Cycurion (NASDAQ: CYCU) to buy Kustom video unit with note, earnout and warrants
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Cycurion, Inc. has entered into an Asset Purchase Agreement to acquire substantially all assets of Kustom Entertainment’s legacy video-solutions business, including Digital Ally-branded in-car and body-worn video systems, subject to closing conditions. The deal is structured with limited immediate equity dilution and aims to expand Cycurion’s public safety technology platform.
Expected consideration at closing includes a $1.25 million cash payment, a $4.25 million secured promissory note bearing 7% interest with a three-year maturity, an earnout of up to $1.0 million, and warrants to purchase up to 2,000,000 shares at $2.80 per share. Based on seller information, the business generated approximately $5.1 million in annual revenue and holds about $8.0 million in contracted backlog, plus around 58 patents and access to roughly 1,000 customers.
Positive
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Insights
Cycurion pursues a largely non-cash, performance-linked acquisition in public safety video.
The transaction adds a law-enforcement focused video and evidence-management business that reportedly produced about $5.1 million in annual revenue and holds roughly $8.0 million in contracted backlog. Strategically, it extends Cycurion’s public safety platform alongside its ARx and Panoptic cybersecurity offerings.
Economic risk is moderated through structure: $1.25 million cash, a $4.25 million secured note at 7%, up to $1.0 million in earnout tied to milestones, and warrants for up to 2,000,000 shares at $2.80. This shifts part of value to future performance while limiting immediate dilution.
Closing remains subject to extensive conditions, including due diligence, carve-out financials sufficient for SEC reporting, board approvals, third-party consents, and no material adverse effect on the business. Actual impact will depend on successful closing and integration, particularly monetizing approximately 1,000 new client relationships.
8-K Event Classification
2 items: 8.01, 9.01
2 items
Item 8.01
Other Events
Other
Voluntary disclosure of events the company deems important to shareholders but not covered by other items.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Cash consideration: $1.25 million
Secured Promissory Note: $4.25 million at 7% interest
Earnout potential: Up to $1.0 million
+5 more
8 metrics
Cash consideration
$1.25 million
Cash portion of aggregate purchase consideration, subject to closing
Secured Promissory Note
$4.25 million at 7% interest
Note with three-year maturity as part of consideration
Earnout potential
Up to $1.0 million
Contingent cash consideration tied to performance milestones
Warrants issued
Up to 2,000,000 shares at $2.80
Cycurion common stock warrants, subject to vesting and restrictions
Target annual revenue
Approximately $5.1 million
Annual revenue generated by the acquired business, per seller information
Contracted backlog
Approximately $8.0 million
Backlog primarily from recurring subscriptions and multi-year contracts
Customer relationships
Approximately 1,000 clients
Law enforcement and public safety customers gained upon closing
Patent portfolio
Approximately 58 patents
Patents covering video surveillance and evidence management technologies
Key Terms
Asset Purchase Agreement, Secured Promissory Note, earnout, backlog, +2 more
6 terms
Asset Purchase Agreement financial
"entered into an Asset Purchase Agreement, dated June 24, 2026"
An asset purchase agreement is a legal contract in which a buyer agrees to buy specific assets and contracts of a business rather than buying the company’s stock or ownership. It matters to investors because it determines exactly what is being bought and what liabilities stay behind — like buying the furniture and equipment from a store but not the building or past debts — which affects the deal’s value, taxes and future risk exposure.
Secured Promissory Note financial
"a $4.25 million Secured Promissory Note bearing interest at 7% per annum"
A secured promissory note is a written promise to repay borrowed money that is backed by specific assets pledged as collateral; if the borrower fails to pay, the lender can seize those assets to recover losses. Investors care because the collateral reduces the lender’s risk and can make the loan safer and more likely to be repaid, similar to a pawnshop loan where an item lowers the lender’s exposure if the borrower defaults.
earnout financial
"an earnout of up to $1.0 million based upon the achievement of specified performance milestones"
An earnout is a financial agreement in which part of the purchase price for a business is paid later, based on the company's future performance. It acts like a bonus system, where sellers earn extra money if the business hits certain goals, aligning their interests with the buyer’s success. Investors pay attention to earnouts because they influence the total deal value and can affect the company's future financial health.
