INTRUSION Inc. (NASDAQ:INTZ), a Delaware-incorporated company specializing in computer communications equipment, has entered into a Standby Equity Purchase Agreement (SEPA) with Streeterville Capital, LLC, as per a recent 8-K filing with the Securities and Exchange Commission. The agreement, effective as of July 3, 2024, provides INTRUSION with the right, though not the obligation, to sell up to $10 million of its common stock to Streeterville over a 24-month term.
The SEPA stipulates that INTRUSION can direct Streeterville to purchase shares at its discretion, subject to certain conditions including a registration statement for the resale of shares being declared effective by the SEC. The volume of shares sold in each transaction, termed an "Advance," is capped at either 100% of the average daily trading volume for the three days preceding the notice or 4.99% of the outstanding common stock.
The purchase price for the shares will be 95% of the lowest daily volume-weighted average price (VWAP) of the stock on the NASDAQ over the three days following the Advance Notice, with the company setting a minimum acceptable price for each Advance.
The agreement also contains an Exchange Cap, which limits the company from issuing more than 19.99% of its outstanding shares prior to the execution of the SEPA unless certain conditions are met.
INTRUSION has committed to using 10% of the proceeds from each Advance to redeem outstanding Series A Preferred Stock held by Streeterville. The company anticipates using the additional funds primarily for working capital and general corporate purposes.
The SEPA will automatically terminate on the earlier of the 24-month anniversary from the date of the agreement or when the full $10 million in advances have been issued. INTRUSION retains the right to terminate the agreement at any time without penalty, given that no outstanding Advance Notices remain.
As part of the agreement, INTRUSION has paid Streeterville a structuring fee of $25,000 and a commitment fee equal to 1% of the Commitment Amount. The company seeks shareholder approval under Nasdaq Listing Rule 5635(d) for issuing common stock in excess of 20% of the outstanding shares at a price below the Minimum Price as stipulated in the SEPA.
This financial move, as reported in the SEC filing, aims to provide INTRUSION with flexible access to capital to support its ongoing business operations and strategic initiatives.
In other recent news, Intrusion Inc. announced Dion Hinchcliffe's appointment to its Board of Directors. Hinchcliffe brings extensive experience from his roles at The Futurum Group and Dartmouth College’s Tuck Center for Digital Strategies. His compensation includes an annual retainer and additional fees based on committee appointments, as well as a potential annual restricted stock unit award.
The cybersecurity firm reported Q1 2024 results, with a decrease in total revenue to $1.1 million. However, Intrusion Inc. secured a significant $25 million contract through partner iOne Resources for the 2025 Philippines midterm elections, expected to boost earnings in the latter half of 2024. The company also raised $2.6 million for working capital through a private offering.
Intrusion Inc. has regained compliance with NASDAQ's listing requirements. The company's cost reduction efforts have resulted in over $7 million in savings in the past year. Despite a net loss of $1.7 million for the first quarter, Intrusion Inc. plans to focus on growth in the Asia-Pacific region and the federal sector, with a multi-year roadmap for endpoint and cloud products.
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