Cycurion, Inc. Enters into Asset Purchase Agreement to Acquire Kustom Entertainment’s Legacy Video Solutions Segment, Delivering Non-Dilutive Scale, Access to Approximately 1,000 New Clients and a Robust Portfolio of Approximately 58 Patents
Rhea-AI Summary
Cycurion (NASDAQ: CYCU) agreed to acquire substantially all assets of Kustom Entertainment’s legacy video-solutions business, including Digital Ally-branded in-car and body-worn video systems and evidence management platforms. Closing is targeted for early July 2026, subject to extensive due diligence, approvals, documentation, and other closing conditions.
Expected consideration totals $1.25 million cash, a $4.25 million 7% secured promissory note, up to $1.0 million earnout, and warrants for up to 2,000,000 CYCU shares at $2.80. Cycurion would gain access to about 1,000 new clients, roughly 58 patents, approximately $5.1 million annual revenue, and about $8.0 million contracted backlog.
Positive
- Access to approximately 1,000 new customer relationships, many overlapping with existing Cycurion clients
- Acquired business adds about $5.1 million annual revenue and roughly $8.0 million backlog
- Transaction includes a portfolio of approximately 58 patents plus pending applications
- Consideration emphasizes cash, debt and performance-based earnout, limiting immediate equity dilution
- Up to 2,000,000 warrants align a portion of consideration with future performance milestones
- Combined platform supports cross-selling video, evidence management and AI-driven cybersecurity solutions
Negative
- Deal is not yet closed and is subject to numerous precedent conditions and potential delays
- Structure adds a $4.25 million secured promissory note bearing 7% annual interest
- Issuance of up to 2,000,000 common stock warrants could create future shareholder dilution
- Earnout of up to $1.0 million includes performance milestones and clawbacks, adding post-closing complexity
News Market Reaction – CYCU
In the Jun 29 session, CYCU declined 7.55%, reflecting a notable negative market reaction. Argus tracked a trough of -24.3% from its starting point during tracking. Our momentum scanner triggered 7 alerts that day, indicating moderate trading interest and price volatility.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Previous Acquisition Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Jun 09 | Secuvant acquisition close | Positive | -4.9% | Closed Secuvant reverse merger, adding Panoptic platform and performance-based earn-out. |
| May 07 | Halo Privacy deal | Positive | -3.1% | Signed binding Halo Privacy acquisition, adding high-margin ARR and secure messaging. |
| Apr 21 | Kustom MOU update | Positive | -3.5% | Updated MOU for Kustom video segment with defined price, revenue and backlog impact. |
| Jan 22 | Initial Kustom MOU | Positive | -0.8% | Announced non-binding MOU to buy Kustom video division with sizable growth contribution. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
CYCU’s acquisition headlines have typically drawn negative next-day reactions despite strategic growth messaging.
Key Terms
asset purchase agreement financial
secured promissory note financial
earnout financial
registration rights agreement regulatory
leak-out agreement financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
MCLEAN, Va., June 29, 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 an Asset Purchase Agreement, dated June 24, 2026 (the “Asset Purchase Agreement”) with Kustom Entertainment, Inc. (NASDAQ: KUST) (“Kustom”) to acquire substantially all of the assets comprising Kustom’s video-solutions division, including the development, sale, licensing, support and servicing of video hardware, camera products, platforms, software and software solutions (the “Business”), subject to the satisfaction or waiver of closing conditions as set forth in the Asset Purchase Agreement. Closing is expected in early July 2026.
The Business includes the well-established Digital Ally-branded in-car video systems, body-worn cameras, and digital evidence management solutions used by law enforcement agencies, municipalities, and public safety organizations across the United States. Kustom currently holds a robust portfolio of approximately 58 patents covering video surveillance, evidence management, and integration technologies, with more patents pending — strengthening its leadership in AI-enhanced rugged video capture, real-time analytics, and secure evidence management.
This transaction represents disciplined execution of Cycurion’s strategy to build a comprehensive public safety technology platform. By combining Kustom’s proven video and evidence management capabilities with Cycurion’s ARx AI-powered cybersecurity platform and the recently acquired Panoptic threat visibility and MDR solutions, the Company expects to create a differentiated, full-spectrum offering that enhances recurring revenue and supports profitable growth.
The transaction has been structured to minimize immediate dilution to existing stockholders. Subject to closing, the aggregate purchase consideration is expected to consist of (i) a cash payment of
Upon closing, Cycurion expects to gain access to approximately 1,000 new customer relationships, including numerous police departments and municipal agencies where the Company already provides cybersecurity and managed services. These overlapping relationships create immediate opportunities for cross-selling integrated video, evidence management, and AI-driven security solutions.
