Cycurion, Inc. Announces a Memorandum of Understanding (“MOU”) to Acquire the Video Solutions Division of Kustom Entertainment, Inc.

Rhea-AI Summary

Cycurion (NASDAQ: CYCU) entered an MOU to acquire Kustom Entertainment’s video solutions division for a contemplated purchase price of $6.0–$8.4 million, payable roughly $1.0–$1.4 million in cash and the remainder in Cycurion preferred stock. The deal is expected to add ~$5.1 million of 2026 revenue (≈35% growth vs. 2025) and ~$8.0 million of backlog, plus ~300 subscription contracts and ~400 key accounts. Preferred stock conversion is set at 20% above the 30-day VWAP and registration is targeted within 90 days post-closing. The MOU is non-binding and subject to regulatory and shareholder approvals.

Positive

• Revenue addition of approximately $5.1 million in 2026
• Backlog of approximately $8.0 million added
• 300 subscription contracts supporting recurring revenue
• ~400 key accounts expands customer footprint
• Equity-heavy structure preserves $1.0–$1.4M cash

Negative

• Transaction paid mostly in preferred stock may dilute shareholders
• Preferred conversion set at 20% above 30-day VWAP (premium)
• Deal is non-binding and may be terminated on 30 days’ notice
• Closing requires regulatory and shareholder approvals (possible delays)

News Market Reaction

-0.78%

8 alerts

-0.78% News Effect

+9.3% Peak Tracked

-14.4% Trough Tracked

-$73K Valuation Impact

$9M Market Cap

1.4x Rel. Volume

On the day this news was published, CYCU declined 0.78%, reflecting a mild negative market reaction. Argus tracked a peak move of +9.3% during that session. Argus tracked a trough of -14.4% from its starting point during tracking. Our momentum scanner triggered 8 alerts that day, indicating moderate trading interest and price volatility. This price movement removed approximately $73K from the company's valuation, bringing the market cap to $9M at that time.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Deal value range: $6.0–8.4M Cash component: $1.0–1.4M Revenue uplift: $5.1M +5 more

8 metrics

Deal value range $6.0–8.4M Contemplated acquisition transaction value based on pro forma data

Cash component $1.0–1.4M Portion of purchase price to be paid in cash

Revenue uplift $5.1M Expected 2026 revenue increase, cited as 35% vs 2025

Acquired backlog $8.0M Backlog from Kustom’s established contracts and subscriptions

Cross-sell revenue $100,000 per month Expected incremental revenue from integrated cross-selling

Subscription contracts 300+ Number of subscription contracts for video solutions as of 2025

Key accounts 400+ Approximate number of key accounts in Kustom’s client network

Registration timeline 90 days Target to get resale registration statement effective after closing

Market Reality Check

Price: $1.97 Vol: Volume 204,832 is 1.41x t...

normal vol

$1.97 Last Close

Volume Volume 204,832 is 1.41x the 20-day average of 145,623, indicating elevated pre-news activity. normal

Technical Shares at $2.57 are trading below the 200-day MA of $8.54 and 99.21% below the 52-week high.

Peers on Argus

Momentum scanner shows only JDZG in motion, moving -6.449999660253525% while CYC...

1 Down

Momentum scanner shows only JDZG in motion, moving -6.449999660253525% while CYCU was flagged as moving up, pointing to a stock-specific reaction rather than a sector-wide move.

Historical Context

5 past events · Latest: Jan 02 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 02	AI strategy update	Positive	+6.5%	Outlined 2025 milestones, AI plan, backlog and revenue metrics.
Dec 30	Backlog and outlook	Positive	+6.0%	Reported $80M contracted backlog, liquidity gains and 2026 run-rate.
Dec 26	Dividend correction	Neutral	-5.0%	Corrected dividend distribution ratio and detailed share metrics.
Dec 23	AI partnership	Positive	+5.5%	Announced AI-driven cybersecurity alliance and global market focus.
Dec 16	Industry recognition	Positive	-6.6%	Debut on MSSP 250 list at No. 116 with growth ambitions.

Pattern Detected

Recent CYCU headlines tied to AI expansion, backlog growth and rankings often saw positive price reactions, but there are instances of sell-offs even on seemingly favorable or neutral news.

