INTRUSION INC : Results of Operations and Financial Condition, Unregistered Sale of Equity Securities, Financial Statements and Exhibits (form 8-K) -

INTRUSION INC : Results of Operations and Financial Condition, Unregistered Sale of Equity Securities, Financial Statements and Exhibits (form 8-K)


Under a previously disclosed securities purchase agreement (the “SPA”) dated
March 10, 2022 between Intrusion Inc. (the “Company”) and Streeterville Capital,
(the “Investor”), on June 8, 2022, the Company notified Investor of the
Company’s decision to exercise its option to issue, and for the Investor to
purchase, an unsecured promissory note (the “Note”) in the aggregate principal
amount of $5,350,000 in exchange for $5,000,000, subject to the Note #2
Conditions Precedent being satisfied on the issuance date. The issuance of the
Note is expected to occur on July 1, 2022. The Note will have substantively
identical terms to the unsecured promissory note that the Company issued to the
Investor on March 10, 2022, as described in the Company’s Current Report on Form
8-K filed on March 10, 2022. The Company is expected to receive $4.8 million in
net proceeds from the issuance of the Note, which the Company expects to use for
general corporate purposes.

The Note will bear interest at a rate of 7% per annum and mature on January 1,
(the “Maturity Date”). The Note will carry an original issue discount
totaling $350,000, which will be included in the principal balance of the Note.
If the Company elects to prepay the Note prior to the Maturity Date, it must pay
a premium of (i) 5%, if the prepayment occurs prior to the three-month
anniversary of issuance, (ii) 7.5%, if the prepayment occurs between the
three-month anniversary and six-month anniversary of issuance, and (iii) 10% if
the prepayment occurs after the six-month anniversary of issuance (in each case,
plus the principal, interest, and fees owed as of the prepayment date).

Beginning January 1, 2023, the Noteholder will have the right to redeem up to
$500,000 of the outstanding balance of the Note per month. Payments in
satisfaction of any such redemption election may be made by the Company,
generally at the Company’s option, (a) in cash, (b) by paying the redemption
amount in the form of shares of the Company’s common stock (“Common Stock”) with
the number of redemption shares being equal to the portion of the applicable
redemption amount divided by the Redemption Conversion Price or (c) a
combination of cash and shares of Common Stock. The “Redemption Conversion
Price” shall equal 85% multiplied by the average of the two lowest daily volume
weighted average prices per share of the Common Stock during the 15 trading days
immediately preceding the date that the Noteholder delivers notice electing to
redeem a portion of the Note. The Company’s right to satisfy the redemption
amount in shares of Common Stock will be subject to certain limitations,
including (i) there not being any Equity Conditions Failure (as defined in the
Note) and (ii) the Noteholder and its affiliates together not owning more than
9.99% of the outstanding shares of Common Stock.

The Note will contain certain Trigger Events that generally, if uncured within
five (5) trading days, may result in an event of default in accordance with the
terms of the Note (such event, an “Event of Default”). Upon a Trigger Event, the
Noteholder may increase the outstanding balance by 15% for certain major Trigger
Events and 5% for all other Trigger Events. Additionally, upon an Event of a
Default, the Noteholder may consider the Note immediately due and payable. Upon
an Event of Default, the interest rate may also be increased to the lesser of
18% per annum or the maximum rate permitted under applicable law.

The foregoing descriptions of the SPA and the Note are summaries, do not purport
to be complete and are qualified in their entirety by reference to the text of
the SPA and the form of the Note, which are filed as Exhibits 10.1 and 4.1,

ITEM 3.02 Unregistered Sales of Equity Securities

The disclosure under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 3.02 by reference. The issuance of shares of Common
Stock under the Note, if any, will be made in reliance on the exemption provided
by Section 4(a)(2) of the Securities Act for the offer and sale of securities
not involving a public offering.


(d) Exhibits

     4.1    Form of Promissory Note #2   (incorporated by reference to Exhibit 4.2
          to the Company's Current Report on Form 8-K filed on March 10, 2022)
     10.1   Securities Purchase Agreement, dated March 10, 2022, by and between
          Intrusion Inc. and Streeterville Capital, LLC   (incorporated by
          reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
          filed on March 10, 2022)
     104  Cover Page Interactive Data File (embedded within the Inline XBRL


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