Intrusion Inc. has entered into an exchange agreement with Streeterville Capital, LLC to settle outstanding debt by issuing newly designated Series B Preferred Stock. The transaction, executed on October 29, 2026, involves the cancellation of two existing promissory notes in exchange for 4,000 shares of Series B Preferred Stock.
Under the terms of the Exchange Agreement, the company partitioned an existing $3,250,000 note, reducing its balance to $704,401.02, and an existing $750,000 note, reducing its balance to $884,267.86. In exchange for these notes, which represent a total of $4,000,000 in aggregate principal debt, the company issued 3,250 shares of Series B Preferred Stock for the first note and 750 shares for the second. The issuance was made without the payment of monetary consideration, relying on an exemption from registration under Section 3(a)(9) of the Securities Act of 1933.
The company filed a Certificate of Designations with the State of Delaware on October 29, 2026, establishing the Series B Preferred Stock. The shares have a par value of $0.01 per share and a stated value of $1,100.00 per share. The Series B Preferred Stock is non-voting, non-convertible, and ranks senior to the company's Common Stock regarding dividends, distributions, and liquidation payments. The preferred shares accrue a 10% per annum preferred return on the stated value and begin paying an automatic quarterly dividend one year after issuance.
The issuance of the Series B Preferred Stock is intended to help the company regain compliance with Nasdaq listing standards. The company estimates that the exchange has increased its stockholders' equity to exceed $5.0 million. By meeting this threshold, the company believes it qualifies for a second 180-calendar-day extension period from Nasdaq to cure a deficiency in the $1.00 minimum bid price requirement. The company intends to provide written notice to Nasdaq regarding its plan to cure the deficiency, which may include implementing a reverse stock split.
