Intrusion Inc. Secures \$3 Million Financing with Streeterville Capital: Key Details of the Note Purchase Agreement

Intrusion Inc. (NASDAQ:INTZ) has entered into a significant financing arrangement with Streeterville Capital, LLC, a Utah-based investment firm. The deal, formalized on April 6, 2026, provides Intrusion Inc. with \$3 million in new funding through the issuance of a secured promissory note. This transaction contains multiple provisions and covenants with substantial implications for existing shareholders and could be price sensitive.

Key Points of the Financing Agreement

• Principal and Structure: Intrusion Inc. has issued a Secured Promissory Note for \$3,230,000, carrying an original issue discount (OID) of \$210,000 and additional transaction expenses of \$20,000 (legal, accounting, due diligence, monitoring, and other costs). This means the actual cash received by Intrusion is \$3,000,000.
• Security: The note is secured by all of Intrusion Inc.’s assets, including intellectual property. This is formalized through a Security Agreement and an IP Security Agreement, both of which are attached as exhibits to the main agreement.
• Closing and Payment: The transaction closed on April 6, 2026. Payment was made via wire transfer, and the agreements became effective upon the exchange of electronic signatures.
• Monitoring Fee: If the note remains outstanding for 90 days, Intrusion will be charged an additional one-time Monitoring Fee, calculated as the Outstanding Balance divided by 0.85, minus the Outstanding Balance itself. This could add a substantial extra cost if the note is not repaid quickly.
• Redemption Rights: Starting six months after closing, Streeterville can demand monthly redemptions of up to \$250,000 in principal. “Limited Redemption Events” can trigger additional rights for the investor to redeem up to 5% of the company’s daily trading volume in cash. These mechanisms could put pressure on Intrusion’s cash flows and may require the company to raise additional liquidity or sell assets.
• Trigger Events and Defaults: Multiple events can trigger default, including failure to pay, insolvency, failure to comply with covenants, adverse legal judgments, and delisting from Nasdaq. Trigger Events permit the investor to increase the outstanding balance by 15% for major events or 5% for minor events, up to three times each. Uncured Trigger Events become Events of Default, accelerating all amounts due and entitling the investor to enforce its security interests.
• Most Favored Nation Clause: If Intrusion issues new debt securities on more favorable terms to other parties, Streeterville can elect to receive those same terms retroactively.
• Participation Right: Streeterville is entitled to participate in up to 10% of any new debt or equity financing by Intrusion Inc. while the note is outstanding. If the company fails to offer this right, it owes liquidated damages of 20% of what Streeterville could have invested.
• Company Covenants: Intrusion is required to maintain public company reporting, keep its shares listed on NYSE, NYSE American, or Nasdaq, and is restricted from entering into “Restricted Issuances” (new variable price securities, convertible notes, etc.) without investor consent.
• Governing Law and Dispute Resolution: The agreements are governed by Utah law, and all claims are subject to binding arbitration or litigation in Utah courts. There is an explicit waiver of jury trial.

Key Provisions That May Affect Shareholders

• High Security Interest: All company assets, including IP, are pledged as collateral. In a default, Streeterville can seize and liquidate these assets, which could be catastrophic for shareholders.
• Potential Shareholder Dilution or Asset Sale: The Redemption and Participation Rights may force Intrusion to raise additional capital or sell assets, potentially at unfavorable terms.
• Restrictive Covenants: The company is restricted in its ability to raise additional variable rate, convertible, or similar “toxic” financings without Streeterville’s consent. This may limit strategic flexibility.
• Trigger Events and Default Penalties: The “Trigger Effect” can substantially increase the outstanding debt, worsening the company’s financial position if it encounters financial or regulatory issues.
• Liquidated Damages and Monitoring Fees: These add significant potential costs if the company breaches provisions or fails to repay the note promptly.
• Board Approval: The transaction was expressly approved by the Board of Directors, and the company made representations of due diligence regarding the investor.

Summary Table of Key Terms

Potential Share Price Impact & Risks

• This financing provides immediate liquidity but comes at a high cost and with significant restrictions. The monthly redemption rights and potential for default-triggered increases in debt raise the company’s risk profile.
• High risk of shareholder value impairment if the company cannot generate sufficient cash flow to meet the redemption schedule or triggers default provisions.
• Potential for dilution or forced asset sales if Intrusion cannot service this debt or if further capital raises are necessary.
• Loss of corporate flexibility due to restrictive covenants and investor consent requirements for future financings.
• Material change in capital structure and risk profile that may affect how the market values Intrusion Inc. shares.

Conclusion

This financing is a material event for Intrusion Inc. shareholders. While it provides much-needed capital, it imposes significant financial, operational, and strategic constraints on the company. Shareholders should consider the risks of increased leverage, restrictive covenants, and the possibility of default-related asset seizure or dilution. The terms are complex and favor the lender, which could lead to share price volatility depending on future company performance and compliance with the loan terms.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult with a qualified financial advisor before making investment decisions. The author holds no position in Intrusion Inc. at the time of writing.

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