Edgar Filing: INTRUSION INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
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/ / Soliciting Material Pursuant to Section240.14a-12

INTRUSION INC.
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(Name of Registrant as Specified In Its Charter)

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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/ / Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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[LOGO]

1101 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
(972) 234-6400

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 2002

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TO THE STOCKHOLDERS OF

Intrusion Inc.:

NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders (the
"Meeting") of Intrusion Inc. (the "Company") will be held at the Holiday Inn
Richardson Select, 1655 N. Central Expressway, Richardson, Texas, at
10:00 A.M., Central Standard Time, on Thursday, April 25, 2002, for the
following purposes:

(1) To elect five (5) directors to serve until the next Annual Meeting
of Stockholders or until their respective successors are duly elected and
qualified;

(2) To approve the amendments to the 1995 Non-Employee Directors Stock
Option Plan for the benefit of non-employee directors of the Company, as
described in this Proxy Statement and set forth in Exhibit A;

(3) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 2002; and

(4) To transact such other business as may properly come before the
Meeting or any adjournments thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The record date for determining those
stockholders who will be entitled to notice of, and to vote at, the Meeting and
at any adjournment thereof is February 26, 2002. A list of stockholders entitled
to vote at the Meeting will be available for inspection at the offices of the
Company.

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR
TO THE MEETING. IF YOU DECIDE TO ATTEND THE MEETING AND WISH TO CHANGE YOUR
PROXY VOTE, YOU MAY DO SO BY VOTING IN PERSON AT THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ G. Ward Paxton

G. Ward Paxton
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

Richardson, Texas
March 20, 2002

INTRUSION INC.
1101 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081

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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 2002

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SOLICITATION AND REVOCABILITY OF PROXIES

The enclosed proxy (the "Proxy") is being solicited on behalf of the Board
of Directors (the "Board") of Intrusion Inc. (the "Company") for use at the
Annual Meeting of Stockholders (the "Meeting") to be held at the Holiday Inn
Richardson Select, 1655 N. Central Expressway, Richardson, Texas, at
10:00 A.M., Central Standard Time, on Thursday, April 25, 2002, or at such other
time and place to which the Meeting may be adjourned. Proxies, together with
copies of this Proxy Statement, are being mailed to stockholders of record on or
about March 20, 2002.

Execution and return of the enclosed Proxy will not affect a stockholder's
right to attend the Meeting and to vote in person. Any stockholder executing a
Proxy retains the right to revoke it at any time prior to exercise at the
Meeting. A Proxy may be revoked by delivery of written notice of revocation to
the Secretary of the Company, by execution and delivery of a later Proxy or by
voting the shares in person at the Meeting. If you attend the Meeting and vote
in person by ballot, your proxy will be revoked automatically and only your vote
at the Meeting will be counted. A Proxy, when executed and not revoked, will be
voted in accordance with the instructions thereon. In the absence of specific
instructions, Proxies will be voted by those named in the Proxy "FOR" the
election as directors of those nominees named in the Proxy Statement, "FOR" the
proposal to amend the 1995 Non-Employee Directors Stock Option Plan, "FOR" the
proposal to ratify the appointment of Ernst & Young LLP as independent auditors
for the Company, and in accordance with their best judgment on all other matters
that may properly come before the Meeting.

The enclosed form of Proxy provides a method for stockholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. The names of all nominees
are listed on the Proxy. If you wish to grant authority to vote for all
nominees, check the box marked "FOR." If you wish to withhold authority to vote
for all nominees, check the box marked "WITHHOLD." If you wish your shares to be
voted for some nominees and not for one or more of the others, check the box
marked "FOR" and indicate the name(s) of the nominee(s) for whom you are
withholding the authority to vote by writing the name(s) of such nominee(s) on
the Proxy in the space provided.

RECORD DATE AND VOTING SECURITIES

Only stockholders of record at the close of business on February 26, 2002,
are entitled to notice of and to vote at the Meeting. The stock transfer books
of the Company will remain open between the record date and the date of the
Meeting. A list of stockholders entitled to vote at the Meeting will be
available for inspection at the executive offices of the Company. On
February 26, 2002, the Company had 20,643,425 outstanding shares of Common
Stock, $0.01 par value (the "Common Stock"), which is the only class of its
capital stock outstanding. In addition, under the rules of the Nasdaq Stock
Market, brokers who hold stock in street name have the authority to vote on
certain routine matters when they have not received instructions from beneficial
owners.

QUORUM AND VOTING

The presence at the Meeting, in person or by Proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum. For each share held, holders of Common Stock are entitled
to one vote on each matter to be voted on at the Meeting including the election
of directors. Assuming the presence of a quorum, the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Meeting, present in person or by Proxy, is required for the approval of
each matter submitted to the Meeting except the election of directors. For such
matter, the five nominees receiving the greatest number of votes of outstanding
shares present in person or represented by Proxy at this Meeting and entitled to
vote shall be deemed elected even if they receive the affirmative vote of less
than a majority of the outstanding shares entitled to be voted at the Meeting.
Additionally, in the election of directors, cumulative voting is prohibited and
Proxies cannot be voted for more than five nominees.

All votes will be tabulated by the inspector of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
as present for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions will be counted towards the tabulations
of votes cast on matters presented at the Meeting and will have the same effect
as negative votes (other than the election of directors) whereas broker
non-votes will not be counted for purposes of determining whether a matter has
been approved.

PROPOSAL ONE
ELECTION OF DIRECTORS

The Board for the ensuing year will consist of five directors who are each
to be elected at the Meeting for a term of office expiring at the next Annual
Meeting of Stockholders or until their respective successors have been elected
and qualified. It is intended that the persons named in the following table will
be nominated as directors of the Company and that the persons named in the
accompanying Proxy, unless otherwise directed, will vote for the election of
such nominees at the Meeting. Each of the nominees has indicated his willingness
to serve as a member of the Board of Directors, if elected. However, in the
event any nominee shall become unavailable for election to the Board for any
reason not presently known or contemplated, the Proxy holders will be vested
with discretionary authority in such instance to vote the enclosed Proxy for
such substitute as the Board of Directors shall designate.

The following slate of five nominees has been nominated by the Board of
Directors:

DIRECTOR
NAME OF NOMINEE AGE POSITION(S) SINCE
--------------- -------- ----------- -----

G. Ward Paxton....................... 66 Chairman, President, Chief Executive 1983
Officer and Director

T. Joe Head.......................... 45 Vice Chairman of the Board and 1983
Director

J. Fred Bucy, Jr., (1)(2)............ 73 Director 1993

Grant A. Dove (1)(2)................. 73 Director 2000

Donald M. Johnston (1)(2)............ 52 Director 1983

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(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

G. WARD PAXTON was named President and Chief Executive Officer of the
Company on November 28, 2001. He is also co-founder of the Company and has
served as Chairman of the Board since the Company's inception in
September 1983. Mr. Paxton also served as President and Chief Executive Officer
of the Company from 1983 until June 2000 and served as Chief Financial Officer
from 1983 until 1994. Prior to founding the Company, Mr. Paxton was Vice
President of Honeywell Optoelectronics, a division of Honeywell, Inc., from 1978
to 1983. From 1969 to 1978, Mr. Paxton was Chairman of the Board, President,
Chief Executive Officer and founder of Spectronics, Inc., which was acquired by
Honeywell, Inc. in 1978. Prior to founding Spectronics, Inc., Mr. Paxton held
various managerial and technical positions at Texas Instruments Incorporated
from 1959 to 1969. Mr. Paxton holds Ph.D., M.S. and B.S. degrees in Physics from
the University of Oklahoma. Mr. Paxton holds no other directorships.

T. JOE HEAD is co-founder of the Company and has served as a director since
the Company's inception in September 1983. Mr. Head was named Vice Chairman of
the Board of Directors in June 2000. He also served as Senior Vice President
from 1983 until 1998 and Executive Vice President from 1998 until June 2000.
Prior to co-founding the Company, Mr. Head held the positions of Product
Marketing Manager and Marketing Engineer of Honeywell Optoelectronics from 1980
to 1983. Mr. Head holds a B.S. degree in Electrical Engineering from Texas A & M
University.

