Intrusion Inc 8-K, filed Apr 23, 2024

Intrusion Inc (INTZ)

8-K 2024-04-23 For: 2024-04-22

View Original

Added on April 10, 2026

About this 8-K

Intrusion Inc filed this 8-K on April 23, 2024, reporting on events of April 22, 2024.

Items reported

Item 1.01: Entered into a material agreement
Item 8.01: Other events
Item 9.01: Financial statements and exhibits

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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)

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

Exhibit
No.		Description
99.1		Term Sheet, dated April 22, 2024
99.2		Press Release issued by Intrusion Inc. on April 22, 2024
104.1		Cover Page Interactive Data File - the cover page XBRL tags are embedded with the Inline XBRL document.

	Intrusion, Inc.

Dated: April 22, 2024	By:	/s/ Kimberly Pinson
		Kimberly Pinson
		Chief Financial Officer

The Offering:	The Company is seeking to raise funds in this Offering, through the sale of two different forms of Units:

	·	Unit 1 will consist of (i) one share of Common Stock and (ii) a warrant to acquire two additional shares of Common Stock, at an exercise price of $1.70 per share of Common Stock (the “Cash Exercise Warrant”). Unit 1 will be sold at a per-Unit price of $1.95, of which $1.70 will be allocated to the purchase price of the share of Common Strock and $0.125 shall be allocated to each share of Common Stock pursuant to the Cash Exercise Warrant, as required by the rules and regulations of Nasdaq.

	·	Unit 2 will consist of (i) one pre-funded warrant to acquire a share of Common Stock (the “Pre-Funded Warrant”), and the same Cash Exercise Warrant as in Unit 1, being a warrant to acquire two additional shares of Common Stock, at an exercise price of $1.70 per share of Common Stock. Unit 2 will be sold at a per-Unit price of $1.94, of which $1.69 will be allocated to the Pre-Funded Warrant, $0.125 shall be allocated to each share of Common Stock pursuant to the Cash Exercise Warrant, as required by the rules and regulations of Nasdaq, and the remaining exercise price of Pre-Funded Warrant will be $0.01, resulting in the same overall investment amount as Unit 1.

	Investors in the offering who, as a result of investing in the Offering, would not exceed ownership of 19.9% of the outstanding shares of Common Stock as of the closing of the Offering, as calculated by the Company pursuant to the rules of Nasdaq, are being offered the opportunity to invest via the acquisition of Unit 1s. Investors in the offering who, as a result of investing in the Offering, would exceed ownership of 19.9% of the outstanding shares of Common Stock as of the closing of the Offering, as calculated by the Company pursuant to the rules of Nasdaq, are being offered the opportunity to invest via the acquisition of Unit 2s. The determination of whether investors in the Offering are eligible to acquire Unit 1s or Unit 2s will be made by the Company. The Unit 1s and the Unit 2s may be referred to herein collectively or individually as the “Units”. The form of the Cash Exercise Warrant is attached hereto as Exhibit B-1, and the form of the Pre-Funded Warrant is attached hereto as Exhibit B-2, and the description of the Cash Exercise Warrant and the Pre-Funded Warrant as set forth herein is qualified in its entirety by the forms of such documents as attached hereto. Each Investor in the Offering will be required to execute a counterpart signature page to the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, when they submit a subscription for Units, and prospective Investors are urged to review the Cash Exercise Warrant and Pre-Funded Warrant, as applicable, in their entirety prior to submitting a subscription for Units. The total Offering amount will be determined based on the number of subscribers who subscribe for Unit 1s, and the amount of their subscriptions which are accepted by the Company, and the the number of subscribers who subscribe for Unit 2s, and the amount of their subscriptions which are accepted by the Company. The Offering will be consummated on the date as first set forth above. There is no minimum amount required to be subscribed for in order for the Company to conduct a closing and to have the subscription funds released to the Company. The Offering is being conducted by the Company and its officers and no placement agents have been engaged by the Company related to the Offering, however, the Company may be obligated to pay commissions to certain parties in connection with the sales of certain Units, pursuant to current agreements with such parties. This Offering is being undertaken pursuant to the exemption from registration provided in Rule 506(b) under Regulation D pursuant to the Securities Act of 1933, as amended (the “Securities Act”) with respect to accredited investors. Please see additional discussion in “Subscription Procedures” below. The Company may undertake one or more other offerings of its securities in the future, and may terminate, suspend or modify the terms of this Offering at any time.

