8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 15, 2024

INTRUSION INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	001-39608	75-1911917
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

101 East Park Blvd, Suite 1200 Plano, Texas	75074
(Address of Principal Executive Offices)	(Zip Code)

(888) 637-7770

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INTZ	NASDAQ Capital Market

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

Emerging growth company ☐

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

Item 1.01 Entry into a Material Definitive Agreement.

Streeterville Capital, LLC Exchange Agreement

On March 15, 2024, Intrusion Inc. (the “Company”), entered into and closed an Exchange Agreement with Streeterville Capital, LLC (“Streeterville”).

The Exchange Agreement facilitates the exchange of debt for Series A Preferred Stock of the Company and the retirement of a promissory note between the Company and Streeterville as follows:

On March 10, 2022, the Company sold to Streeterville that certain Promissory Note #1 in the original principal amount of $5,350,000.00 (“Note #1”). Then, on June 29, 2022, the Company sold to Streeterville that certain Promissory Note #2 in the original principal amount of $5,350,000.00 (“Note #2”). Subject to the terms of the Agreement, the Company and Streeterville have partitioned a new Promissory Note (“Note #1”) in the original principal amount of $3,007,237.26 from Note #1 and then cause the outstanding balance of Note #1 to be reduced by an amount equal to the Note #1 Exchange Amount, and such outstanding balance shall therefore be $500,120.07. According to the terms of the Agreement, Company and Streeterville have exchanged (the “Exchange”) Note #2 and the Partitioned Note for 9,275 shares of Series A Preferred Stock (the “Exchange Shares”). Other than the surrender of Note #2 and the Partitioned Note, no consideration of any kind was given by the Company to Streeterville in connection with the Agreement.

The Company and Streeterville have agreed that following the partition of Note #1, that Note #1 and the security interest with respect to Note #1 shall remain in full force and effect, provided that the outstanding balance of Note #1 shall be reduced by an amount equal to the Note #1 Exchange Amount. According to the Agreement, all of the, the Note #1 Transaction Documents remain in full force and effect, enforceable in accordance with all of its original terms and provisions. If there is any conflict between the terms of the Agreement, on the one hand, and the Note #1 Transaction Documents, on the other hand, the terms the Agreement shall prevail.

Partitioned Note

Pursuant to the Agreement, on March 15, 2024, the Company and Streeterville executed a Partitioned Promissory Note, in the form of Note #1 (the “Partitioned Note”). The Partitioned Note represents the remaining portion of the prior amount owed by the Company to Streeterville pursuant to the previous Note #1, and partitioned on March 15, 2024, as referenced in the section above. The principal amount of the Partitioned Note is $3,007,237.26 with interest, fees, charges, and late fees accruing on the first business day following March 15, 2024 (the “Maturity Date”). Interest on the principal amount is at the rate of 7% per annum, simple interest, from the issuance date until the Partitioned Note is paid or satisfied in full.

The foregoing description of the Exchange Agreement and Partitioned Note is not complete and is qualified in its entirety by the full text of the Exchange Agreement and the Partitioned Note, which are filed herewith as Exhibits 10.1, and 10.2 to this Current Report on Form 8-K, respectively, and which are incorporated by reference herein.

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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Amended and Restated Certificate

On March 15, 2024, following approval by stockholders at the Special Meeting (as hereinafter defined), as discussed in Item 5.07 of this Current Report on Form 8-K, the Company filed the Amended and Restated Certificate of Incorporation (the “A&R Certificate”) to (i) eliminate the Series 1, Series 2, and Series 3 preferred shares, (ii) create a right of stockholders to take action by written consent; (iii) add a Delaware forum selection provision; and (iv) update, clarify and remove outdated provisions.

The description of the A&R Certificate contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Certificate, a copy of which will be filed as an exhibit to the Company’s next periodic report.