J. FRED BUCY, JR. has served as a director of the Company since 1993.
Mr. Bucy was employed in various technical and managerial capacities by Texas
Instruments Incorporated from 1953 through his retirement in 1985. At the time
of his retirement, Mr. Bucy was President, Chief Executive Officer and a
director of Texas Instruments. Among other activities, Mr. Bucy is a Trustee of
Southwest Research Institute. He was Chairman of the Texas National Research
Laboratory Commission (re-appointed by George W. Bush in 1995) until 2001.
Mr. Bucy was also a member of the Coordinating Board Advisory Committee on
Research of the Texas College and University System and a former member of the
Board of Regents of Texas Tech University and Texas Tech University Health
Sciences Center from 1973 to 1991, including four years as its Chairman.
Mr. Bucy has been accorded Distinguished Alumnus and Distinguished Engineer
Awards by Texas Tech University, is a fellow of the Institute of Electrical and
Electronics Engineers, a member of National Academy of Engineers, and is a life
member of the Navy League. Mr. Bucy was awarded an honorary Doctor of Science
degree from Texas Tech University in 1994.

GRANT A. DOVE has served as a director of the Company since August 2000.
Mr. Dove is a Managing Partner of Technology Strategies and Alliances ("TS&A").
Prior to joining TS&A in 1992, Mr. Dove was Chairman and CEO of the
Microelectronics and Computer Technology Corporation ("MCC"), a research and
development consortium. Prior to joining MCC, Mr. Dove spent 28 years with Texas
Instruments Incorporated in various technical and managerial capacities.
Mr. Dove is on the boards of four other public companies including Cooper
Cameron Corporation, Inet Technologies, InterVoice-Brite and Tipping Point
Technologies (which changed its name in 2001 from Netpliance). He also serves on
the boards of several private companies. Mr. Dove holds a B.S. in Electrical
Engineering from Virginia Tech and was named their Distinguished Engineering
Alumnus for 1995. He also serves on the University of Texas Engineering
Foundation Advisory Council. He is a Director of the Virginia Tech Foundation,
and is a member of the Virginia Tech Engineering Department Committee of 100.

DONALD M. JOHNSTON has served as a director of the Company since
November 1983. Mr. Johnston is President of Massey Burch Capital Corp., a
venture capital firm. He served as President of Massey Burch Investment
Group, Inc., a venture capital firm ("Massey Burch"), from 1990 until
December 1993 and he has been a principal of that firm since 1982. Prior to
joining Massey Burch, Mr. Johnston was the President of InterFirst Venture
Corporation, a venture capital subsidiary of Interfirst Bancshares, Inc., and
the Executive Director of First Dallas, Ltd., a corporate finance group in
London, England. Mr. Johnston holds a B.A. degree from Vanderbilt University and
an M.B.A. degree from Southern Methodist University. Mr. Johnston was also a
director of @plan, Inc., prior to its acquisition by Doubleclick, but resigned
from that position in February 2001. Mr. Johnston currently serves as a director
for InnerWireless Inc., a provider of wireless local area networks services in
office buildings through a proprietary technology and Corphealth, a behavioral
health management group.

All directors of the Company hold office until the next ensuing annual
meeting of stockholders or until their respective successors are duly elected
and qualified. All officers of the Company are elected annually by the Board of
Directors and serve at the discretion of the Board. There are no family
relationships between any director or officer of the Company and any other such
person.

STOCKHOLDER APPROVAL

The affirmative vote of a plurality of the outstanding shares of Common
Stock present in person or by proxy at the Annual Meeting is required for the
election of each of the nominees for director.

THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF SUCH NOMINEES.

BOARD OF DIRECTORS AND COMMITTEES

The business affairs of the Company are managed under the direction of the
Board. The Board meets on a regularly scheduled basis during the fiscal year of
the Company to review significant developments affecting the Company and to act
on matters requiring Board approval. It also holds special meetings as required
from time to time when important matters arise requiring Board action between
scheduled meetings. The Board of Directors or its authorized committees met
twenty times during the 2001 fiscal year. During fiscal year 2001, each director
participated in at least 75% or more of the aggregate of (i) the total number of
meetings of the Board of Directors (held during the period for which he was a
director) and (ii) the total number of meetings of all committees of the Board
on which he served (during the period that he served).

The Board has established Audit and Compensation Committees to devote
attention to specific subjects and to assist it in the discharge of its
responsibilities. The Company does not have a nominating committee. The
functions customarily attributable to a nominating committee are performed by
the Board as a whole. The functions of the Audit Committee and the Compensation
Committee are described below.

COMPENSATION COMMITTEE. The Compensation Committee is empowered to advise
management and make recommendations to the Board with respect to the
compensation and other employment benefits of executive officers and key
employees of the Company. The Compensation Committee also administers the
Company's incentive stock option plans (the "Stock Option Plans") for officers
and key employees and the Company's incentive bonus programs for executive
officers and salaried non-sales employees. The Compensation Committee is
authorized, among other powers, to determine from time to time the individuals
to whom options shall be granted, the number of shares to be covered by each
option and the time or times at which options shall be granted pursuant to the
Stock Option Plans. The Compensation Committee is currently comprised of J. Fred
Bucy, Jr. (Chairman), Grant A. Dove, and Donald M. Johnston. The Compensation
Committee met seven times during the 2001 fiscal year.

AUDIT COMMITTEE. The Audit Committee is composed of three directors: Donald
M. Johnston (Chairman), J. Fred Bucy, Jr. and Grant A. Dove, each of whom is
independent (as defined in Rule 4200 of the National Association of Securities
Dealers' listing standards). The functions performed by the Committee, its
membership and the number of meetings held during the fiscal year, is set forth
in the "Report of the Audit Committee," included in this Proxy Statement. The
Audit Committee is governed by a written charter which was approved by the Audit
Committee in August 2000 and included as Exhibit A to the Company's proxy
statement for its 2001 annual meeting of stockholders.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.

The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles,
the matters required to be discussed by SAS 61 (Certification of Accounting
Standards AU Section 280) and such other matters as are required to be discussed
with the Committee under generally accepted auditing standards. In addition, the
Committee has discussed with the independent auditors the auditors' independence
from management and the Company including the matters in the written disclosures
and the letter from the independent accountants required by the Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees) and considered the compatibility
of nonaudit services with the auditors' independence.

The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee meets
with independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held seven meetings during fiscal year 2001.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
stockholder ratification, the selection of the Company's independent auditors.

Respectfully submitted,

AUDIT COMMITTEE
of the Board of Directors

Donald M. Johnston, Audit Committee
Chair
J. Fred Bucy, Jr., Audit Committee
Member
Grant A. Dove, Audit Committee Member

PROPOSAL TWO
PROPOSAL TO APPROVE AMENDMENTS TO THE
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

In 1995, the Company adopted the 1995 Non-Employee Directors Stock Option
Plan (the "1995 Directors Plan") to advance the interest of the Company and its
stockholders by strengthening the Company's ability to attract and retain
experienced and able individuals to serve as independent directors of the
Company and to furnish additional incentive to such individuals to serve as
independent directors of the Company. On January 10, 2002, the Board amended the
1995 Directors Plan to make certain changes that would allow the Company to
offer a more meaningful equity incentive package in order to attract and retain
highly qualified individuals to serve as non-employee directors. In addition,
amendments were made to improve the administration of the 1995 Directors Plan.
Certain of the amendments made to the 1995 Directors Plan required the approval
of the Company's stockholders. Accordingly, the Company's stockholders are being
asked to approve the following amendments to the 1995 Directors Plan:

(1) an amendment that increases the aggregate number of shares of Common
Stock available for issuance pursuant to the exercise of stock options
granted under the 1995 Directors Plan by 100,000 shares to 260,000
shares of Common Stock;

(2) an amendment that replaces the automatic option grant feature that
provided that each non-employee director be granted an option to
purchase an additional 20,000 shares of Common Stock on the fifth
anniversary of the date he or she was granted an initial option to
purchase 20,000 shares of Common Stock under the 1995 Directors Plan
with an automatic grant feature that provides that each non-employee
director of the Company be granted an option to purchase 10,000 shares
of Common Stock following each annual stockholders meeting, provided
such individual has served as a non-employee director for at least six
months; and

(3) an amendment that changes the vesting schedule of the options
granted pursuant to the 1995 Directors Plan from five annual
installments to three annual installments.

The following is a summary of the principal features of the 1995 Directors
Plan, as most recently amended. This summary does not purport to be complete and
is subject in all respects to, and qualified by, the provisions of the full text
of such plan which is attached as Exhibit A to this Proxy Statement.

STOCK SUBJECT TO THE PLAN. The 1995 Directors Plan provides that
260,000 shares of Common Stock are reserved for issuance pursuant to the
1995 Directors Plan, including a 100,000 share increase that is part of this
proposal. If any outstanding option granted pursuant to the 1995 Directors Plan
expires, lapses or terminates without being fully exercised, the shares
allocated to the unexercised portion of such option will again be available for
purposes of the 1995 Directors Plan unless such Plan has been terminated. The
shares of Common Stock issued pursuant to the exercise of options granted under
the 1995 Directors Plan can be either treasury or authorized but unissued
shares.