Subscription Procedures:	A subscriber must meet one (or more) of the investor suitability standards (be an “accredited investor”) to purchase Units. The definition of who qualifies as an “accredited investor” is set forth in the Subscription Agreement which is attached hereto as Exhibit A. To subscribe for Units in the Offering, prospective Investors must:

	·	Complete a Subscription Agreement;

	·	Execute a counterpart signature page to the Cash Exercise Warrant or Pre-Funded Warrant, as applicable;

	·	Return the completed and executed Subscription Agreement and the executed counterpart signature page to the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, to the Company to the address as set forth in the Subscription Agreement; and

	·	Send payment for the Units subscribed for by by wire transfer pursuant to the instructions as set forth in the Subscription Agreement.

	The execution of a Subscription Agreement by an Investor constitutes a binding offer to purchase the Units subscribed for. Once an Investor subscribes for Units, that Investor will not be able to withdraw such subscription. If a subscription is not accepted, subscription funds will be promptly returned to the applicable Investor, without interest or deduction (except for the wire transfer fee). If the Company accepts a subscription, the Company will execute a counterpart signature to the Subscription Agreement and the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, and return those documents to the applicable Investor, and the applicable funds will be available for use by the Company. The Company may accept or reject a prospective Investor’s subscription in its sole discretion. Payment for a subscription may be made via wire transfer pursuant to the instructions set forth in the Subscription Agreement.

Use of Proceeds:	The Company will utilize the proceeds of the Offering for general corporate purposes.

Registration:	None of the shares of Common Stock included in the Unit 1s, the Cash Exercise Warrant or Pre-Funded Warrant, as applicable included in the applicable Units, or the shares of Common Stock that may be issued on any exercise of the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, are registered for resale under the Securities Act and do not carry registration rights.

Capitalization; Public Offering; Financials:	The authorized shares of the Company consist of 80,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share (the “Preferred Stock”) the terms and conditions of which may be determined by the Board. 20,000 shares of the Preferred Stock have been designated as the Series A Preferred Stock of the Company, pursuant to a Certificate of Designations of Preferences and Rights of Series A Preferred Stock, a copy of which is included in the SEC Filings. For additional information regarding the capitalization of the Company, and for the financial statements of the Company, please see the Company’s SEC Filings.

Governance:	The Company is governed by its Amended and Restated Certificate of Incorporation and Bylaws, which are included within the SEC Filings. Investors are urged to review the Certificate of Incorporation and the Bylaws in their entirety prior to submitting a Subscription Agreement.