Series A Certificate of Designations

Also on March 15, 2024, following approval by stockholders at the Special Meeting and following the filing of the A&R Certificate, filed a Certificate of Designations (the “Series A Certificate”) creating Series A preferred stock, $0.01 par value per share (the “Series A Stock”). Pursuant to the terms of the Series A Certificate, 20,000 shares of Series A Stock are authorized and each share of Series A Stock has a stated value of $1,100 (the “Stated Value”).

Except to the extent that the holders of at least a majority of the outstanding Series A Stock (the “Required Holders”) expressly consent to the creation of Parity Stock (as defined below), all shares of the Company’s capital stock shall be junior in rank to all Series A Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such shares of the Company’s capital stock shall be qualified by the rights, powers, preferences and privileges of the Series A Stock. Without limiting any other provision of the Series A Certificate, without the prior express consent of the Required Holders, voting separately as a single class, and with each share of Series A Stock having one vote on such matter, the Company shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series A Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”), or (ii) of pari passu rank to the Series A Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Parity Stock”). In the event of the merger or consolidation of the Company with or into another corporation wherein the Company is the surviving entity, the shares of Series A Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall provide for a result inconsistent therewith, subject to the other terms and conditions herein.

Preferred Return

Each share of Series A Stock accrues a rate of return on the Stated Value at the rate of 10% per year, compounded annually to the extent not paid as set forth in the Series A Certificate, and to be determined pro rata for any factional year periods (the “Preferred Return”). The Preferred Return accrues on each share of Series A Stock from the date of its issuance, and shall be payable or otherwise settled as set forth herein. The Preferred Return will be payable on a quarterly basis, either in cash or via the issuance to the applicable Series A Holder of an additional number of shares of Series A Stock equal to (i) the Preferred Return then accrued and unpaid, divided by (ii) the Stated Value, with the election as to payment in cash or via the issuance of additional shares of Series A Stock to be determined in the discretion of the Company.

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Series A Dividend

Commencing on the one-year anniversary of the issuance date of each share of Series A Stock, each such share of Series A Stock shall accrue an automatic quarterly dividend, based on three quarters of 91 days each and the last quarter of 92 days (or 93 days for leap years), which shall be calculated on the Stated Value of such share of Series A Stock, and which shall be payable in additional shares of Series A Stock, based on the Stated Value, or in cash as set forth herein (each, as applicable, the “Quarterly Dividend”). For the period from the one-year anniversary of the issuance date of a share of Series A Stock to the two-year anniversary of the issuance date of a share of Series A Stock, the Quarterly Dividend shall be 2.5% per quarter, and for all periods following the two-year anniversary of the issuance date of a share of Series A Stock, the Quarterly Dividend shall be 5% per quarter.

The Quarterly Dividend shall be aggregated for each Series A Holder, and shall be paid to each Series A Holder following the end of each applicable quarter, via the issuance to such Series A Holder of the whole number of shares of Series A Stock payable with respect to such Quarterly Dividend, and payment in cash for any fractional shares of Series A Stock that would be issuable with respect to such applicable Quarterly Dividend.

Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event (as defined in the Series A Certificate), each share of Series A Stock shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders before any payment shall be made to the holders of the Company’s common stock equal to by reason of their ownership thereof, an amount per share of Series A Stock equal to the Stated Value at such time plus any accrued but unpaid Preferred Return plus any accrued and unpaid Quarterly Dividend (as applicable, the “Series A Preferred Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Company available for distribution to its shareholders shall be insufficient to pay the Series A Preferred Liquidation Amount, the Series A Holders with respect to their shares of Series A Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Following the payment of the Series A Preferred Liquidation Amount, if there are any remaining assets of the Corporation available for distribution to its shareholders, the Series A Stock shall not participate in such distributions.

No Conversions

The Series A Stock is not be convertible into shares of common stock or into any other class or series of stock of the Company.

Corporation Optional Redemption

Subject to the terms and conditions of the Series A Certificate, at any time the Company may elect, in the sole discretion of the Board, to redeem all or any portion of the Series A Stock then issued and outstanding from all of the Series A Holders (a “Corporation Optional Redemption”) by paying to the applicable Series A Holders an amount in cash equal to the Series A Preferred Liquidation Amount then applicable to such shares of Series A Stock being redeemed in the Corporation Optional Conversion (the “Redemption Price”).

