Exhibit 99.1

 

For additional information contact:

Richard S. DeRose (703) 293-7901

For release:

November 13, 2007

Information Analysis Inc. Reports Third Quarter Results

FAIRFAX, VIRGINIA – Information Analysis Inc. (IAIC:OTCBB) today reported results for its third fiscal quarter ended September 30, 2007. Revenues were $2,635,000, compared to $2,574,000 reported in the third quarter 2006. The information technology services company reported net income of $95,000, or $0.01 per share basic and diluted, compared to net income of $157,000 or $0.01 per share basic and diluted, in the third quarter 2006.

For the nine months ended September 30, 2007, IAI’s revenues were $7,797,000, compared to revenues of $7,457,000 for the same period in 2006. The Company reported net income of $207,000, or $0.02 per share basic and diluted, compared to net income of $396,000, or $0.04 per share basic and $0.03 per share diluted, reported for the comparable 2006 period.

“We have begun to increase our investment in sales and marketing efforts starting in the fourth quarter to improve our rate of growth and profitability,” said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. “We still have a number of bid opportunities outstanding for new business and additional add-on business to existing contracts, which are expected to materialize during future quarters.

“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-KSB for the fiscal year ended December 31, 2006 and in other filings with the Securities and Exchange Commission.

 

—more—


Information Analysis Reports Third Quarter Results

November 13, 2007

Page 2 of 4

Information Analysis Incorporated

Statements of Operations

 

     Three months ended September 30,
(in thousands, except per share data; unaudited)    2007    2006

Revenue:

     

Professional fees

   $ 1,688    $ 2,180

Software sales

     947      394
             

Total revenue

     2,635      2,574

Cost of goods sold and services provided:

     

Cost of professional fees

     1,272      1,626

Cost of software sales

     749      183
             

Total cost of sales

     2,021      1,809
             

Gross margin

     614      765

Selling, general and administrative expense

     527      610
             

Operating income

     87      155

Other income (expense)

     8      2
             

Income before income taxes

     95      157

Provision for income taxes

     —        —  
             

Net income

   $ 95    $ 157
             

Earnings per share:

     

Basic

   $ 0.01    $ 0.01

Diluted

   $ 0.01    $ 0.01

Shares used in calculating earnings per share:

     

Basic

     11,196,760      11,137,371

Diluted

     11,414,922      11,478,082

 

—more—


Information Analysis Reports Third Quarter Results

November 13, 2007

Page 3 of 4

Information Analysis Incorporated

Statements of Operations

 

     Nine months ended September 30,
(in thousands, except per share data; unaudited)    2007    2006

Revenue:

     

Professional fees

   $ 5,365    $ 6,675

Software sales

     2,432      782
             

Total revenue

     7,797      7,457

Cost of goods sold and services provided:

     

Cost of professional fees

     4,093      5,080

Cost of software sales

     1,931      478
             

Total cost of sales

     6,024      5,558
             

Gross margin

     1,773      1,899

Selling, general and administrative expense

     1,586      1,508
             

Operating income

     187      391

Other income, net

     20      5
             

Income before income taxes

     207      396

Provision for income taxes

     —        —  
             

Net income

   $ 207    $ 396
             

Earnings per share:

     

Basic

   $ 0.02    $ 0.04

Diluted

   $ 0.02    $ 0.03

Shares used in calculating earnings per share:

     

Basic

     11,196,760      10,973,470

Diluted

     11,408,401      11,436,461

 

—more—


Information Analysis Reports Third Quarter Results

November 13, 2007

Page 4 of 4

Information Analysis Incorporated

Balance Sheets

 

(in thousands)    As of
September 30, 2007
(unaudited)
    As of
December 31, 2006
(audited)
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 1,263     $ 808  

Accounts receivable, net

     1,759       1,758  

Prepaid expenses

     349       382  

Note receivable

     116       116  

Other assets

     7       4  

Other receivables

     6       6  
                

Total current assets

     3,500       3,074  

Fixed assets, net

     63       67  

Other assets

     6       9  
                

Total assets

   $ 3,569     $ 3,150  
                

LIABILITIES & STOCKHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 755     $ 644  

Deferred revenues

     482       513  

Accrued payroll and related liabilities

     294       265  

Other accrued liabilities

     99       53  
                

Total liabilities

     1,630       1,475  
                

Common stock, par value $0.01, 30,000,000 shares authorized; 12,839,376 shares issued, 11,196,760 outstanding

     128       128  

Additional paid in capital

     14,543       14,486  

Accumulated deficit

     (11,802 )     (12,009 )

Less treasury stock; 1,642,616 shares at cost

     (930 )     (930 )
                

Total stockholders’ equity

     1,939       1,675  
                

Total liabilities and stockholders’ equity

   $ 3,569     $ 3,150  
                

 

—end—