CHANGES IN CAPITALIZATION. In the event any change is made to the
outstanding shares of Common Stock by reason of any recapitalization, stock
dividend, stock split, combination of shares, exchange of shares or other change
in corporate structure effected without the Company's receipt of consideration,
appropriate adjustments will be made to (1) the maximum number and/or class of
securities issuable under the 1995 Directors Plan, (2) the number and/or class
of securities and (3) the exercise price per share in effect under each
outstanding option.

ELIGIBILITY. Only directors who are not employees of the Company or its
subsidiaries are eligible to receive option grants under the 1995 Directors
Plan. Pursuant to the terms of the 1995 Directors Plan, each director of the
Company who is at the time not an officer or employee of the Company will
automatically be granted an option to purchase 20,000 shares of Common Stock
upon his or her initial appointment or election to the Board. Provided that the
Company's stockholders approve this proposal, each non-employee director will
automatically be granted an additional option to purchase 10,000 shares

of Common Stock on the date of each annual meeting of the Company's stockholders
(beginning with the Meeting) provided that such individual has been a
non-employee director for at least six months prior to the date of grant. The
Company currently has three non-employee directors who are eligible to receive
annual automatic option grants under the 1995 Directors Plan.

OPTION TERMS. Each option granted pursuant to the 1995 Directors Plan will
have a maximum term of 10 years. Such options cannot be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or the
laws of descent and distribution.

The exercise price under each option granted pursuant to the 1995 Directors
Plan will be set at the fair market value of the Common Stock on the date such
option is granted. The fair market value on any relevant date will be the
closing price of the Common Stock on the Nasdaq Stock Market on the day in
question. On January 31, 2002, the closing price was $1.72.

Provided the Company's stockholders approve this proposal, each option
granted pursuant to the 1995 Directors Plan will vest and become exercisable in
three annual installments upon the director's completion of each year of service
following the date of grant.

In the event that an optionee ceases to be a director for any reason other
than death, such optionee may, during the one-year period immediately following
the date he or she ceases to be a director, exercise his or her options to the
extent vested and exercisable on the date service as a non-employee director
ceases. Should an optionee under the 1995 Director Plan die while serving as a
director, his or her options will become fully vested and can be exercised by
such optionee's estate or devisee by will or legatee by the laws of descent and
distribution, as applicable, within one year after death and any unexercised
options will expire at the end of such period. In no event, however, can any
option be exercised beyond the term of such option.

In the event of the proposed dissolution or liquidation of the Company, the
proposed sale of all or substantially all of the assets of the Company, or the
proposed merger of the Company with or into another corporation, the Board has
the ability to accelerate the vesting of the options granted under the
1995 Directors Plan.

PLAN ADMINISTRATION. The 1995 Directors Plan will be administered by the
Board pursuant to the formulas indicated in the 1995 Directors Plan. The Board
will have no discretion to determine the selection of non-employee directors to
whom options may be granted, the number of shares subject to such options, the
term of such options, the number of options which may be granted or the price
per share at which such options may be exercised.

PLAN AMENDMENTS. The Board can amend the 1995 Directors Plan at any time,
provided that stockholder approval will be required for any amendment that
(1) increases the number of shares for which options may be granted,
(2) changes the manner of determining the exercise price at which shares may be
purchased upon exercise of options, (3) changes the class of persons eligible to
receive options under the 1995 Directors Plan, (4) changes the period during
which options may be exercised or (5) changes the provisions relating to the
administration of the 1995 Directors Plan. Amendments to the 1995 Directors Plan
will not alter or impair, without the written consent of the affected optionee,
any of the rights or obligations pursuant to any outstanding option previously
granted pursuant to such plan.

PLAN TERMINATION. The 1995 Directors Plan can be terminated by the Board at
any time and will terminate automatically on March 21, 2005. Options that were
granted under the 1995 Directors Plan and that are outstanding at the time the
1995 Directors Plan is terminated will not be affected.

ACCOUNTING TREATMENT. Option grants under the 1995 Directors Plan with
exercise prices equal to the fair market value of the option shares on the grant
date will not result in any direct charge to the Company's reported earnings.
However, the fair value of those options is required to be disclosed in the
notes to the Company's financial statements, and the Company must also disclose,
in footnotes to the Company's financial statements, the pro-forma impact those
options would have upon the Company's

reported earnings were the fair value of those options at the time of grant
treated as a compensation expense. In addition, the number of outstanding
options may be a factor in determining the Company's earnings per share on a
fully-diluted basis.

FEDERAL INCOME TAX CONSEQUENCES. Options granted under the 1995 Directors
Plan will be treated for federal income tax purposes as non-statutory options.
Under federal tax law, an optionee will not realize income for federal income
tax purposes at the time a non-statutory option is granted. However, in the year
in which the non-statutory option is exercised, an optionee will realize
ordinary income in an amount equal to the aggregate fair market value of the
shares acquired by such exercise on the exercise date minus the aggregate price
paid for the shares. The Company will be entitled to take a corresponding
deduction. Upon any subsequent sale of the shares, any amount realized by an
optionee that is in excess of the fair market value of the shares on the date
such option was exercised will constitute long-term or short-term capital gain
(depending on how long the shares are held). If the amount realized by an
optionee upon any such sale is less than the fair market value of the shares on
the date the option is exercised, the difference will constitute long-term or
short-term capital loss (depending on the period such shares are held).

STOCK AWARDS. As of January 31, 2002, options to purchase a total of
100,000 shares of Common Stock were outstanding and no shares had been issued
upon exercise of any options granted pursuant to the 1995 Directors Plan. No
options were granted pursuant to the 1995 Directors Plan between January 1, 2001
and January 31, 2002.

NEW PLAN BENEFITS. As of February 26, 2002, no options had been granted,
and no shares of Common Stock had been issued, on the basis of the share
increase or other amendments, which are the subject of this proposal. However,
if the Company's stockholders approve this proposal, Messrs. Bucy, Dove, and
Johnston will each be automatically granted an option to purchase 10,000 shares
of Common Stock on the date of the Meeting.

STOCKHOLDER APPROVAL. The affirmative vote of at least a majority of the
outstanding shares of Common Stock present in person or by proxy at the Annual
Meeting and entitled to vote is required for approval of the amendments to the
1995 Directors Plan. Should such stockholder approval not be obtained, then the
amendments described in this proposal will not become effective.

THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.

PROPOSAL THREE
PROPOSAL TO RATIFY THE APPOINTMENT
OF INDEPENDENT AUDITORS

The Board has appointed Ernst & Young LLP to serve as independent auditors
of the Company and to audit its consolidated financial statements for fiscal
year 2002, subject to ratification by the Company's stockholders at the Meeting.
Ernst & Young LLP has served as the Company's independent auditors since the
Company's inception and is, therefore, familiar with its affairs and financial
procedures. To the knowledge of management of the Company, neither such firm nor
any of its members has any direct or material indirect financial interest in the
Company, nor any connection with the Company in any capacity other than as
independent auditors.

Although stockholder ratification and approval of this appointment is not
required by the Company's bylaws or otherwise, in keeping with the Company's
policy that its stockholders should be entitled to a voice in this regard and as
a matter of good corporate practice, the Board is seeking ratification of this
appointment. If the appointment is not ratified, the Board must then determine
whether to appoint other auditors prior to the end of the current fiscal year.
In such case, the opinions of stockholders will be taken into consideration.

AUDIT FEES. The aggregate fees billed for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ending December 31, 2001 and for the review of financial statements included in
the Company's quarterly filings required under the Securities Exchange Act of
1934, as amended, in that same year were $141,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There were no
services performed or fees incurred in connection with the implementation and
design of financial information systems for the fiscal year ending December 31,
2001.

ALL OTHER FEES. The aggregate fees billed for professional services
performed by Ernst & Young LLP other than those fees listed above for the fiscal
year ending December 31, 2001 were $480,000, including audit related services of
$87,000, and nonaudit services of $393,000.

The Audit Committee considered the services provided by Ernst & Young LLP
described under "Financial Information Systems Design and Implementation Fees"
and "All Other Fees" above, if any, compatible with the maintaining Ernst &
Young LLP's independence.

A representative of Ernst & Young LLP, the Company's independent auditors
for fiscal year 2001, is expected to be in attendance at the Meeting and will be
afforded the opportunity to make a statement. The representative will also be
available to respond to appropriate questions.

The enclosed Proxy will be voted as specified, but if no specification is
made, it will be voted in favor of the adoption of the resolution of
ratification.

THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial
ownership of the Common Stock as of January 31, 2002, unless otherwise
indicated, by (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock, (ii) each director and
nominee as a director of the Company, (iii) the executive officers named in the
Summary Compensation Table of the Executive Compensation and Related Information
below and (iv) all current directors and executive officers of the Company as a
group. The persons and entities named in the table have sole voting and
investment power with respect to all such shares owned by them, unless otherwise
indicated.

AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER OR GROUP (1) BENEFICIAL OWNERSHIP(2) CLASS
------------------------------------- ----------------------- ----------

G. Ward Paxton (3).......................................... 852,886 4.13%
T. Joe Head(1)(4)........................................... 2,153,111 10.43
J. Fred Bucy, Jr.(5)........................................ 52,000 *
Grant A. Dove(6)............................................ 56,000 *
Donald M. Johnston(7)....................................... 53,427 *
Patrick R. Gooden(8)........................................ 34,395 *
Eric H. Gore(9)............................................. 112,869 *
Ryon W. Packer(10).......................................... 9,500 *
Jay R. Widdig(11)........................................... 35,101 *
Timothy W. Kinnear(12)...................................... 92,770 *
SAIC Venture Capital Corporation(1)......................... 3,150,000 15.26
All directors and executive officers as a group
(10 persons)(13).......................................... 3,452,059 16.47

------------------------

* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.

(1) The addresses of the persons or entities shown in the foregoing table who
are beneficial owners of more than 5% of the Common Stock are as follows:
T. Joe Head, 1101 East Arapaho Road, Richardson, Texas 75081; and SAIC
Venture Capital Corporation, 3753 Howard Hughes Parkway, Las Vegas, NV
89109.

(2) Beneficial ownership is calculated in accordance with the rules of the
Securities and Exchange Commission in accordance with Rule 13d-3(d)(1).
Percentage of beneficial ownership is based on 20,643,425 shares of Common
Stock outstanding as of January 31, 2002. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable or will become exercisable within 60 days following
January 31, 2002 are deemed outstanding. However, these shares are not
deemed outstanding for the purpose of computing the percentage ownership of
any other person. Unless otherwise indicated in the footnotes to this
table, the persons and entities named in the table have sole voting and
sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.

(3) Includes the equivalent of 17,386 shares held by Mr. Paxton in the
Intrusion Stock Fund in the Intrusion 401(k) Savings Plan.

(4) Includes 400 shares held by the Biblical Studies Foundation in which
Mr. Head is President. Mr. Head disclaims beneficial ownership of, and does
not have sole voting or investment power over, such shares.

(5) Includes 38,000 shares that Mr. Bucy may acquire upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
January 31, 2002.

(6) Includes 4,000 shares that Mr. Dove may acquire upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
January 31, 2002.

(7) Includes 28,000 shares that Mr. Johnston may acquire upon exercise of
options that are currently exercisable or will become exercisable within
60 days of January 31, 2002.

(8) Includes 33,335 shares that Mr. Gooden may acquire upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
January 31, 2002. Also includes the equivalent of 1,060 shares held by
Mr. Gooden in the Intrusion Stock Fund in the Intrusion 401(k) Savings
Plan.

(9) Includes 90,935 shares that Mr. Gore may acquire upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
January 31, 2002. Also includes the equivalent of 9,934 shares held by
Mr. Gore in the Intrusion Stock Fund in the Intrusion 401(k) Savings Plan.

(10) Includes 7,500 shares that Mr. Packer may acquire upon exercise of options
that are currently exercisable or will become exercisable within 60 days
of January 31, 2002.

(11) Includes 30,035 shares that Mr. Widdig may acquire upon exercise of
options that are currently exercisable or will become exercisable within
60 days of January 31, 2002. Also includes the equivalent of 1,066 shares
held by Mr. Widdig in the Intrusion Stock Fund in the Intrusion 401(k)
Savings Plan.

(12) Mr. Kinnear, former Director, President and Chief Executive Officer of
Intrusion Inc., resigned on November 28, 2001. The table includes 80,001
vested shares that Mr. Kinnear may acquire upon the exercise of options
until the options expire on February 26, 2002. Also includes the
equivalent of 10,143 shares held by Mr. Kinnear in the Intrusion Stock
Fund in the Intrusion 401(k) Savings Plan.

(13) Includes an aggregate of 311,806 shares that may be acquired upon exercise
of options of officers and directors that are currently exercisable or
will become exercisable within 60 days of January 31, 2002.

EXECUTIVE OFFICERS

The following table sets forth the names and ages of all executive officers
of the Company, their respective positions with the Company, and the period
during which each has served as an officer.

SERVED AS
OFFICER
NAME OF OFFICER AGE POSITION(S) SINCE
--------------- -------- --------------------------------------- ---------

G. Ward Paxton.................... 66 Chairman, President, Chief Executive
Officer and Director 1983
Patrick R. Gooden................. 54 Vice President, Operations and
Engineering 2000
Eric H. Gore...................... 48 Vice President, Worldwide Sales 1994
Ryon W. Packer.................... 34 Vice President, Mktg. and Business
Development 2001
Jay R. Widdig..................... 39 Vice President, Chief Financial
Officer, Treasurer and Corporate
Secretary 1999

PATRICK R. GOODEN has served the Company as Vice President--Operations and
Engineering since February 2000. In addition since April 2001, Mr. Gooden has
served as Vice-Chairman of the Board of Directors for a Joint Venture between
Shanghai Video and Audio and Intrusion Inc., based in Shanghai, China (PRC).
Between 1992 and 1999, Mr. Gooden served in a number of management assignments
with Thomas Group, Inc., including Vice President of Operations--Europe,
Corporate Vice President and most recently as Senior Vice President. Previously,
from 1967 to 1992, Mr. Gooden served Texas Instruments Incorporated in various
management positions where he led engineering and operations teams and
implemented world-class manufacturing practices. Mr. Gooden holds a M.B.A. from
Southern Methodist University and a B.A. degree in Business Administration and
Economics from Austin College.

ERIC H. GORE has served the Company as Vice President--Worldwide Sales since
June 2001. He also served as Vice President--International Sales from
December 2000 and June 2001 and Vice President--Strategic Business Development.
Mr. Gore previously held positions with the Company as Director of Strategic
Business Development from 1992 to 1994, Area Sales Manager from 1989 to 1992 and
Regional Sales Manager from 1984 to 1989. Prior to joining the Company,
Mr. Gore served Texas Instruments Incorporated as Marketing Manager--Eastern
United States from 1982 to 1983 and Product Marketing Representative from 1979
to 1982. Mr. Gore holds a M.B.A. degree from Hardin-Simmons University and a
Bachelor of Business Administration degree from the University of North Texas.

RYON W. PACKER has served the Company as Vice President--Marketing and
Business Development since April 26, 2001. He previously served as executive
director of marketing and business development when he joined the Company in
September 2000. Mr. Packer is responsible for the Company's overall strategic
and tactical product direction, partnerships and marketing, including product
marketing and public communications. Mr. Packer is also responsible for
developing the Company's global marketing plan to build worldwide recognition
for Intrusion's network security products. Prior to joining the Company,
Mr. Packer served as Vice President of Marketing and Business Development with
SecureLogix from 1999 to 2000. Prior positions he has held include Director of
Product and Brand Management, for Micrografx from 1996 to 1999 and Director of
Worldwide Marketing for United Press International. Mr. Packer's background
covers over 12-years in software and hardware development, product management
and marketing.

JAY R. WIDDIG has served the Company as Vice President, Chief Financial
Officer and Treasurer since December 1999 and Corporate Secretary since
April 2000 and previously held the position of Corporate Controller and Chief
Accounting Officer from April 1999 to December 1999. Prior to joining the
Company, Mr. Widdig held various managerial positions, including Senior Director
of Finance and Administration, at Cyrix Corporation from 1992 to 1999. From 1985
to 1992, Mr. Widdig served Texas Instruments Incorporated and Halliburton
Company in various financial positions. Mr. Widdig holds a M.B.A. degree from
Oklahoma City University and a B.S. degree in Accounting from Cameron
University.

Neither the Company nor any of its subsidiaries has employment agreements
with any of its executives.

