Business Context and Reporting Period
This Form 8-K, dated September 1, 2025, reports a material definitive agreement entered into by Nukkleus Inc. (the "Company"). The filing details the acquisition of Tiltan Software Engineering Ltd. ("Tiltan"), an Israeli corporation specializing in AI software solutions for the defense and aerospace sectors. The transaction marks a strategic expansion into defense markets, facilitated by the creation of a new Delaware subsidiary, Nukkleus Defense AI Applications, Inc.
Key Financial Metrics and Transaction Structure
The total purchase price for 100% of Tiltan's share capital is NIS 47,600,000 (approximately $14 million). The consideration is structured as follows:
- Cash Component: NIS 35,700,000 (approx. $10.5 million), representing 75% of the purchase price.
- Payment Schedule: Six equal installments of NIS 5,950,000 over 180 days, with the first due at closing.
- Financing: A secured promissory note for NIS 29,750,000 (approx. $8.75 million) was issued to the seller, covering five-sixths of the cash component. The note is non-interest bearing unless an event of default occurs (10% per annum).
- Working Capital Retention: NIS 2,000,000 from the first three payments will be retained by Tiltan for working capital.
- Equity Component: NIS 11,900,000 (approx. $3.5 million), representing 25% of the purchase price.
- Shares will be deposited into escrow at closing and released on the 180th day (Settlement Date).
- The number of shares is based on the market price on the Settlement Date, with a cash or share make-up provision if the value falls short.
- Employee Retention Program: A total pool of NIS 2,500,000 established, consisting of NIS 500,000 from the purchase price, NIS 1,000,000 in cash from Nukkleus, and NIS 1,000,000 in stock options.
Material Changes and Strategic Impact
The acquisition represents a significant shift in the Company's portfolio, adding proprietary defense and aerospace software products including:
- T-BAT: GPS-denied navigation and landing software.
- T-TRACK: Real-time video motion detection and tracking.
- AGM: 3D mapping and GIS generation from aerial imagery.
- TOPS: Physics-based 3D simulation system with thermal and radar capabilities.
- Majestic.ai: AI training dataset and synthetic data generation.
- T-Aware: Multi-sensor operational management system.
The filing does not provide historical revenue, profit, or cash flow metrics for the Company or Tiltan, nor does it detail current debt levels or liquidity positions outside of the specific transaction financing.
Guidance, Risks, and Contingencies
Closing Conditions: The transaction is subject to several material conditions, including:
- Receipt of regulatory approvals, specifically notification to the Israeli Defense Export Controls Agency.
- Delivery of PCAOB-compliant audited financial statements for Tiltan for fiscal years 2023 and 2024, and 2025 quarterly statements.
- Accuracy of representations and warranties and the absence of a material adverse effect on Tiltan.
Risks and Contingencies:
- Regulatory Risk: Delays or denial of defense export control approvals could prevent closing.
- Financial Risk: The equity component exposes the seller to market volatility, while the Company faces cash flow obligations over the next 180 days.
- Indemnification: Provisions are capped at 10% of the purchase price.
Key Facts for Investor Verification
- Verify the Company's current cash position and ability to fund the initial $1.75 million cash installment and the $8.75 million promissory note obligations.
- Confirm the status of regulatory approvals from the Israeli Defense Export Controls Agency.
- Review the attached Stock Purchase Agreement (Exhibit 10.1) for specific covenants and representations.
- Monitor the market price of NUKK stock to assess the potential dilution impact of the equity component settlement.
- Assess the integration plan for Tiltan's technology into the new Nukkleus Defense subsidiary.