Risk Factors:	An investment in the Units is subject to certain material risks as set forth in the SEC Filings, which are incorporated herein by reference in their entirety. Prospective Investors are urged to read these risk factors in their entirety prior to determining whether to acquire any Units. Prospective Investors should be aware that an investment in the Company involves a high degree of risk and there can be no assurance that the Company’s objectives will be achieved, or that an Investor receive a return of its capital. In addition to the risk facts as set forth in the SEC Filings, prospective Investors should note that the price of the shares of Common Stock included in the Unit 1s or acquirable pursuant to the Pre-Funded Warrants in the Unit 2s, including the exercise price of the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, has not been determined by any independent financial evaluation, market mechanism or by any auditors, and is therefore, to a large extent, arbitrary. No audit firm will review management’s valuation and, therefore, there will be no opinion from any such firm as to the fairness of the offering price as determined by our management. As a result, the price of the shares of Common Stock included in the Unit 1s, or acquirable pursuant to the Pre-Funded Warrants in the Unit 2s, including the exercise price of the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, in this Offering may not reflect the value perceived by the market. Also, the initial offering price per share of Common Stock, and the exercise price of the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, will be substantially higher than the pro forma net tangible book value per share of Common Stock outstanding prior to this Offering. As a result, Investors purchasing Units in this Offering will experience immediate dilution based on the net tangible book value as of the date hereof. This dilution is due in large part to the fact that our founders and other shareholders may have paid substantially less than the offering price in this Offering when they purchased their shares of the Company, and due to the fact that the Common Stock and the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, have no contingent or other general claim on any of the assets of the Company. There can be no assurance that the shares of Common Stock included in the Unit 1s, or the exercise price of the Cash Exercise Warrant or Pre-Funded Warrant, as applicable, will be worth the price for which they are offered and Investors may, therefore, lose a portion or all of their investment. Each prospective Investor in the Company must make its own independent assessment of the merits of an investment in the Company, including, without limitation, a determination whether such an investment is suitable for the Investor.
Tax Considerations	This Term Sheet does not address tax considerations which may be applicable to Investors. *Each prospective Investor should consult its own tax adviser as to the income tax consequences of an investment in the Company, whether federal, state or local or non-U.S.*

Expenses:	Investors will bear their own fees and expenses incurred in connection with any acquisition of Units.

No Offer:	This Term Sheet the Exhibits hereto and any other documents delivered by the Company in connection therewith are for informational purposes only and do not constitute either an offer to sell securities or the solicitation of an offer to buy securities. There will be no offer or sale of securities, or any solicitation to buy, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

	Send to:	Prosperity Bank
		5851 Legacy Circle, 4^th Floor
		Plano, TX 75024
		ABA: 113122655
		Account Number: 222678376

2.	Offer to Purchase. Subscriber hereby irrevocably offers to purchase the Units and tenders herewith the total price noted above. Subscriber recognizes and agrees that (i) this subscription is irrevocable and, if Subscriber is a natural person, shall survive Subscriber’s death, disability or other incapacity, and (ii) the Company has complete discretion to accept or to reject this Subscription Agreement in its entirety and shall have no liability for any rejection of this Subscription Agreement. This Subscription Agreement shall be deemed to be accepted by the Company only when it is executed by the Company.

3.	Effect of Acceptance. Subscriber hereby acknowledges and agrees that on the Company’s acceptance of this Subscription Agreement, it shall become a binding and fully enforceable agreement between the Company and the Subscriber. As a result, upon acceptance by the Company of this Subscription Agreement, Subscriber will become the record and beneficial holder of the Common Stock and the Cash Exercise Warrants if acquiring Unit 1s, or the record and beneficial holder of the Pre-Funded Warrants and the Cash Exercise Warrants if acquiring Units 2s, and the Company will be entitled to receive the purchase price of the Units as specified herein.

4.	General Representations and Warranties of Subscriber. Any references in the remainder of this Subscription Agreement to the “Securities” is a reference to the applicable Units, the shares of Common Stock included in the Units if the Subscriber is acquiring Unit 1s, the Pre-Funded Warrant if the Subscriber is acquiring Unit 2s, the Cash Exercise Warrants and the shares of Common Stock that may be issued on any exercise of the Cash Exercise Warrants or the Pre-Funded Warrants, as applicable. Subscriber hereby represents and warrants to the Company as follows:

	(a)	Subscriber is an “accredited investor” as defined in Rule 501(a) of Regulation D pursuant to the Securities Act.