All executive officers of the Company are elected annually by the Board and
serve at the discretion of the Board. There are no family relationships between
any director or executive officer and any other such person.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION INFORMATION

The following table sets forth certain summary information regarding all
cash compensation earned by the Company's Chief Executive Officers and each of
the Company's four other most highly compensated executive officers (the "Named
Executive Officers") for the last three fiscal years in all capacities in which
they served the Company and its subsidiaries for such period. In addition,
Timothy W. Kinnear is also included in the table because he was the Company's
President and Chief Executive Officer until he resigned on November 28, 2001. No
other executive officers who would have otherwise been includible in such table
on the basis of salary and bonus earned for the 2001 fiscal year has been
excluded by reason of his or her termination of employment or change in
executive status during that year. The individuals listed below shall be
referred to as the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ----------------------------------
AWARDS PAYOUTS
----------------------- --------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY ($) ($) (1) ($) ($) (#) ($) ($) (9)
----------------------- -------- ----------- -------- ------------- ---------- ---------- -------- -------------

G. Ward Paxton, (2) 2001 $237,019 -- -- -- -- -- $ 1,700
Chairman, President, 2000 250,000 -- $34,522(3) -- -- -- 1,700
CEO and Director 1999 250,000 -- -- -- -- -- 1,600

Patrick R. Gooden, (4) 2001 208,077 -- -- -- 50,000 -- 1,700
Vice President of 2000 162,000 -- -- -- 40,000 -- 1,108
Operations and 1999 -- -- -- -- -- -- --
Engineering

Eric H. Gore, 2001 176,827 $76,153 -- -- 50,000 -- 609
Vice President of 2000 170,962 39,000 19,709(3) -- 25,000 -- 1,700
Worldwide Sales 1999 105,000 114,000 -- -- 12,000 -- 1,600

Ryon W. Packer, (5) 2001 168,231 9,167 -- -- 40,000 -- 1,649
Vice President of 2000 38,942 -- -- -- 7,500 -- --
Marketing and 1999 -- -- -- -- -- -- --
Business Development

Jay R. Widdig (6) 2001 208,077 -- -- -- 50,000 -- 1,700
Vice President, Chief 2000 164,615 -- -- -- 15,000 -- 1,646
Financial Officer, 1999 91,769 2,285 -- -- 22,000 -- 314
Treasurer and
Secretary

Timothy W. Kinnear, 2001 317,485(7) -- -- -- 50,000 -- 170,450(8)
Former President, CEO 2000 258,077 -- -- -- 50,000 -- 1,700
and Director 1999 220,000 -- -- -- 50,000 -- 1,600

------------------------------

(1) Represents bonus compensation and/or commission earned during the fiscal
year indicated, a portion of which may have been or will be paid during the
subsequent fiscal year.

(2) Mr. Paxton was named President and Chief Executive Officer on November 28,
2001. He also served as President and Chief Executive Officer of the Company
from the Company's inception until June 1, 2000.

(3) Includes one time lump sum vacation payout due to corporate vacation policy
change.

(4) Patrick R. Gooden joined the Company on February 1, 2000.

(5) Ryon W. Packer joined the Company on September 11, 2000 and was named Vice
President of Marketing and Business Development on April 26, 2001.

(6) Jay R. Widdig joined the Company on April 30, 1999.

(7) Includes vacation payout of $27,101 which is based on vacation hours not
taken prior to resignation.

(8) Includes a $168,750 severance payment to be paid out over a nine-month
period. Also includes $1,700 of annual matching contributions under the
Company's tax-qualified Section 401(k) Savings Plan.

(9) This amount includes the annual employer matching contributions under the
Company's tax qualified Section 401(k) Savings Plan.

OPTION GRANTS DURING FISCAL YEAR 2001

The following table provides information related to options to acquire
shares of Common Stock granted to the Named Executive Officers during fiscal
year 2001. The Company did not grant any stock appreciation rights during fiscal
year 2001.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS
INDIVIDUAL GRANTS OPTION TERM (1)
------------------------------------------------------------------------------------------------- ---------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(2) FISCAL YEAR ($/SHARE)(3) DATE 5%($) 10%($)
----------------------------------- ------------- ---------------- ------------ ---------- --------- ---------

G. Ward Paxton..................... -- -- -- -- -- --

Patrick R. Gooden.................. 10,000 0.63% $5.00 01/17/11 $ 31,445 $ 79,687
20,000 1.27 7.13 02/01/11 89,680 227,268
15,000 0.95 4.50 04/30/11 42,450 107,578
5,000 0.32 1.31 10/17/11 4,119 10,439

Eric H. Gore....................... 25,000 1.58 5.00 01/17/11 78,612 199,218
5,000 0.32 5.25 01/19/11 16,508 41,836
15,000 0.95 4.50 04/30/11 42,450 107,578
5,000 0.32 1.31 10/17/11 4,119 10,439

Ryon W. Packer..................... 15,000 0.95 5.00 01/17/11 47,167 119,531
20,000 1.27 4.50 04/30/11 56,601 143,437
5,000 0.32 1.31 10/17/11 4,119 10,439

Jay R. Widdig...................... 30,000 1.90 5.00 01/17/11 94,334 239,061
15,000 0.95 4.50 04/30/11 42,450 107,578
5,000 0.32 1.31 10/17/11 4,119 10,439

Timothy W. Kinnear................. 50,000 3.17 7.13 02/01/11 224,201 568,169

------------------------------

(1) The potential realizable value illustrates the value that may be realized
upon exercise of the options immediately prior to the expiration of their
respective terms, assuming the specified compounded rates of appreciation of
the Company's Common Stock over the term of each option. There can be no
assurance that the actual stock price appreciation over the option term will
be at the assumed 5% and 10% levels or at any other defined level. These
potentially realizable values do not take into account provisions of each
option providing for termination of the option following cessation of
employment, nontransferability or effective vesting over three years.

(2) Each option was an incentive stock option. Each option has a term of ten
years from date of grant, subject to earlier termination under certain
conditions upon cessation of employment of the optionee and become
exercisable with respect to one third of the shares covered thereby on each
grant date anniversary. Such options are not transferable.

(3) The exercise price per share of each option was equal to 100% of the fair
market value of the Common Stock per share on the date of grant. The
Compensation Committee, in its sole discretion, may affect the cancellation
of such options in exchange for a new option grant with a lower exercise
price equal to the current fair market value per share at the time of
cancellation.

OPTION EXERCISES AND FISCAL YEAR END HOLDINGS

The following table sets forth information with respect to options exercised
by the Named Executive Officers during fiscal year 2001 and the number and value
of options held at fiscal year end. No stock appreciation rights were exercised
and no stock appreciation rights were outstanding at fiscal year end.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- ----------- ----------- ----------- ------------- ------------ --------------

G. Ward Paxton......... -- -- 20,800 5,200 -- --
Patrick R. Gooden...... -- -- 13,334 76,666 -- $2,050
Eric H. Gore........... -- -- 67,534 79,466 -- 2,050
Ryon W. Packer......... -- -- 2,500 45,000 -- 2,050
Jay R. Widdig.......... -- -- 18,368 67,332 -- 2,050
Timothy W. Kinnear..... -- -- 80,001 -- -- --

------------------------

(1) The closing price for the Company's Common Stock as reported by The Nasdaq
Stock Market (National Market System) on December 31, 2001, was $1.72 per
share. The indicated value is calculated on the basis of the difference
between the option exercise price per share and $1.72, multiplied by the
number of shares of Common Stock underlying each "in-the-money" option.

COMPENSATION OF DIRECTORS

Messrs. Bucy, Johnston, and Dove (each non-employee director) receives a
cash retainer fee of $1,000 per month. Each non-employee director also receives
a fee of $1,000, which was reduced from $1,500 in November 2001, for each
meeting of the Board attended (excluding telephonic meetings) and for each
meeting of a committee of the Board attended (exclusive of committee meetings
held on the same day as Board meetings). Each non-employee director also
receives a fee of $500 for each telephonic meeting attended. Each non-employee
director is also reimbursed for all reasonable expenses incurred in attending
such meetings. No director who is an employee of the Company receives any fees
for service as a director of the Board. However, T. Joe Head, who is an employee
director, earned $187,000 for his services to the Company as an employee. He did
not receive any stock options during 2001. Mr. Head did not receive any
additional fees for his services as a director of the Board.

Pursuant to the terms of the 1995 Directors Plan, each of the Company's
non-employee directors is automatically granted an option to purchase 20,000
shares of Common Stock upon joining the Board.

Pursuant to the terms of the 1995 Directors Plan prior to its amendment and
restatement in 2002, each non-employee director is automatically granted an
option to purchase an additional 20,000 shares on the fifth anniversary of the
date he or she was initially granted an option pursuant to the 1995 Directors
Plan. During fiscal year 2001, no non-employee directors were granted options
pursuant to this provision. As discussed previously in this Proxy Statement, the
Board has amended and restated the 1995 Directors Plan and this provision has
been amended. Instead of automatically granting an option to purchase 20,000
shares on the fifth anniversary of the initial grants, each non-employee
director will be automatically granted an option to purchase 10,000 shares on
the date of each annual stockholder meeting as long as the director has served
as such for at least six months prior to the date of grant. Please refer to
Proposal Two for a complete description of the amended and restated 1995
Directors Plan.