Dividends and Distributions

The Series A Stock will not participate in any dividends, distributions or payments to the holders of the common stock.

Voting

Except as set forth in the Series A Certificate, the Series A Stock will not have any voting rights and will not vote on any matter submitted to the holders of the common stock, or any class thereof, for a vote.

The Company may not, and will not, amend or repeal the Series A Certificate without the prior written consent of Series A Holders holding a majority of the Series A Stock then issued and outstanding, in which vote each share of Series A Stock then issued and outstanding shall have one vote, voting separately as a single class, in person or by proxy, either in writing without a meeting or at an annual or a special meeting of such Series A Holders, and any such act or transaction entered into without such vote or consent shall be null and void ab initio, and of no force or effect.

The description of the Series A Certificate contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Series A Certificate, a copy of which will be filed as an exhibit to the Company’s next periodic report.

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Item 5.07. Submission of Matters to a Vote of Security Holders.

On March 15, 2024, held a special meeting of stockholders (the “Special Meeting”) to vote on the following matters:

1.  Reverse Stock Split

Stockholders approved the amendment of the Company’s Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to effectuate a reverse stock split of Intrusion’s outstanding shares of common stock, at a ratio of no less than 1-for-2 and no more than 1-for-20, with such ratio to be determined at the sole discretion of the Board, in accordance with the voting results listed below.

For	Against	Abstain	Broker Non-Votes
20,683,455	810,865	75,068	N/A

2.  Elimination of Series 1, Series 2, and Series 3 Preferred Shares

Stockholders approved the amendment of the Certificate of Incorporation to eliminate Series 1, Series 2, and Series 3 preferred shares, in accordance with the voting results listed below.

For	Against	Abstain	Broker Non-Votes
11,537,514	61,337	86,958	9,883,579

3.  Amendment of Certificate of Incorporation to Create a Right of Stockholders to Take Action by Written Consent

Stockholders approved the amendment of the Certificate of Incorporation to create a right of stockholders to take action by written consent, in accordance with the voting results listed below.

For	Against	Abstain	Broker Non-Votes
7,096,104	4,547,473	42,232	9,883,579

4.  Amendment of Certificate of Incorporation to Add a Delaware Forum Selection Provision

Stockholders approved the amendment of the Certificate of Incorporation to add a Delaware forum selection provision, in accordance with the voting results listed below.

For	Against	Abstain	Broker Non-Votes
11,264,210	130,617	290,982	9,883,579

5.  Amendment of Certificate of Incorporation to Update, Clarify and Remove Outdated Provisions

Stockholders approved the amendment of the Certificate of Incorporation to update, clarify and remove outdated provisions, in accordance with the voting results below.

For	Against	Abstain	Broker Non-Votes
11,375,971	33,257	276,581	9,883,579

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Item 7.01. Regulation FD Disclosure.

On March 18, 2024, the Company issued a press release announcing that following approval from stockholders at the Special Meeting, the Company intends to effectuate a 1-for-20 reverse stock split of its issued and outstanding shares of common stock (the “Reverse Split”).

The Company also announced that it has entered into the Exchange Agreement under which the Company and Streeterville partitioned the Partitioned Note.

The information included in this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD. 

Item 8.01. Other Events.

Following approval from stockholders at the Special Meeting on March 15, 2024, the Company intends to effectuate a 1-for-20 Reverse Split of its issued and outstanding shares of common stock. The Company expects that the Reverse Split will become effective on March 22, 2024, at 4:00 p.m., Eastern Time. As of the open of trading on March 25, 2024, the Company’s common stock will continue to trade on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “INTZ” on a Reverse Split-adjusted basis, with the new CUSIP number 46121E 304. The Reverse Split is intended to increase the price per share of the Company's common stock to allow the Company to demonstrate compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq.