	(b)	Subscriber has been furnished the SEC Filings, the Term Sheet and, if requested by the Subscriber, other documents related to the Company and its operations. The Subscriber has carefully read the SEC Filings, the Term Sheet and any such other requested documents. Subscriber has been furnished with all documents and materials relating to the business, finances and operations of the Company and information that Subscriber requested and deemed material to making an informed investment decision regarding its purchase of the Units. Subscriber has been afforded the opportunity to review such documents and materials and the information contained therein. Subscriber has been afforded the opportunity to ask questions of the Company and its management. Subscriber understands that such discussions, as well as any written information provided by the Company, were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily a thorough or exhaustive description, and except as expressly set forth in this Subscription Agreement, the Company makes no representation or warranty with respect to the completeness of such information and makes no representation or warranty of any kind with respect to any information provided by any entity other than the Company. Some of such information may include projections as to the future performance of the Company, which projections may not be realized, may be based on assumptions which may not be correct and may be subject to numerous factors beyond the Company’s control. Additionally, Subscriber understands and represents that Subscriber is purchasing the Units notwithstanding the fact that the Company may disclose in the future certain material information that the Subscriber has not received, including the financial results of the Company for their current fiscal quarters. Neither such inquiries nor any other due diligence investigations conducted by such Subscriber shall modify, amend or affect such Subscriber’s right to rely on the Company’s representations and warranties, if any, contained in this Subscription Agreement. Subscriber has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its investment in the Securities. Subscriber has full power and authority to make the representations referred to herein, to purchase the Securities and to execute and deliver this Subscription Agreement.

	(a)	Subscriber has read and understood, and is familiar with, this Subscription Agreement, the Securities and the business and financial affairs of the Company.

	(b)	Subscriber has fully complied with all filing and reporting requirements pursuant to the Section 13 and Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, to the extent applicable to Subscriber.

	(c)	Subscriber is not an officer, director or “affiliate” (as defined in Rule 405 of the Securities Act) of the Company.

	(d)	At no time was Subscriber presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising, in each case, with respect to an offer or sale of the Securities.

	(e)	Subscriber, either personally, or together with Subscriber’s advisors (other than any securities broker/dealers who may receive compensation from the sale of any of the Units), has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, is able to bear the risks of an investment in the Securities and understands the risks of, and other considerations relating to, a purchase of the Securities, including the matters set forth under the caption “Risk Factors” in the Term Sheet. The Subscriber and its advisors have had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Securities. Subscriber’s financial condition is such that Subscriber is able to bear the risk of holding the Securities that Subscriber may acquire pursuant to this Subscription Agreement, for an indefinite period of time, and the risk of loss of Subscriber’s entire investment in the Company.

	(f)	Subscriber has investigated the acquisition of the Securities to the extent Subscriber deemed necessary or desirable and the Company has provided Subscriber with any reasonable assistance Subscriber has requested in connection therewith.

	(g)	The Securities are being acquired for Subscriber’s own account for investment, with no intention by Subscriber to distribute or sell any portion thereof within the meaning of the Securities Act, and will not be transferred by Subscriber in violation of the Securities Act or the then applicable rules or regulations thereunder. No one other than Subscriber has any interest in or any right to acquire the Securities. Subscriber understands and acknowledges that the Company will have no obligation to recognize the ownership, beneficial or otherwise, of the Securities by anyone but Subscriber.

	(h)	No representations or warranties have been made to Subscriber by the Company, or any representative of the Company, or any securities broker/dealer, other than as set forth in this Subscription Agreement.

	(i)	Subscriber is aware that Subscriber’s rights to transfer the Securities is restricted by the Securities Act and applicable state securities laws, and Subscriber will not offer for sale, sell or otherwise transfer the Securities without registration under the Securities Act and qualification under the securities laws of all applicable states, unless such sale would be exempt therefrom.

	(j)	Subscriber understands and agrees that the Securities it acquires have not been registered under the Securities Act or any state securities act in reliance on exemptions therefrom and that the Company has no obligation to register any of the Securities offered by the Company.

	(k)	The Subscriber has had an opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of this investment and all such questions have been answered to the full satisfaction of the undersigned. Subscriber understands that no person other than the Company has been authorized to make any representation and if made, such representation may not be relied on unless it is made in writing and signed by the Company. The Company has not, however, rendered any investment advice to the undersigned with respect to the suitability of any investment in the Securities.

	(i)	an investment in the Securities is highly speculative and involves a high degree of risk of loss of the entire investment in the Company; and

	(ii)	there is no assurance that a public market for the will be available and that, as a result, Subscriber may not be able to liquidate Subscriber’s investment in the Securities should a need arise to do so.