EMPLOYMENT AGREEMENTS

Neither the Company nor its subsidiaries has any employment agreements with
any of its Named Executive Officers.

On November 28, 2001, the Company entered into a Resignation Agreement and
General Release with its then President and Chief Executive Officer, Timothy W.
Kinnear. Please refer to the Certain Transactions with Management section of
this Proxy Statement for a summary of the agreement.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

GENERAL. The Compensation Committee of the Board sets the compensation for
the Chief Executive Officer, reviews the design, administration and
effectiveness of the compensation programs for other key executives, and
approves stock option grants for all executive officers and key employees. The
Compensation Committee is currently composed of three non-employee directors who
have no interlocking relationships. The data and information included in the
various compensation tables appearing elsewhere in this Proxy Statement should
be read in conjunction with and deemed to be a part of this report.

NAMED EXECUTIVE OFFICERS. This report includes disclosure of the required
compensation information for any one acting as the Company's Chief Executive
Officer at any time during the year and its executive officers including the
four most highly compensated officers.

COMPENSATION OBJECTIVES. The Company operates in the highly competitive and
rapidly changing high technology industry. The Compensation Committee believes
that the compensation programs for executive officers of the Company should be
designed to attract, motivate and retain talented executives who contribute to
the success of the Company and should be determined within a competitive
framework based on the achievement of overall business objectives and financial
performance and individual contributions. Within this framework, the
Compensation Committee's objectives are to:

- Provide a total compensation program competitive with the compensation
practices of organizations in the high technology industry of comparable
size to the Company.

- Provide annual variable incentive awards based on the Company's overall
financial performance relative to corporate objectives.

- Align the financial interests of executive officers with those of
stockholders by providing equity-based incentives.

BASE SALARY. The salaries of the executive officers, including the Chief
Executive Officer, are determined annually by the Compensation Committee with
reference to (i) salaries paid to executives with similar responsibilities at
comparable companies, primarily in the high technology industry, (ii) each
officer's performance and (iii) the Company's overall financial results, without
specific weighting being attributed to any of these factors. The Compensation
Committee believes that the Company must offer salaries within a competitive
market range to attract and retain talented executives. However, the
Compensation Committee manages salaries for the executive group as a whole in a
conservative fashion in order to place more emphasis on incentive compensation.
In January 2001, the Compensation Committee established the base salaries for
each of the Named Executive Officers. In October 2001, the Compensation
Committee reduced the base salaries for each of the Named Executive Officers
between 3% and 31%. The average decrease of the Named Executive Officers was
19%. These reductions were in an effort to reduce expenses. The "Summary
Compensation Table" of this Proxy Statement reflects the annual salary paid to
the Named Executive Officers pursuant to these reductions and the initial
salaries set by the Compensation Committee.

INCENTIVE BONUS PLAN. To reinforce the attainment of corporate objectives,
the Compensation Committee believes that a substantial portion of the potential
annual compensation of each executive officer should be in the form of variable
incentive pay. The incentive cash bonus program for executives is established
annually by the Compensation Committee based upon the Company's achievement of
sales and net income targets established at the beginning of the fiscal year.
The incentive plan for executives, other than certain executives in the
Company's sales organization, requires a threshold level of Company financial
performance before any incentives are awarded. Once the threshold objective for
sales and/or net income of a fiscal year is reached, specific formulas are in
place to calculate the actual incentive payment for each executive for such
year. In fiscal 2001, the Company did not achieve its threshold level of
profitability; thus, non-sales executives, including the two Chief Executive
Officers and two of the other Named Executive Officers, did not receive any
incentive bonus awards. Certain employees in the sales organization, including
one of the Named Executive Officers, received incentive sales commission awards
in fiscal 2001 based upon the degree of achievement of targeted sales objectives
established at the beginning of the fiscal year. An additional Named Executive
Officer received a Management By Objective (MBO) bonus during 2001 prior to
being named an Executive Officer.

EQUITY-BASED INCENTIVES. The goal of the Company's equity-based incentive
awards is to align the interests of executive officers with stockholders. The
Compensation Committee determines the value allocated to equity-based incentives
according to each executive's position within the Company, individual
performance, contributions to achievement of corporate objectives and related
factors, and grants stock options to create a meaningful opportunity for stock
ownership.

The Company has previously adopted three Stock Option Plans (collectively,
the "Plans"), including the 1983 Incentive Stock Option Plan, the 1987 Incentive
Stock Option Plan and the 1995 Stock Option Plan, to provide long-term incentive
compensation for eligible participants. Generally, executive officers and other
key employees of the Company and its subsidiaries are eligible to participate in
the Plans; however, non-employee directors of the Company are not eligible to
participate in these Plans. These directors participate in the 1995 Director
Plan. Stock option grants under the Plans provide the right to purchase shares
of Common Stock at fair market value on the date of grant, or in the case of an
optionee who at the time of the grant holds more than 10% of the total combined
voting securities of the Company, 110% of the fair market value on the date of
grant. Stock options generally vest within a three or a five-year period and
provide terms of five or ten years, as applicable. In 2001, the Compensation
Committee approved the grant of stock options pursuant to the Plans to the Named
Executive Officers indicated in the tables accompanying this report.

CEO COMPENSATION. G. Ward Paxton was named President and Chief Executive
Officer of the Company on November 28, 2001. He also served as President and
Chief Executive Officer of the Company from 1983 until June 2000. Mr. Paxton's
base salary was set at $250,000 for fiscal year 2001, but was decreased to
$175,000 in October 2001 by the Compensation Committee. Timothy W. Kinnear also
served as President and Chief Executive Officer during 2001. Mr. Kinnear
resigned from Intrusion Inc. on November 28, 2001. Mr. Kinnear's base salary was
set at $325,000 for fiscal year 2001, but was decreased to $225,000 in
October 2001 by the Compensation Committee. The salaries of Mr. Paxton and
Mr. Kinnear were decreased in an effort to reduce cost. Mr. Kinnear also
received an option to acquire 50,000 shares as noted on the Option Grants in the
Last Fiscal Year table as included in this Proxy Statement. The grant was based
on the experience of Mr. Kinnear and his contributions to the Company. Under the
1995 Stock Option Plan, no individual can receive options to acquire more than
50,000 shares in any twelve month period. The base salaries for Mr. Paxton and
Mr. Kinnear were based on personal performance of CEO duties and on salary
levels paid to chief executive officers of comparable companies. Mr. Paxton and
Mr. Kinnear did not receive an incentive bonus award for 2001 because the
Company did not achieve its threshold level of profitability established at the
beginning of the year.

COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. The
limitation applies only to compensation which is not considered to be
performance-based. Non-performance based compensation paid to the Company's
executive officers for the 2001 fiscal year did not exceed the $1 million limit
per officer, and the Compensation Committee does not anticipate that the
non-performance based compensation to be paid to the Company's executive
officers for fiscal 2002 will exceed that limit. The Company's 1995 Stock Option
Plan has been structured so that any compensation deemed paid in connection with
the exercise of option grants made under that plan with an exercise price equal
to the fair market value of the option shares on the grant date will qualify as
performance-based compensation which will not be subject to the $1 million
limitation. Because it is unlikely that the cash compensation payable to any of
the Company's executive officers in the foreseeable future will approach the
$1 million limit, the Compensation Committee has decided at this time not to
take any action to limit or restructure the elements of cash compensation
payable to the Company's executive officers. The Compensation Committee will
reconsider this decision should the individual cash compensation of any
executive officer ever approach the $1 million level.

It is the opinion of the Compensation Committee that the executive
compensation policies and plans provide the necessary total remuneration program
to properly align the Company's performance and the interests of the Company's
stockholders through the use of competitive and equitable executive compensation
in a balanced and reasonable manner, for both the short and long-term.

Respectfully submitted,

COMPENSATION COMMITTEE
of the Board of Directors

J. Fred Bucy, Jr. Compensation Committee
Chair

Grant A. Dove, Compensation Committee
Member

Donald M. Johnston, Compensation Committee
Member

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member or nominee for election as a member of the Board or any committees
of the Board has an interlocking relationship with the board (or member of such
board) or any committee (or member of such committee) of a board of any other
company.