Upon the effectiveness of the Reverse Split, every 20 shares of the Company’s issued and outstanding shares of common stock will be combined into one issued and outstanding share of common stock. No fractional shares of common stock will be issued as a result of the Reverse Split. Rather, any fractional shares will be rounded up to the next higher whole share. The Reverse Split will have no impact on the total authorized number of shares of common stock and the par value per share of the Company’s common stock will remain unchanged at $0.01. The Reverse Split will affect all stockholders uniformly and will not alter any stockholder’s percentage of common stock, except to the extent that the Reverse Split would result in some stockholders owning a fractional share as described above.

The Company’s transfer agent, Computershare Inc., is acting as the exchange agent for the Reverse Split. Registered stockholders holding pre-Reverse Split shares of the Company’s common stock electronically in book-entry form are not required to take any action to receive post-Reverse Split shares. Those stockholders who hold their shares in brokerage accounts or in "street name" will have their positions automatically adjusted to reflect the Reverse Split, subject to each broker's particular processes, and will not be required to take any action in connection with the Reverse Split.

Additional information concerning the Reverse Split can be found in the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 25, 2024, which can also be found on the Company’s investor relations website.

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Item 9.01 Financial Statement and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Exchange Agreement dated March 15, 2024, between Streeterville Capital, LLC and the registrant.
10.2	Partitioned Promissory Note, Note #1 dated March 15, 2024, between Streeterville Capital, LLC and the registrant.
99.1	Press release of the registrant dated March 15, 2024.
104.1	Cover Page Interactive Data File - the cover page XBRL tags are embedded with the Inline XBRL document.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	Intrusion, Inc.
Dated: March 18, 2024	By:	/s/ Kimberly Pinson
		Kimberly Pinson
		Chief Financial Officer

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EX-10.1

Exhibit 10.1

1.1.THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.

EXCHANGE AGREEMENT

This Exchange Agreement (this “Agreement”) is entered into as of March 15, 2024 (“Effective Date”) by and between Streeterville Capital, LLC, a Utah limited liability company (“Lender”), and Intrusion Inc., a Delaware corporation (“Borrower”). Certain capitalized terms are defined in Section 2 of this Agreement.

A.Borrower previously sold and issued to Lender that certain Promissory Note #1 dated March 10, 2022 in the original principal amount of $5,350,000.00 (the “Note #1”) pursuant to that certain Note Purchase Agreement dated March 10, 2022 between Lender and Borrower (the “Note #1 Purchase Agreement,” and together with Note #1 and all other documents entered into in conjunction therewith, the “Note #1 Transaction Documents”).

B.Borrower previously sold and issued to Lender that certain Promissory Note #2 dated June 29, 2022 in the original principal amount of $5,350,000.00 (“Note #2”) pursuant to that certain Note Purchase Agreement dated June 29, 2022 between Lender and Borrower (the “Note #2 Purchase Agreement,” and together with Note #2 and all other documents entered into in conjunction therewith, the “Note #2 Transaction Documents”).

C.Subject to the terms of this Agreement, Borrower and Lender desire to partition a new Promissory Note in the form of Note #1 as attached hereto as Exhibit A (the “Partitioned Note”) in the original principal amount of $3,007,237.26 (the “Note #1 Exchange Amount”) from Note #1 and then cause the outstanding balance of Note #1 to be reduced by an amount equal to the Note #1 Exchange Amount, and such outstanding balance shall therefore be $500,120.07.

D.Borrower and Lender desire to exchange (such exchange is referred to as the “Exchange”) Note #2 and the Partitioned Note for 9,275 shares of Series A Preferred Stock (the “Exchange Shares”), according to the terms and conditions of this Agreement.

E.Other than the surrender of Note #2 and the Partitioned Note, no consideration of any kind whatsoever shall be given by Lender to Borrower in connection with this Agreement.

F.Lender and Borrower now desire to exchange Note #2 and the Partitioned Note for the Exchange Shares on the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Recitals. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate, are contractual in nature, and are hereby incorporated into and made a part of this Agreement.

2.Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms, as used herein, have the following meanings:

(a)“Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with, the specified Person.

(b)“Certificate of Designations” means the Certificate of Designations of the Series A Preferred Stock filed with the Delaware Secretary of State.