Recent Company History

Over the last five events since Dec 16, 2025, Cycurion highlighted an MSSP 250 ranking, AI alliances, a special share dividend, and an $80M contracted backlog with Q3 2025 revenue of $3.83M. Those updates produced mixed moves, with three notably positive reactions (around 5–7%) and two negative days after recognition and dividend news. Today’s acquisition MOU fits a pattern of strategic growth steps layered on recent financings and government contracts.

Market Pulse Summary

This announcement outlines an MOU for Cycurion to acquire Kustom’s video solutions division, with a ...

Analysis

This announcement outlines an MOU for Cycurion to acquire Kustom’s video solutions division, with a deal value of $6.0–8.4M, mostly in preferred stock. The company highlights an expected $5.1M 2026 revenue increase, $8.0M in backlog, and about $100,000 per month in cross-sell potential. Against recent filings discussing dilution and funding facilities, investors may track closing conditions, integration progress, and whether projected cross-selling materializes.

Key Terms

memorandum of understanding, preferred stock, backlog, vwap, +3 more

7 terms

memorandum of understanding regulatory

"announced that it has entered into a Memorandum of Understanding (“MOU”) to acquire"

A memorandum of understanding (MOU) is a formal agreement between two or more parties that outlines their shared intentions and plans to work together. It acts like a handshake in writing, clarifying each side’s roles and expectations before any official contract is signed. For investors, an MOU signals that parties are serious about collaboration, which can influence future business opportunities and potential growth.

preferred stock financial

"remainder in Cycurion preferred stock. This enables Cycurion to engage"

Preferred stock is a type of ownership in a company that typically offers investors higher and more consistent dividend payments than common stock. Unlike regular shares, preferred stock usually doesn’t come with voting rights but provides a priority claim on the company’s assets and profits, making it a more stable and predictable investment option. This makes preferred stock attractive to those seeking steady income with lower risk.

backlog financial

"approximately $8.0 million in backlog from Kustom’s established contracts"

A backlog is the amount of work or orders that a company has received but hasn't completed yet. It’s like a restaurant with many dishes to serve; the backlog shows how many orders are still waiting to be finished. It matters because a large backlog can indicate strong demand or potential delays in delivering products or services.

vwap financial

"conversion price ... equal to 20% above the 30-day VWAP of Cycurion’s common stock"

VWAP, or Volume-Weighted Average Price, is a way to find the average price of a stock throughout the trading day, giving more importance to times when more shares are traded. It helps traders see the typical price and decide whether a stock is expensive or cheap compared to its average, similar to finding the average speed during a trip by giving more weight to times when you traveled faster or slower.

down round protection financial

"subject to adjustment ... and down round protection as set forth in a definitive agreement"

A contractual protection for earlier investors that compensates them if a company later sells shares at a lower price than they paid, so their ownership stake or economic value isn’t unfairly reduced. It matters to investors because it preserves their percentage of ownership or the value of their investment—think of it as being given extra slices of a shrinking pie so your original slice stays roughly the same—and it influences how future financing and company value are perceived.

registration statement regulatory

"to file and cause a registration statement covering the resale of the shares"

A registration statement is a formal document that companies file with a government agency to offer new shares of stock to the public. It provides essential information about the company's finances, operations, and risks, helping investors make informed decisions. Think of it as a detailed product description that ensures transparency and trust before buying into a company.

conversion price financial

"The conversion price for Cycurion’s preferred stock shall be equal to 20% above"

The conversion price is the fixed price at which a convertible security, like a bond or preferred stock, can be exchanged for shares of common stock. It acts like a set rate that determines how many shares an investor can receive if they choose to convert their investment. This helps investors understand the value and potential benefits of converting their securities into company shares.

AI-generated analysis. Not financial advice.

The Combination is Expected to Enhance Integrated Public Safety and Cybersecurity Solutions and Increase Our Revenue and Cross-Selling Opportunities

MCLEAN, Va., Jan. 22, 2026 (GLOBE NEWSWIRE) -- Cycurion, Inc. (NASDAQ: CYCU) (“Cycurion” or the “Company”), a leading provider of AI-driven cybersecurity, IT security solutions, and managed services, today announced that it has entered into a Memorandum of Understanding (“MOU”) to acquire the video-solutions division of Kustom Entertainment, Inc. (NASDAQ: KUST) (“Kustom”), a pioneer in mobile video surveillance technologies, including body-worn cameras, in-car video systems, and digital evidence management solutions for law enforcement, public safety, and commercial sectors.

