iaic_ex991.htm

FAIRFAX, VIRGINIA – Information Analysis Inc. (OTCBB: IAIC) reported results for the second quarter ended June 30, 2011. Revenues were $1,620,000 compared to $1,688,000 reported in 2010’s second quarter. The Company reported net income of $47,000, or $0.00 per share, compared to net income of $78,000, or $0.01 per share in 2010’s second quarter. IAI had revenue of $3,044,000, compared to $3,703,000 reported for six months ending June 30, 2010. Net income for the first six months of fiscal 2011 was $38,000, or $0.00 per share, versus net income of $182,000, or $0.02 per share, in the comparable 2010 period.

“The Company’s profits showed improvement over last quarter’s results,” Sandor Rosenberg, Chairman and Chief Executive Officer of IAI said. “There continues to be an increase in opportunities for the modernization business, and we have been aggressively pursuing these opportunities, which should improve revenue in the future. We expect to remain profitable during the second half of the year.

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.

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. These include the failure to obtain sufficient contracts, and to profitably complete those contracts. Investors should read and understand the risk factors detailed in the Company's 10-K for the fiscal year ended December 31, 2010 and in other filings with the Securities and Exchange Commission.

	Three months ended June 30,
(in thousands, except per share data; unaudited)	2011		2010
Sales:
Professional fees	$	1,148	$	1,115
Software sales		472		573
Total sales		1,620		1,688
Cost of goods sold and services provided:
Cost of professional fees		692		665
Cost of software sales		366		460
Total cost of sales		1,058		1,125
Gross margin		562		563
Operating expenses:
Selling, general and administrative		517		487
Operating income		45		76
Other income		2		2
Income before income taxes		47		78
Provision for income taxes		-		-
Net income	$	47	$	78
Comprehensive Income	$	47	$	78
Net income per share:
Basic and diluted	$	0.00	$	0.01
Shares used in calculating earnings per share:
Basic		11,196,760		11,196,760
Diluted		11,213,466		11,222,863

	Six months ended June 30,
(in thousands, except per share data; unaudited)	2011		2010
Sales:
Professional fees	$	2,251	$	2,628
Software sales		793		1,075
Total sales		3,044		3,703
Cost of goods sold and services provided:
Cost of professional fees		1,285		1,456
Cost of software sales		642		882
Total cost of sales		1,927		2,338
Gross margin		1,117		1,365
Operating expenses:
Selling, general and administrative		1,083		1,188
Operating income		34		177
Other income		4		5
Income before income taxes		38		182
Provision for income taxes		-		-
Net income	$	38	$	182
Comprehensive Income	$	38	$	182
Net income per share:
Basic and diluted	$	0.00	$	0.02


Shares used in calculating earnings per share:
Basic		11,196,760		11,196,760
Diluted		11,209,229		11,215,187

Information Analysis Reports Second Quarter Results

August 11, 2011

Page 4 of 4

Information Analysis Incorporated Condensed Balance Sheets

	As of			As of
	June 30, 2011			December 31, 2010
	(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,970		$	1,968
Accounts receivable, net		909			772
Prepaid expenses		300			571
Notes receivable (current portion)		7			6
Total current assets		3,186			3,317
Fixed assets, net		33			36
Notes receivable (long term portion)		7			11
Other assets		6			6
Total assets	$	3,232		$	3,370

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	101		$	76
Deferred revenues		376			653
Commissions payable		516			447
Accrued payroll and related liabilities		250			245
Other accrued liabilities		66			69
Total liabilities		1,309			1,490

Common stock, par value $0.01, 30,000,000 shares authorized;
12,839,376 shares issued, 11,196,760 outstanding at
June 30, 2011, and at December 31, 2010		128			128
Additional paid in capital		14,572			14,568
Accumulated deficit		(11,847	)		(11,886	)
Less treasury stock; 1,642,616 shares at cost		(930	)		(930	)
Total stockholders' equity		1,923			1,880
Total liabilities and stockholders' equity	$	3,232		$	3,370