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(c)“Control” means (a) the possession, directly or indirectly, of the power to vote 10% or more of the securities or other equity interests of a Person having ordinary voting power, (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, by contractor otherwise, or (c) being a director, officer, executor, trustee or fiduciary (or their equivalents) of a Person or a Person that controls such Person.

(d)“Notes” means Note #1 and Note #2.

(e)“Person” means a natural person, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof.

(f)“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

(g)“Series A Preferred Stock” means shares of Borrower’s Series A Preferred Stock, par value $0.01.

(h)“Transaction Documents” means this Agreement, the Certificate of Designations and any other agreement, document, certificate or writing delivered or to be delivered in connection with this Agreement and any other document related to the Transactions related to the forgoing, including, without limitations, those delivered at the Closing.

(i)“Transactions” means the purchase and sale of the Exchange Shares and the other transactions contemplated in connection with the Exchange.

3.Closing. The closing of the Transactions (the “Closing”) shall occur on the Effective Date immediately following the execution of this Agreement, by means of the exchange by express courier or email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

(a)Partition. Effective as of the Closing, Borrower and Lender agree that the Partitioned Note is hereby partitioned from Note #1. Following such partition of Note #1, Borrower and Lender agree that Note #1 and the security interest with respect to Note #1 shall remain in full force and effect, provided that the outstanding balance of Note #1 shall be reduced by an amount equal to the Note #1 Exchange Amount.

(b)Exchange. Pursuant to the terms and conditions of this Agreement, at the Closing, Lender shall surrender Note #2 and the Partitioned Note to Borrower, and the Partitioned Note, Note #2 and the Note #2 Transaction Documents shall be cancelled and terminated and all obligations of Borrower under the Partitioned Note, Note #2 and the Note #2 Transaction Documents shall be deemed fulfilled, and the Partitioned Note, Note #2 and the Note #2 Transaction Documents shall thereafter be deemed terminated and null and void and of no further force or effect. The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of Note #2 and the Partitioned Note. Notwithstanding the foregoing, this Agreement will be terminated and deemed void ab initio if the Exchange Shares are not issued on the Effective Date.

(c)Exemption. The issuance of the Partitioned Note, the issuance of the Exchange Shares and the other Transactions are being undertaken pursuant to the exemption provided by Rule 506(b) of Regulation D under the Securities Act.

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7.Borrower’s Representations, Warranties and Agreements. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its Affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder, (c) no event of default has occurred under either of the Notes and any events of default that may have occurred thereunder have not been, and are not hereby, waived by Lender, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Borrower’s obligations under the Notes, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action and the Exchange Shares will be validly issued, fully paid and non-assessable, free and clear of all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and description, (f) Borrower has not received any consideration in any form whatsoever for entering into this Agreement, other than the surrender of Note #2 and the Partitioned Note, and (g) Borrower has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement.

8.Lender’s Representations, Warranties and Agreements. In order to induce Borrower to enter into this Agreement, Lender, for itself, and for its Affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Lender has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Lender hereunder, (c) Lender has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Borrower related to this Agreement; and (d) Lender is an “accredited investor” as defined in Rule 501 of Regulation D promulgated pursuant to the Securities Act.

9.Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Note #1 Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY.

10.Arbitration of Claims. Any disputes arising under or in connection with this Agreement, the Exchange Shares, the Certificate of Designations or the Transactions, shall be subject to the Arbitration Provisions (as defined in the Note #1 Purchase Agreement) attached as exhibits to the Note #1 Purchase Agreement.

11.Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or other electronic transmission (including email) shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile transmission or other electronic transmission (including email) shall be deemed to be their original signatures for all purposes.

12.Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses.  Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.

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13.No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.

14.Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

15.Entire Agreement. This Agreement, together with the Transaction Documents, and all other documents referred to herein, supersedes all other prior oral or written agreements between Borrower, Lender, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Lender nor Borrower makes any representation, warranty, covenant or undertaking with respect to such matters.

16.Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.