STOCK PERFORMANCE INFORMATION

The following chart illustrates the percentage of change in the cumulative
total stockholder return on the Company's Common Stock during the five year
period ending December 31, 2001, compared with the cumulative total return on
the Center for Research in Securities Prices ("CRSP") Total Return Index for The
Nasdaq Stock Market, CRSP Total Return Index for Nasdaq Computer Manufacturing
Stocks, and the CRSP Total Return Index for Nasdaq Computer and Data Processing
Stocks, respectively, for the same periods.

STOCK PERFORMANCE*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC USING THE FOLLOWING
TABLE VALUES

12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/29/2000 12/31/2001
---------- ---------- ---------- ---------- ---------- ----------

Intrusion Inc........................ 100 53.65 25.00 75.52 39.58 14.33
CRSP Total Rtn. Index for the Nasdaq
Stock Market....................... 100 122.48 172.68 320.89 193.01 153.15
CRSP Total Rtn. Index for Nasdaq
Computer Mfg. Stocks............... 100 120.83 262.78 557.80 314.18 216.53
CRSP Total Rtn. Index for Nasdaq
Computer and Data Processing....... 100 122.87 219.20 481.81 221.85 178.69

* The comparison assumes (i) $100 was invested on December 31, 1996 in the
Company's Common Stock and in each of the foregoing indices and (ii) that any
dividends paid by companies included in the comparative indices were reinvested
in additional shares of the same class of equity securities of such companies at
the frequency with which dividends were paid during the applicable periods
depicted.

The stock performance information depicted in the foregoing chart is not
necessarily indicative of future stock performance. Notwithstanding anything to
the contrary set forth in any of the Company's previous or future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, that might incorporate this Proxy or future filings made by the
Company under those statutes, the Compensation Committee Report, the Audit
Committee Report, the Audit Committee Charter, reference to the independence of
Audit Committee members and the Stock Performance Graph are not deemed filed
with the Securities and Exchange Commission. They also shall not be deemed
incorporated by reference into any of those prior filings or into any future
filings made by the Company under those statutes, except the extent the Company
specifically incorporates such information by reference in such filings.

CERTAIN TRANSACTIONS WITH MANAGEMENT

On November 28, 2001, the Company entered into a Resignation Agreement and
General Release with its then President and Chief Executive Officer, Timothy W.
Kinnear. In exchange for his agreement to release the Company and its
affiliates, directors, officers, employees and representatives from any and all
claims, known or unknown, that he may have against the Company, the Company
agreed to pay Mr. Kinnear nine months salary equal to $168,750 in accordance
with its normal payroll practices.

COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS

Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation promulgated pursuant to the Exchange
Act to furnish the Company with copies of all Section 16(a) report forms they
file with the SEC.

Based solely on its review of the copies of such report forms received by it
with respect to fiscal year 2001, the Company believes that all filing
requirements applicable to its directors, officers and persons who own more than
10% of a registered class of the Company's equity securities have been timely
complied with in accordance with Section 16(a) of the Exchange Act.

STOCKHOLDER PROPOSALS

Stockholders may submit proposals on matters appropriate for stockholder
action at subsequent annual meetings of the stockholders consistent with
Rule 14a-8 promulgated under the Exchange Act. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 2003
Annual Meeting of Stockholders, such proposals must be received by the Company
not later than November 20, 2002. Such proposals should be directed to
Intrusion Inc., 1101 East Arapaho Road, Richardson, Texas 75081, Attention:
Secretary (telephone: (972) 234-6400; telecopy: (972) 234-1467).

Pursuant to Rule 14a-4(c) of the Exchange Act of 1934, if a stockholder who
intends to present a proposal at the 2003 Annual Meeting of Stockholders does
not notify the Company of such proposal on or prior to February 3, 2003, then
management proxies would be allowed to use their discretionary voting authority
to vote on the proposal when the proposal is raised at the annual meeting, even
though there is no discussion of the proposal in the 2003 proxy statement.

EXPENSES OF SOLICITATION

All costs incurred in the solicitation of Proxies for the Meeting will be
borne by the Company. In addition to the solicitation by mail, officers and
employees of the Company may solicit Proxies by telephone, telefax or
personally, without additional compensation. The Company may also make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation materials to the beneficial
owners of shares of Common Stock held of record by such persons, and the Company
may reimburse such brokerage houses and other custodians, nominees and
fiduciaries for their out-of-pocket expenses incurred in connection therewith.
In addition, Mellon Investor Services LLC has been retained by the Company to
aid in the solicitation of Proxies and will solicit Proxies by mail, telephone,
internet, telefax and personal interview and may request brokerage houses and
nominees to forward soliciting material to beneficial owners of Common Stock.
For these services, Mellon Investor Services LLC will be paid fees not to exceed
$6,500, plus reasonable incidental expenses.

ADDITIONAL INFORMATION AVAILABLE

UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL FURNISH,
WITHOUT CHARGE, A COPY OF THE COMPANY'S 2001 ANNUAL REPORT ON FORM 10-K, AS
FILED WITH THE SEC, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO.
THE REQUEST SHOULD BE DIRECTED TO THE SECRETARY AT THE COMPANY'S OFFICES
INDICATED ABOVE.

The Company's 2001 Annual Report on Form 10-K accompanies this Proxy
Statement. The Annual Report on Form 10-K, which includes financial statements,
does not form and is not to be deemed part of this Proxy Statement.

OTHER BUSINESS

As of the date of this Proxy Statement, the Board and management are not
aware of any other matter, other than those described herein, which will be
presented for consideration at the Meeting. Should any other matter requiring a
vote of the stockholders properly come before the Meeting or any adjournment
thereof, the enclosed Proxy confers upon the persons named in and entitled to
vote the shares represented by such Proxy discretionary authority to vote the
shares represented by such Proxy in accordance with their best judgment in the
interest of the Company on such matters. The persons named in the enclosed Proxy
also may, if it is deemed advisable, vote such Proxy to adjourn the Meeting from
time to time.

PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ G. Ward Paxton

G. WARD PAXTON

CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

Richardson, Texas
March 20, 2002

EXHIBIT A

1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
OF
INTRUSION INC.
(AMENDED AND RESTATED AS OF JANUARY 10, 2002)

1. PURPOSE. The purposes of the 1995 Non-Employee Directors Stock Option
Plan of Intrusion Inc. (this "Plan") are to promote the growth and prosperity of
Intrusion Inc. (the "Company"), to attract and retain the best available people
to serve as independent directors of the Company and to encourage stock
ownership by such individuals and thus increase their personal interest in the
Company's success.

2. ADMINISTRATION.

(a) This Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board may from time to time prescribe, amend and rescind such
rules, regulations, provisions and procedures, consistent with the terms of this
Plan, as may be advisable in its opinion in the administration of this Plan, and
subject to the terms of this Plan shall prescribe the provisions of the stock
option agreements to be issued hereunder and make all other determinations and
interpretations necessary or advisable for administering this Plan and the stock
option agreements.

(b) A majority of the Board shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Board, shall be the acts of the
Board. All decisions, determinations and interpretations of the Board shall be
final and binding on all persons interested in this Plan.

3. SHARES AND OPTIONS UNDER THIS PLAN.

(a) The stock to be subject to stock options granted under this Plan
("Options") shall be shares of the Company's common stock, $.01 par value per
share (the "Common Stock"), either authorized and unissued or treasury stock.

(b) Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each outstanding Option, the
aggregate number of shares of Common Stock that have been authorized for
issuance under this Plan, and the exercise price of any outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a stock split, payment of a stock dividend with
respect to the Common Stock, recapitalization, combination or reclassification
of the Common Stock, or any other change affecting the outstanding Common Stock
as a class without receipt of consideration by the Company. Such adjustment
shall be made by the Board in its sole discretion, which adjustment shall be
final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.

(c) In the event of the proposed dissolution or liquidation of the Company,
the proposed sale of all or substantially all of the assets of the Company, or
the proposed merger of the Company with or into another corporation, any Options
shall terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board; provided, however, that the Board may,
in the exercise of its sole discretion, in such instances declare that any
Option shall terminate as of a date fixed by the Board and give each Optionee
the right to exercise the Optionee's Option as to all or any part of the Shares
covered by such Option, including Shares as to which the Option would not
otherwise be exercisable.

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(d) The total number of shares of Common Stock reserved for issuance or sale
upon the exercise of Options shall be 260,000 shares (subject to adjustment in
accordance with Section 3(b)).

(e) In the event any outstanding Option for any reason expires, is cancelled
or otherwise terminates, the shares allocable to the unexercised portion of such
Option shall again be available for issuance under this Plan. However, if the
sale and remittance procedure described in Section 6(f)(ii) is used, then the
number of shares of Common Stock available for issuance pursuant to this Plan
shall be reduced by the gross number of shares for which the Option is
exercised, and not by the net number of shares of Common Stock issued to the
holder of such Option.