The contemplated transaction is valued between $6.0-8.4 million based on the pro forma financial information agreed upon by the parties, with the purchase price to be paid in $1.0-1.4 million of cash and the remainder in Cycurion preferred stock. This enables Cycurion to engage in what it believes is a highly accretive acquisition with minimal cash outlay. The addition of Kustom’s video-solutions division is anticipated to increase Cycurion’s revenues by approximately $5.1 million, or 35% in 2026 compared to 2025, and approximately $8.0 million in backlog from Kustom’s established contracts and recurring subscription models, which may build on the Company’s strong momentum and forecasted run-rate growth.

“This acquisition is expected to be transformative and accretive for Cycurion shareholders,” said Kevin Kelly, Chairman and CEO of Cycurion. “By combining Kustom’s proven video and evidence management expertise with our AI-powered cybersecurity platforms, we expect to create a comprehensive, secure ecosystem for public safety agencies and enterprises. The deal is expected to deliver immediate top- and bottom-line growth, strengthen recurring revenue, and unlock significant cross-selling potential all at what we believe is an attractive valuation.”

Stan Ross, Chairman, President and CEO of Kustom commented: “We are excited to move forward under this MOU as we consider the potential sale of our Video Solutions Division to Cycurion. We believe Cycurion’s expertise and resources can help further advance the innovative video and evidence‑management technologies developed by our team, and we look forward to continuing constructive discussions as the process advances.”

Accretive Transaction with Strong Financial Impact

The acquisition is expected to be accretive to Cycurion’s earnings profile through:

• Immediate Revenue and Backlog Addition: Approximately $5.1 million in annual revenue from Kustom’s subscription-based video storage, cloud management, and service contracts, plus an $8.0 million secured backlog providing strong visibility into future revenues.
  
  
• Equity-Heavy Structure: Predominantly paid in Cycurion preferred stock, preserving cash for growth initiatives while aligning Kustom shareholders with Cycurion’s long-term upside.
  
  
• Margin Expansion and Synergies: Integration of high-margin recurring models with Cycurion’s cybersecurity services enables bundled offerings, operational efficiencies, and accelerated profitability in the mission-critical public safety market.
  
  

Expanded Client Access and Cross-Selling Opportunities

If we were to close the transactions contemplated by the MOU, it is expected to provide Cycurion immediate access to Kustom’s extensive client footprint, which includes agencies from all 50 U.S. states and more than 30 countries, as well as a substantial base of law enforcement, commercial fleet, and event security customers. Kustom has built a broad network serving thousands of end-users through its deployments, including over 300 subscription contracts for its video solutions as of 2025, supporting thousands of individual officers, departments, and organizations.

This expansive client network, exceeding approximately 400 key accounts, may create powerful cross-selling synergies:

• Cycurion can introduce its advanced cybersecurity, managed detection and response, cloud security, and ARx platform to Kustom’s customers, who manage sensitive video evidence and data requiring ironclad protection against cyber threats.
• Existing Public Safety Footprint: Cycurion already partners closely with police departments nationwide through its strategic alliance with CentralSquare Technologies, a leading provider of public safety software (including CAD, RMS, and dispatch systems). Agencies using CentralSquare solutions are expected to now be able to integrate Cycurion’s cybersecurity defenses with Kustom’s body-worn and in-car video technologies, delivering a fully secure, end-to-end public safety ecosystem.
• Incremental Revenue Potential: The combined relationships and complementary products, leveraging Kustom’s broad reach across thousands of clients, is expected to position Cycurion to generate approximately $100,000 per month in additional revenue through cross-selling integrated cybersecurity and video solutions, further enhancing accretion.
  
  

Complementary Strengths Driving Long-Term Value

• Integrated Public Safety Ecosystem: Kustom’s innovative video surveillance and evidence management technologies is expected to pair seamlessly with Cycurion’s cybersecurity expertise, enabling secure data transmission, chain-of-custody integrity, and AI-enhanced analytics for faster incident response.
• Government and Enterprise Expansion: Deep shared roots in serving federal, state, and local agencies may create cross-selling opportunities and a stronger value proposition in high-demand areas like smart cities and critical infrastructure protection.
• Innovation Acceleration: The combination supports development of next-generation platforms merging physical security video with cyber defenses.
  