	(n)	Subscriber is not dependent for liquidity on any of the amounts Subscriber is investing in the Securities.

	(o)	Subscriber’s address set forth below is his or her or its correct residence or business address.

	(p)	Subscriber has full power and authority to make the representations referred to herein, to purchase the Securities and to execute and deliver this Subscription Agreement.

	(q)	Subscriber understands that the foregoing representations and warranties are to be relied upon by the Company as a basis for the exemptions from registration and qualification of the sale of the Securities under the federal and state securities laws and for other purposes.

	(b)	To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any amounts from a prospective investor if such prospective investor cannot make the representation set forth in this paragraph. The Subscriber agrees to promptly notify the Company should the Subscriber become aware of any change in the information set forth in these representations. The Subscriber understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of the Subscriber, either by prohibiting additional subscriptions from the Subscriber, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and any broker may also be required to report such action and to disclose the Subscriber’s identity to OFAC. The Subscriber further acknowledges that the Company may, by written notice to the Subscriber, suspend the redemption rights, if any, of the Subscriber if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company or any Broker or any of the Company’s other service providers. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

	(c)	To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately-held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a senior foreign political figure (as defined below), or any immediate family (as defined below) member or close associate (as defined below) of a senior foreign political figure, as such terms are defined in the footnotes below. A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure. “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws. A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

	(d)	If the Subscriber is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Subscriber receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Subscriber represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.

	(e)	The Subscriber acknowledges that, to the extent applicable, the Company will seek to comply with the Foreign Account Tax Compliance Act provisions of the U.S. Internal Revenue Code and any rules, regulations, forms, instructions or other guidance issued in connection therewith (the “FATCA Provisions”). In furtherance of these efforts, the Subscriber agrees to promptly deliver any additional documentation or information, and updates thereto as applicable, which the Company may request in order to comply with the FATCA Provisions. The Subscriber acknowledges and agrees that, notwithstanding anything to the contrary contained in the Term Sheet, any side letter or any other agreement, the failure to promptly comply with such requests, or to provide such additional information, may result in the withholding of amounts with respect to, or other limitations on, distributions made to the Subscriber and such other reasonably necessary or advisable action by the Company with respect to the Securities (including, without limitation, required withdrawal), and the Subscriber shall have no claim, and shall not pursue any claim, against the Company or any other person in connection therewith.

6.	Indemnification. Subscriber acknowledges that Subscriber understands the meaning and legal consequences of the representations and warranties made by Subscriber herein, and that the Company is relying on such representations and warranties in making the determination to accept or reject this Subscription Agreement. Subscriber hereby agrees to indemnify and hold harmless the Company and each employee and agent thereof from and against any and all losses, damages or liabilities due to or arising out of a breach of any representation or warranty of Subscriber contained in this Subscription Agreement.

7.	Transferability. Subscriber agrees not to transfer or assign this Subscription Agreement, or any interest herein, and further agrees that the assignment and transferability of the Securities acquired pursuant hereto shall be made only in accordance with applicable federal and state securities laws.

8.	Termination of Agreement; Return of Funds. In the event that, for any reason, this Subscription Agreement is rejected in its entirety by the Company, this Subscription Agreement shall be null and void and of no further force and effect, and no party shall have any rights against any other party hereunder. In the event that the Company rejects this Subscription Agreement, the Company shall promptly return or cause to be returned to Subscriber any money tendered hereunder without interest or deduction.

9.	Notices. All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, or delivered by, facsimile or e-mail to Subscriber at the address set forth below and to the Company at the address set forth on the first page of this Subscription Agreement, or at such other place as the Company may designate by written notice to Subscriber.

10.	Amendments. Neither this Subscription Agreement nor any term hereof may be changed, waived, discharged or terminated except in a writing signed by Subscriber and the Company.