17.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part. Borrower may not assign this Agreement or any of its obligations herein without the prior written consent of Lender.

18.Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, the Note #1 Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Lender and Borrower. If there is any conflict between the terms of this Agreement, on the one hand, and the Note #1 Transaction Documents, on the other hand, the terms of this Agreement shall prevail.

19.Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.

20.Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Borrower or Lender shall be given as set forth in the “Notices” section of the Note #1 Purchase Agreement.

21.Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

BORROWER:

INTRUSION INC.

 
By: /s/ Anothony Scott              

Anothony Scott, CEO

LENDER:

STREETERVILLE CAPITAL, LLC

By: /s/ John M. Fife                     

John M. Fife, President

[Signature Page to Exchange Agreement]

Exhibit A

Partitioned Note

(Attached)

EX-10.2

Exhibit 10.2

Partitioned Note

Issuance Date: March 15, 2024 Principal Amount: U.S. $3,007,237.26

FOR VALUE RECEIVED, pursuant to this Partitioned Note (this “Note”), Intrusion Inc., a Delaware corporation (“Borrower”), promises to pay to Streeterville Capital, LLC, a Utah limited liability company, or its successors or assigns (“Lender”), the principal amount as set forth forth above and any interest, fees, charges, and late fees accrued hereunder on the first business day following the Issuance Date as set forth above (the “Maturity Date”) in accordance with the terms set forth herein and to pay interest on the Principal Amount at the rate of seven percent (7%) per annum, simple interest, from the Issuance Date until the same is paid or otherwise satisfied in full. The Borrower and the Lender may be referred to herein collectively as the “Parties” and each individually as a “Party”.

Section 1.Partition and Exchange. This Note represents a portion of the prior amount owed by the Borrower to the Lender pursuant to the Promissory Note #1 dated as of March 10, 2022, and this Partitioned Note is being issued to the Lender pursuant to the Exchange Agreement by and between the Parties dated as of Issuance Date (the “Exchange Agreement”). The Parties acknowledge and agree that it is anticipated that, immediately following the issuance of this Note, this Note and the Principal Amount and all accrued interest hereunder (the “Indebtedness”) shall be exchanged for certain securities of the Borrower pursuant to the Exchange Agreement.

Section 2.Repayment. To the extent not exchanged for other securities of the Borrower pursuant to the Exchange Agreement, the Indebtedness shall be due and payable on the Maturity Date.

Section 3.Governing Law; Venue. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

Section 4.Amendments. The prior written consent of both Parties hereto shall be required for any change or amendment to this Note.

Section 5.Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the provisions of the Exchange Agreement.

Section 6.Governing Law. This Note and all matters based upon, arising out of or relating in any way to this Note, including all disputes, claims or causes of action arising out of or relating to this Note as well as the interpretation, construction, performance and enforcement of this Note, shall be governed by the laws of the United States and the State of Utah, without regard to any jurisdiction’s conflict-of-laws principles.

Section 7.Counterparts. This Note may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed this Note as of the Issue Date set forth above.

Intrusion Inc.

By:  /s/ Anothony Scott                               

Name: Anothony Scott

Title:   Chief Executive Officer

Agreed and accepted:

Streeterville Capital LLC

By: /s/ John M. Fife                              

Name: John M. Fife

Title:   President

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EX-99.1

Exhibit 99.1

Intrusion, Inc. Announces 1-for-20 Reverse Stock Split & Exchange Agreement of Debt

to Preferred Stock

PLANO, Texas, March 18, 2024 (ACCESSWIRE) -- Intrusion Inc. (NASDAQ: INTZ), a leader in cyberattack prevention solutions (the "Company" or "Intrusion"), today announced that following approval from stockholders at the Special Meeting of Stockholders on March 15, 2024, the Company intends to effectuate a 1-for-20 reverse stock split of its issued and outstanding shares of common stock, par value $0.01 per share. The Company also announced today that it has entered into an exchange agreement with Streeterville Capital, LLC to exchange an aggregate $9,275,000 in senior debt pursuant to notes issued in March and June of 2022 for a newly designated Series A Preferred Stock (the "Exchange Agreement").