  

As noted above, a substantial portion of the purchase price shall be paid in Cycurion’s preferred stock. The conversion price for Cycurion’s preferred stock shall be equal to 20% above the 30-day VWAP of Cycurion’s common stock before the closing and shall be subject to adjustment to reflect stock splits, stock dividends, recapitalizations, and other similar events, and down round protection as set forth in a definitive agreement. Kustom shall have the right, but not the obligation, to convert the preferred stock into shares of Cycurion common stock at any time after the registration of the shares underlying the preferred stock. The Company shall use commercially reasonable best efforts to file and cause a registration statement covering the resale of the shares of common stock issuable upon conversion of the preferred stock to be declared effective within 90 days following the closing of the transaction and subsequent sales of common stock will be subject to a leak out arrangement.

The transaction would be subject to customary closing conditions, including regulatory approvals and applicable shareholder approval.

The parties are under no obligation to complete the transactions contemplated in the MOU, which may be terminated prior to the execution of a definitive agreement by either party upon 30-days’ notice.

About Cycurion, Inc.

Based in McLean, Virginia, Cycurion (NASDAQ: CYCU) is a forward-thinking provider of IT cybersecurity solutions and AI, committed to delivering secure, reliable, and innovative services to clients worldwide. Specializing in cybersecurity, program management, and business continuity, Cycurion harnesses its AI-enhanced ARx platform and expert team to empower clients and safeguard their operations. Along with its subsidiaries, Axxum Technologies LLC, Cloudburst Security LLC, and Cycurion Innovation, Inc., Cycurion serves government, healthcare, and corporate clients committed to securing the digital future. More info: www.cycurion.com

About Kustom Entertainment Inc.

Kustom Entertainment, Inc. (NASDAQ: KUST) develops and manufactures advanced video solutions, including body-worn cameras, in-car systems, portable surveillance, and evidence management tools for law enforcement, commercial fleets, and security applications, emphasizing reliability and innovation in public safety.

Forward-Looking Statements

This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the operations and prospective growth of Cycurion’s business.

Certain statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Such statements include, but are not limited to, statements regarding the anticipated closing of the transactions contemplated by the MOU; the acceleration of the Company’s inorganic growth strategy; the integration on the Company’s and Kustom’s businesses; and other statements that are not historical facts, including statements which may be accompanied by words such as “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and similar expressions are intended to identify such forward-looking statements. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Cycurion and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to, the outcomes of the Company’s investigations, the outcomes of Kustom’s integration with the Company, risks related to the closings of the transactions contemplated by the MOU, any potential legal proceedings, or the future performance of the Company’s stock. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed by Cycurion with the U.S. Securities and Exchange Commission. Cycurion anticipates that subsequent events and developments may cause its plans, intentions, and expectations to change. Cycurion assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as expressly required by law. Forward-looking statements speak only as of the date they are made and should not be relied upon as representing Cycurion’s plans and expectations as of any subsequent date.

Cycurion Investor Relations:
(888) 341-6680
investors@cycurion.com

Cycurion Media Relations:
(888) 341-6680
media@cycurion.com

FAQ

What is the contemplated purchase price for Kustom’s video division in the CYCU MOU?

The contemplated purchase price range is $6.0–$8.4 million, with $1.0–$1.4 million in cash and the remainder in preferred stock.

How much revenue is Cycurion (CYCU) expected to add from the Kustom video division in 2026?

Cycurion expects approximately $5.1 million of incremental revenue in 2026, about 35% higher than 2025.

How much backlog does the Kustom division contribute to Cycurion (CYCU)?

The transaction is expected to add about $8.0 million in secured backlog.

What are the key terms of the preferred stock in the CYCU acquisition of Kustom’s division?

Preferred stock conversion price equals 20% above the 30-day VWAP before closing; conversion after registration and subject to adjustments.

Is the MOU between Cycurion (CYCU) and Kustom binding and when will it close?

The MOU is non-binding; the transaction is subject to a definitive agreement, regulatory and shareholder approvals, and may be terminated on 30 days’ notice.

How many subscription contracts and customer accounts does the Kustom division bring to Cycurion (CYCU)?

Kustom’s video division includes about 300 subscription contracts and an expanded footprint covering approximately 400 key accounts.

What near-term revenue uplift does Cycurion (CYCU) expect from cross-selling after the Kustom deal?

The company expects roughly $100,000 per month in incremental cross-selling revenue from integrated cybersecurity and video solutions.