Business Context and Reporting Period
Company: Intrusion Inc. (INTZ)
Filing Type: Form 8-K (Current Report)
Date of Report: June 29, 2026
Event: Entry into a Material Definitive Agreement to acquire OW Cyber LLC ("Target") from VigilAigent Corp. ("Seller").
Key Financial Metrics and Transaction Structure
The acquisition is structured in two stages with a mix of cash, stock, and contingent consideration.
- First Closing (Completed June 29, 2026):
- Interest Acquired: 60% of Target's membership interests.
- Total Purchase Price: $1,950,000.
- Payment Breakdown: $200,000 (prior deposit credit), $160,000 (cash), and $1,590,000 (unregistered common stock).
- Stock Issuance: 2,223,549 shares issued at a contract price of $0.67 per share.
- Working Capital Adjustment: Subject to post-closing adjustment based on a target of $(1,365,000).
- Second Closing (Pending):
- Interest Acquired: Remaining 40% of Target.
- Consideration: $1,300,000 cash payment.
- Conditions: Subject to stockholder and Nasdaq approvals; deadline August 30, 2026 (extendable).
- Contingent Consideration (Earn-Out):
- Total Potential Value: Up to $6,900,000 in unregistered common stock.
- Structure: Three milestones based on ARR Run Rate and Adjusted Operating Cash Flow targets through March 2028.
- Post-Issuance Capitalization: 22,741,846 shares of Common Stock outstanding immediately following the First Closing.
Material Changes and Operational Control
- Management Control: Intrusion Inc. is designated as the initial Manager of Target with exclusive discretion over operations. Anthony Scott (Intrusion CEO) was appointed Target's CEO and Secretary.
- Minority Protection: The Operating Agreement mandates the Seller retains at least 40% equity interest pending the Second Closing.
- Escrow Arrangement: 149,254 shares of Intrusion stock were deposited in escrow to secure Seller indemnification obligations, releasable after 12 months.
- Indemnification: General obligations survive for two years with a $50,000 basket and a $3,000,000 liability cap.
Guidance, Risks, and Contingencies
- Regulatory Approvals: The Second Closing and issuance of Earn-Out Shares exceeding 19.9% of outstanding stock require stockholder and Nasdaq approvals.
- Lock-Up Provisions: Earn-Out Shares are subject to a six-month lock-up with standard leak-out provisions (15% of average daily volume).
- Performance Risk: The $6.9 million earn-out is contingent on Target achieving specific financial milestones (ARR and Cash Flow) over the next two years.
- Unregistered Securities: Shares issued were exempt under Section 4(a)(2) and Rule 506; resale registration efforts will be made upon request after the Second Closing.
Investor Verification Checklist
- Verify the status of required stockholder and Nasdaq approvals for the Second Closing and potential Earn-Out share issuance.
- Confirm the final working capital adjustment amount for the First Closing.
- Monitor Target's ARR Run Rate and Adjusted Operating Cash Flow against the specific milestones for March 2027, September 2027, and March 2028.
- Review the full text of the Membership Interest Purchase Agreement (Exhibit 10.1) for detailed definitions of "ARR Run Rate" and "Adjusted Operating Cash Flow."
- Assess the dilution impact of the 2,223,549 shares issued and potential future Earn-Out shares on existing shareholders.