11.	Governing Law. This Subscription Agreement and all amendments hereto shall be governed by and construed in accordance with the laws of the State of Delaware without application of the conflicts of laws provisions thereof.

12.	Headings. The headings in this Subscription Agreement are for convenience of reference, and shall not by themselves determine the meaning of this Subscription Agreement or of any part hereof.

13.	Counterparts. This Subscription Agreement may be executed in any number of counterparts with the same force and effect as if all parties had executed the same document. The execution and delivery of a facsimile or other electronic transmission of this Subscription Agreement shall constitute delivery of an executed original and shall be binding upon the person whose signature appears on the transmitted copy.

14.	Continuing Obligation of Subscriber to Confirm Investor Status. Upon the request of the Company and for as long as the Subscriber holds Securities or other securities in the Company, the Subscriber shall confirm Subscriber’s investor status as an “Accredited Investor,” as defined by the Securities and Exchange Commission at the time of such request. In connection therewith, the Company shall deliver to the Subscriber a questionnaire that elicits the necessary information to determine the Subscriber’s investor status. Upon receipt of the questionnaire, the Subscriber shall: (i) complete it, (ii) execute the signature page therein, and (iii) return it to the Company, or its designee, in accordance with the instructions therein, no later than ten (10) days after receipt of the questionnaire.

	(i)	Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Company’s transfer agent at the time (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and there is an effective registration statement permitting the issuance of the Warrant Shares to the Holder, and otherwise by delivery in book-entry form in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, provided that, in either case, the Company’s obligation to deliver the Warrant Shares may not be any earlier than one (1) Trading Day after receipt by the Company of the aggregate Exercise Price (such date that delivery of the Warrant Shares is required hereunder, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise and the Exercise Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date a notice of uncertificated shares with respect to the Warrant Shares is delivered. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP (as defined below) of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to use commercially reasonable efforts to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market (as defined below) with respect to the Common Stock as in effect on the date of delivery of a duly executed Notice of Exercise.

	(ii)	Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

	(iii)	Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

	(iv)	Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(c)(i) pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall, to the extent allowable under applicable law, (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

	(v)	No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall round down to the nearest whole share.

	(vi)	Charges, Taxes and Expenses. The Company will, from time to time, promptly pay all taxes and charges that may be imposed upon the Company in respect of the issuance or delivery of Warrant Shares, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or the Warrant Shares. The Company or the Transfer Agent, as applicable, shall not register any transfer or issue or deliver any Warrant certificate(s) or Warrant Shares unless or until the Persons (as defined below) requesting the registration or issuance shall have paid to the Company or the Transfer Agent for the account of the Company the amount of such tax, if any, or shall have established to the reasonable satisfaction of the Company and the Transfer Agent that such tax, if any, has been paid. The Company shall pay all Transfer Agent fees required for processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for electronic delivery of the Warrant Shares. For purposes herein, “Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.

	(i)	“Trading Day” means any day on which the Trading Market is open for trading, including any day on which the Trading Market is open for trading for a period of time less than the customary time; provided, that in the event that the shares of Common Stock are not listed or quoted on a Trading Market, then Trading Day shall mean any date on which commercial banks are generally open for business in the State of New York.

	(ii)	“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

	(iii)	“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)) or (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

	(i)	Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder a notice in accordance with Section 6(i) setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

	(ii)	Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided pursuant to this Warrant constitutes, or contains, material, non-public information regarding the Company or any of its subsidiaries (as determined by the Company in consultation with its legal counsel), the Company shall promptly disclose such information with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

	(i)	if to the Company, to:
		Intrusion Inc.
		101 East Park Blvd, Suite 1200
		Plano, TX 75074
		Attention: Kimberly Pinson, Chief Financial Officer
		Email: kimberly.pinson@intrusion.com

	(ii)	if to the Holder, at such address or other contact information delivered by the Holder to Company as set forth in the Subscription Agreement or as is on the books and records of the Company.

	INTRUSION INC.


	By:______________________________________
	Name: Anthony Scott
	Title: President and Chief Executive Officer

Name:
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Dated: _______________ ___, ________

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