The 1-for-20 reverse stock split and entry into the Exchange Agreement are part of the Company's plan to regain compliance with the minimum bid price requirement of $1.00 (the "Minimum Bid Price Requirement") and the equity standard for continued listing on the Nasdaq Capital Markets ("Nasdaq").

Reverse Stock Split Details:

The Company expects that the reverse stock split will become effective on March 22, 2024, at 4:00 p.m., Eastern Time. As of the open of trading on March 25, 2024, Intrusion’s common stock will continue to trade on Nasdaq under the ticker symbol “INTZ” on a reverse stock split-adjusted basis, with the new CUSIP number 46121E 304. The reverse stock split is intended to increase the price per share of the Company's common stock to allow the Company to demonstrate compliance with the Minimum Bid Price Requirement for continued listing on Nasdaq.

Upon the effectiveness of the reverse stock split, every 20 shares of the Company’s issued and outstanding shares of common stock will be combined into one issued and outstanding share of common stock. No fractional shares of common stock will be issued as a result of the reverse stock split. Rather, any fractional shares will be rounded up to the next higher whole share. The reverse stock split will have no impact on the total authorized number of shares of common stock and the par value per share of the Company’s common stock will remain unchanged at $0.01. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage of common stock, except to the extent that the reverse stock split would result in some stockholders owning a fractional share as described above. Proportionate automatic adjustments will be made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards and warrants, as applicable.

Intrusion's transfer agent, Computershare Inc., is acting as the exchange agent for the reverse stock split. Registered stockholders holding pre-reverse stock split shares of Intrusion’s common stock electronically in book-entry form are not required to take any action to receive post-reverse stock split shares. Those stockholders who hold their shares in brokerage accounts or in "street name" will have their positions automatically adjusted to reflect the reverse stock split, subject to each broker's particular processes, and will not be required to take any action in connection with the reverse stock split.

Additional information concerning the reverse stock split can be found in Intrusion's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 25, 2024, which can also be found on Intrusion’s investor relations website.

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About Intrusion Inc.

Intrusion Inc. is a cybersecurity company based in Plano, Texas. The Company offers its customers access to its exclusive threat intelligence database containing the historical data, known associations, and reputational behavior of over 8.5 billion IP addresses. After years of gathering global internet intelligence and working exclusively with government entities, the Company released its first commercial product in 2021. Intrusion Shield is designed to allow businesses to incorporate a Zero Trust, reputation-based security solution into their existing infrastructure. Intrusion Shield observes traffic flow and instantly blocks known malicious or unknown connections from both entering or exiting a network to help protect against Zero-Day and ransomware attacks. Incorporating Intrusion Shield into a network can elevate an organization's overall security posture by enhancing the performance and decision-making of other solutions in its cybersecurity architecture.

Cautionary Statement Regarding Forward-Looking Information

This release may contain certain forward-looking statements, including, without limitation, our expectations for positive results from our recent sales, marketing, and strategic initiatives, which statements reflect management’s expectations regarding future events and operating performance. These forward-looking statements speak only as of the date hereof and involve a number of risks and uncertainties, including the risk that our recent sales, marketing, and strategic efforts will not result in increased product awareness or sales of our Intrusion Shield. These statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, including, the risk that this financing fails to provide the needed capital for the Company to execute its current business strategies, the Company does not achieve the anticipated results from its current sales, marketing, operational, and product development initiatives, as well as risks that we have detailed in the Company’s most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”

IR Contact:

Alpha IR Group

Mike Cummings or Josh Carroll

INTZ@alpha-ir.com

Source: Intrusion, Inc.

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XML

Cover	Mar. 15, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 15, 2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-39608
Entity Registrant Name	INTRUSION INC.
Entity Central Index Key	0000736012
Entity Tax Identification Number	75-1911917
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	101 East Park Blvd
Entity Address, Address Line Two	Suite 1200
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75074
City Area Code	(888)
Local Phone Number	637-7770
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	INTZ
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false