(f) Nothing in this Plan or in any Option granted pursuant to this Plan
shall confer on any individual any right to continue as a director of the
Company or interfere in any way with the removal of such person as a director in
accordance with the Company's Certificate of Incorporation and Bylaws.
Outstanding Options shall in no way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

4. ELIGIBILITY AND GRANTS.

(a) Each director of the Company who is not at the time of the grant of an
Option an officer or employee of the Company (a "Non-Employee Director") shall
automatically be granted Options as follows:

(i) On the day of a Non-Employee Director's initial appointment or
election (whichever comes first) to the Board, such individual shall be
granted, without any action on the part of the Board or such individual, an
Option to purchase 20,000 shares of Common Stock (subject to adjustment in
accordance with Section 3(b)).

(ii) Thereafter, upon the date of each annual meeting of the Company's
stockholders (beginning with the 2002 annual meeting), such Non-Employee
Director shall be granted, without any action on the part of the Board or
such individual, an Option to purchase 10,000 shares of Common Stock
(subject to adjustment in accordance with Section 3(b)), provided such
individual has served as a Non-Employee Director for at least six months.

(b) All of the Options shall be non-qualified options, not incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.

5. OPTION PRICE. The price at which shares of Common Stock may be
purchased upon the exercise of an Option shall be 100% of the Fair Market Value
(defined below) of the Common Stock on the date the Option is granted. For
purposes of this Plan, "Fair Market Value" shall mean (a) if the Common Stock is
listed upon an established stock exchange or exchanges, the highest closing
price of the Common Stock on such stock exchange or exchanges on the day in
question or, if no sale of the Common Stock shall have been made on any stock
exchange on such day, on the next preceding day on which there was a sale of the
Common Stock; (b) if the Common Stock is not listed upon an established stock
exchange, the mean between dealer "bid" and "ask" prices of the Common Stock in
the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. on the day in question or, if no sale of the Common
Stock shall have been made on such day, on the last preceding day on which there
was a sale of the Common Stock; and (c) if there is no public market for the
Common Stock, such amount as the Board, in its sole discretion, shall determine,
after taking all relevant facts into consideration.

6. EXERCISE OF OPTIONS.

(a) Subject to Sections 6(b), (c) and (d), each Option shall vest and become
exercisable in three successive equal annual installments upon the Non-Employee
Director's completion of each year of service as a Board member over a period of
three years measured from the date the Option is granted. Each

A-2

Option shall have a term of ten (10) years and, to the extent not theretofore
exercised, shall expire and not be exercisable after the tenth anniversary of
the date of its grant.

(b) During the lifetime of a Non-Employee Director, Options granted to such
Non-Employee Director may be exercised only by such Non-Employee Director.
Options shall not be sold, pledged, assigned or transferred in any manner except
by will or by the laws of descent and distribution, and any attempt to do so in
violation of this prohibition, whether voluntary, involuntary, by operation of
law or otherwise, shall immediately void the Option.

(c) If a Non-Employee Director dies while serving on the Board, any
outstanding Option theretofore granted to such director shall become fully
vested as of the date of his or her death and may be exercised by his or her
estate or a person who has acquired the right to exercise the Option by will or
the laws of descent and distribution at any time or times prior to the first
anniversary of the date of such director's death; provided that in no event may
such Option be exercised after the tenth anniversary of the date of its grant.
Thereafter, such Option shall terminate and cease to be exercisable.

(d) If a Non-Employee Director ceases to be a director of the Company for
any reason other than death, any outstanding Option may be exercised for the
number of shares of Common Stock for which such Option is exercisable at the
time the Non-Employee Director ceases to be a director of the Company at any
time or times prior to the first anniversary of the date he or she ceased to be
a director of the Company; provided that in no event may such Option be
exercised after the tenth anniversary of the date of its grant. At the time the
Non-Employee Director's ceases to be a director of the Company, the Option shall
terminate and cease to be outstanding to the extent the Option is not
exercisable. Upon the expiration of the one year exercise period or, if earlier,
upon the tenth anniversary of the date of its grant, such Option shall terminate
in its entirety and cease to be exercisable.

(e) An Option may not be exercised for fractional shares of Common Stock.

(f) The Option shall be considered exercised on the day when written notice
of such exercise has been received by the Company at its principal place of
business from the person entitled to exercise the Option, accompanied by full
payment of the purchase price and such other documents, if any, as the Company
shall reasonably require. Payment may be made in (i) cash or by certified or
cashier's check to the order of the Company or other guaranteed funds or
(ii) through a special sale and remittance procedure pursuant to which the
person exercising the Option shall concurrently provide irrevocable instructions
(A) to a brokerage firm approved by the Company to effect the immediate sale of
the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
purchase price payable for the purchased shares plus all applicable federal,
state and local income and employment taxes required to be withheld by the
Company by reason of such exercise and (B) to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale. Upon receipt of all such documents and payments, the
Company shall issue the purchased shares. No adjustment will be made for a
dividend or other rights for which the record date is prior to the date of the
exercise of the Option, except as specifically provided in this Plan.

(g) No Non-Employee Director shall have stockholder rights with respect to
the shares of Common Stock subject to an Option until he or she has exercised
the Option in accordance with Section 6(f) and become a holder of record of the
purchased shares.

7. AMENDMENT AND DISCONTINUANCE. The Board may at any time amend this
Plan, provided that, except as permitted by Section 3(b), no amendment without
the requisite approval of the stockholders of the Company shall: (a) increase
the total number of shares for which Options may be granted, (b) change the
manner of determining the exercise price at which shares may be purchased,
(c) change the class of persons eligible to receive Options under this Plan,
(d) change the period during which Options may be exercised or (e) change the
provisions relating to the administration of this Plan by the Board. The Board

A-3

may terminate this Plan at any time but such termination shall not affect
Options previously granted and such Options shall remain in full force and
effect as if this Plan had not been terminated.

8. SECURITIES ACT OF 1933. Unless (a) the shares to be issued upon
exercise of an Option granted under this Plan have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended, or
(b) in the opinion of counsel for the Company, no such registration is
necessary, the Company shall be under no obligation to issue any shares covered
by any Option. The inability of the Company to obtain any authority deemed by
the Company's counsel to be necessary to the lawful issuance or sale of any
shares of its Common Stock hereunder shall relieve the Company of any liability
in respect of the nonissuance or sale of such shares as to which such authority
shall not have been obtained.

9. EFFECTIVE DATE; TERM OF PLAN. This Plan originally became effective as
of March 21, 1995 and was amended and restated as of January 10, 2002. This Plan
shall terminate on March 21, 2005, unless sooner terminated as provided in this
Plan. At the end of such term, this Plan shall expire except for Options then
outstanding.

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PROXY

INTRUSION INC.
1101 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081

ANNUAL MEETING OF STOCKHOLDERS - APRIL 25, 2002

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned stockholder(s) of Intrusion Inc., a Delaware corporation
(the "Company"), hereby appoints G. Ward Paxton and Jay R. Widdig, and each
of them, attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to represent and to vote all shares of common stock of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the Holiday Inn Richardson Select, 1655 N. Central
Expressway, Richardson, Texas 75080, at 10:00 A.M., Central Standard Time, on
Thursday, April 25, 2002, and at any adjournment thereof.

(Continued on reverse side)

This Proxy, when properly executed will be voted as directed herein by the
undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1, 2, and 3.

1. ELECTION OF DIRECTORS
Nominees: G. Ward Paxton, T. Joe Head, J. Fred Bucy, Jr., Grant A. Dove and
Donald M. Johnston

INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.

FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees

________________________________________________________________________________

2. Proposal to approve the amendments to the 1995 Non-Employee Directors Stock
Option Plan for the benefit of non-employee directors of the Company, as
described in the Proxy Statement dated March 20, 2002 and set forth in
Exhibit A;

FOR AGAINST ABSTAIN

3. Ratification of the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 2002.

FOR AGAINST ABSTAIN

In their discretion, such attorneys-in-fact and proxies are authorized to
vote upon such other business as properly may come before the meeting.

I will will not be attending the meeting

YOU ARE REQUESTED TO COMPLETE, DATE, SIGN, AND RETURN THIS PROXY PROMPTLY.
ALL JOINT OWNERS MUST SIGN. PERSONS SIGNING AS EXECUTORS, ADMINISTRATORS,
TRUSTEES, CORPORATE OFFICERS, OR IN OTHER REPRESENTATIVE CAPACITIES SHOULD SO
INDICATE.

Date:___________________________________, 2002

____________________________________________
Signature