,000, or $0.00 per share basic and diluted, compared to net income of $122,000 or $0.01 per share basic and diluted, in the third quarter 2009.

For the nine months ended September 30, 2010, IAI's revenues were $5,655,000 compared to revenues of $4,787,000 for the same period in 2009. The Company reported net income of $225,000 or $0.02 per share basic and diluted, compared to net income of $66,000, or $0.01 per share basic and diluted, reported for the comparable 2009 period.

"The year to date revenue and profit in comparison to last year increased significantly. Additionally, as a result of our continuing investment in sales and marketing, we have been awarded a number of new contracts in the past few months worth in excess of 2 million dollars," said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. "There are still a number of bid opportunities outstanding for new business, which should allow our profitability to continue to grow."

"We continue to pursue merger and acquisition opportunities."

About Information Analysis Incorporated

Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is an information technology services company. The Company is a web solution provider and software conversion specialist, modernizing legacy systems and extending their reach to the internet world.

Additional information for investors

This release may contain forward-looking statements regarding the Company's business, customer prospects, or other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in the Company's 10-K for the fiscal year ended December 31, 2009 and in other filings with the Securities and Exchange Commission.


Information Analysis Incorporated

Statements of Operations

                                                Three months ended September 30,

(in thousands, except per share data;           2010          2009
unaudited)

Revenue:

Professional fees                               $ 1,293       $ 1,302

Software sales                                    659           686

Total revenue                                     1,952         1,988

Cost of goods sold and services provided:

Cost of professional fees                         723           751

Cost of software sales                            593           580

Total cost of sales                               1,316         1,331

Gross margin                                      636           657

Selling, general and administrative expense       596           536

Income from operations                            40            121

Other income, net                                 2             1

Income before income taxes                        42            122

Provision for income taxes                        --            --

Net income                                      $ 42          $ 122

Earnings per common share:

Basic                                           $ 0.00        $ 0.01

Diluted                                         $ 0.00        $ 0.01

Shares used in calculating earnings per share:

Basic                                             11,196,760    11,196,760

Diluted                                           11,224,521    11,208,403




Information Analysis Incorporated

Statements of Operations

                                                Nine months ended September 30,

(in thousands, except per share data;           2010          2009
unaudited)

Revenue:

Professional fees                               $ 3,921       $ 3,601

Software sales                                    1,734         1,186

Total revenue                                     5,655         4,787

Cost of goods sold and services provided:

Cost of professional fees                         2,178         2,295

Cost of software sales                            1,475         931

Total cost of sales                               3,653         3,226

Gross margin                                      2,002         1,561

Selling, general and administrative expense       1,784         1,503

Income from operations                            218           58

Other income, net                                 7             8

Income before income taxes                        225           66

Provision for income taxes                        --            --

Net income                                      $ 225         $ 66

Earnings per share:

Basic                                           $ 0.02        $ 0.01

Diluted                                         $ 0.02        $ 0.01

Shares used in calculating earnings per share:

Basic                                             11,196,760    11,196,760

Diluted                                           11,216,833    11,207,820




Information Analysis Incorporated

Balance Sheets

                                           As of               As of

                                           September 30, 2010  December 31, 2009

(in thousands)                             (unaudited)         (audited)

ASSETS

Current assets:

Cash and cash equivalents                  $ 1,877             $ 1,479

Accounts receivable, net                     1,667               940

Prepaid expenses                             761                 689

Note receivable                              6                   --

Total current assets                         4,311               3,108

Fixed assets, net                            35                  42

Note receivable                              13                  --

Other assets                                 6                   6

Total assets                               $ 4,365             $ 3,150

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable                           $ 732               $ 89

Accrued payroll and related liabilities      252                 255

Other accrued liabilities                    621                 307

Deferred revenues                            805                 779

Total current liabilities                    2,410               1,430

Common stock, par value $0.01, 30,000,000
shares authorized;

12,839,376 shares issued, 11,196,760         128                 128
outstanding

Additional paid in capital                   14,564              14,554

Accumulated deficit                          (11,807 )           (12,032 )

Less treasury stock; 1,642,616 shares at     (930    )           (930    )
cost

Total stockholders' equity                   1,955               1,720

Total liabilities and stockholders'        $ 4,365             $ 3,150
equity




    Source: Information Analysis Inc.