Based on information from the seller, the Business generated approximately
L. Kevin Kelly, Chairman and Chief Executive Officer of Cycurion, stated: “This proposed acquisition demonstrates our continued focus on disciplined, value-accretive execution. We are adding a complementary public safety video platform and expect to immediately access approximately 1,000 new clients — many of them police departments where we already have strong relationships. By integrating Digital Ally’s trusted solutions with our ARx and Panoptic platforms, we expect to deliver comprehensive, AI-enhanced capabilities that strengthen our position in public safety technology and drive higher-margin recurring revenue for our shareholders.”
Stanton E. Ross, CEO of Kustom Entertainment, added: “This is a perfect match. Cycurion’s deep relationships with the law enforcement agencies we serve, combined with their AI-driven cybersecurity expertise, positions them to grow this business far beyond what we could alone. They offer agencies a fully integrated platform — protecting networks and capturing evidence under one contract and one mission. We couldn’t have found a better home for the business or our clients.”
The Proposed Acquisition
On June 24, 2026, Cycurion entered into the Asset Purchase Agreement pursuant to which the Company agreed, subject to the terms and conditions thereof, to acquire substantially all of the assets comprising the Business.
Subject to closing, aggregate consideration is expected to include:
$1.25 million in cash;- a
$4.25 million Secured Promissory Note bearing interest at7% per annum with a three-year maturity; - an earnout of up to
$1.0 million based upon the achievement of specified performance milestones and subject to clawback provisions (subject to an earnout and clawback agreement); and - warrants to purchase up to 2,000,000 shares of Cycurion common stock at an exercise price of
$2.80 per share, subject to vesting (subject to a warrant agreement), transfer restrictions, and the terms of a leak-out agreement.
The transaction also contemplates the execution of related ancillary agreements, including a security agreement, registration rights agreement, intellectual property assignment agreement, assignment and assumption agreement, bill of sale, employment agreements, contractor agreement, shared services agreement, and other customary transaction documents.
Completion of the proposed transaction remains subject to various conditions precedent, including, among others, satisfactory completion of financial, accounting, operational and business due diligence; reconciliation and validation of financial information and projections; delivery of carve-out financial statements and supporting documentation sufficient to satisfy audit and SEC reporting requirements; approval by the boards of directors of both companies; execution and delivery of ancillary transaction documents; obtaining any required third-party consents; entering arrangements with key employees and contractors identified by Cycurion; and the absence of a material adverse effect on the Business. There can be no assurance that the conditions precedent will be satisfied or waived or that the transaction will close on the anticipated timeframe or at all.
Potential Strategic Benefits
- Non-Dilutive Structure: Cash/debt-focused consideration with performance-based earnout preserves shareholder value and supports continued profitable growth.
- Immediate Client Access and Synergies: Approximately 1,000 new clients, including key police departments and public safety agencies with existing Cycurion relationships, enabling accelerated cross-selling of integrated solutions.
- Public Safety Platform Leadership: Combines video/evidence management with ARx AI cybersecurity and Panoptic MDR for differentiated, high-value offerings.
- Revenue and Backlog Acceleration: Adds approximately
$5.1 million annual revenue and approximately$8.0 million backlog with strong recurring components, enhancing margins and supporting profitable expansion. - Strategic Execution: Advances Cycurion’s inorganic growth strategy, leveraging existing contracts, government vehicles, and client relationships for operational synergies and sustained profitability.
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. For more information, visit www.cycurion.com.
About Kustom Entertainment, Inc.
Kustom produces live music events and festivals across North America. The company focuses on creating memorable fan experiences through live entertainment, festival operations, artist booking, sponsorships, marketing, and event production. For more information, visit www.kustoment.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined in 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, risks that the parties may be unable to satisfactorily complete the conditions precedent included in the Asset Purchase Agreement, including the requirement to complete due diligence; reconcile financial information; obtain required board approvals; the possibility that the proposed acquisition is not completed; failure to satisfy closing conditions; termination of the Asset Purchase Agreement; delays in closing; financing risks; regulatory or third-party consent issues; the acceleration of the Company’s inorganic growth strategy; the continued execution on the Company’s backlog; 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, risks related to customer performance and satisfaction, contract modifications, delays or terminations, and the Company’s ability to fulfill contractual obligations, the outcomes of the Company’s investigations, 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