backlog financial
"holds approximately $8.0 million in contracted backlog, primarily from recurring subscriptions"
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.
registration rights agreement financial
"including a security agreement, registration rights agreement, intellectual property assignment agreement"
A registration rights agreement is a contract that gives investors the option to have their ownership stakes officially registered with the government, making it easier to sell their shares later. This agreement matters because it provides investors with a clearer path to cash out their investments if they choose, offering more liquidity and confidence in their ability to sell their holdings when desired.
leak-out agreement financial
"warrants to purchase up to 2,000,000 shares ... subject to ... the terms of a leak-out agreement"
A leak-out agreement is a contract that lets a company share sensitive, non-public information with a limited set of outsiders under strict rules, effectively permitting a controlled ‘leak’ rather than broad disclosure. For investors this matters because it can speed up deal discussions or partner searches while setting who sees critical information, influencing the fairness of a process, potential stock-price reactions, and the risk of confidential information reaching the market prematurely.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 29, 2026
(Exact Name of Registrant as Specified in Its Charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (888 ) 341-6680
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 8.01 Other Events.
On June 29, 2026, the Company issued a press release. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d)Exhibits:
| Exhibit No. | Description | |||||||
| 99.1 | Press Release dated June 29, 2026 | |||||||
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CYCURION, INC. | ||||||||||||||
| Date: | July 1, 2026 | By: | /s/ L. Kevin Kelly | |||||||||||
| Name: | L. Kevin Kelly | |||||||||||||
| Title: | Chief Executive Officer | |||||||||||||
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Exhibit 99.1
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
June 29, 2026
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 $1.25 million, (ii) a $4.25 million secured promissory note, (iii) contingent cash consideration of up to $1.0 million payable only upon the achievement of specified earnout conditions, and (iv) warrants to purchase up to 2,000,000 shares of Cycurion common stock. The transaction structure is intended to align a substantial portion of the consideration with future performance while limiting immediate equity dilution to existing stockholders.
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 $5.1 million in annual revenue and holds approximately $8.0 million in contracted backlog, primarily from recurring subscriptions and multi-year contracts. Cycurion believes the acquisition can enhance operating leverage and support margin expansion, although there can be no assurance that these benefits will be realized.
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 at 7% 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.
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•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
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investors@cycurion.com
Cycurion Media Relations:
(888) 341-6680
media@cycurion.com
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FAQ
What acquisition did Cycurion (CYCU) announce involving Kustom Entertainment?
Cycurion agreed to acquire substantially all assets of Kustom Entertainment’s video-solutions division. This includes Digital Ally-branded in-car video, body cameras, and evidence management solutions used by law enforcement and public safety agencies across the U.S., expanding Cycurion’s public safety technology platform.
How is the purchase consideration for Cycurion’s Kustom video business deal structured?
The proposed consideration includes $1.25 million in cash, a $4.25 million secured promissory note at 7% interest with three-year maturity, up to $1.0 million contingent earnout, and warrants to purchase up to 2,000,000 Cycurion common shares at an exercise price of $2.80 per share, subject to conditions.
What revenue and backlog does the acquired Kustom video business contribute to Cycurion (CYCU)?
Based on seller information, the business generated approximately $5.1 million in annual revenue and holds about $8.0 million in contracted backlog. Much of this backlog comes from recurring subscriptions and multi-year contracts, which may support more stable, recurring revenue for Cycurion if the deal closes.
How many customers and patents does the Kustom video business add to Cycurion?
Cycurion expects access to approximately 1,000 new customer relationships, including many police departments and municipal agencies. The business also brings a portfolio of about 58 patents in video surveillance, evidence management, and integration technologies, with additional patents pending, enhancing its technology base.
What are the key closing conditions for Cycurion’s acquisition of Kustom’s video assets?
Closing requires satisfactory completion of financial and operational due diligence, reconciliation of financials, delivery of carve-out financial statements, board approvals for both companies, execution of ancillary agreements, necessary third-party consents, arrangements with key employees, and no material adverse effect on the business.
Why does Cycurion describe the Kustom transaction structure as non-dilutive?
The structure emphasizes cash and debt, plus performance-based earnout, with equity compensation through warrants that vest over time. This means most consideration is cash, a secured note, and contingent payments, limiting immediate issuance of common stock and therefore limiting near-term dilution for existing shareholders.