Cycurion (NASDAQ: CYCU) to acquire Kustom video-solutions unit in structured deal
Rhea-AI Filing Summary
Cycurion, Inc. is entering public-safety video technology by agreeing to acquire substantially all assets of Kustom Entertainment’s video-solutions business. The deal covers intellectual property, contracts, customer relationships, inventory and operating assets tied to in-car video, body-worn cameras and digital evidence management.
Subject to closing conditions, consideration includes a $1.25 million cash payment, a $4.25 million secured promissory note at 7.0% interest, up to $1.0 million in revenue-based earnout and warrants for up to 2,000,000 common shares at a $2.80 exercise price. The acquired business reportedly generated about $5.1 million in annual revenue and holds roughly $8.0 million in contracted backlog, largely from recurring and multi-year arrangements.
Ancillary agreements include IP assignment, security and leak-out agreements, employment offers for key staff, and an earnout and clawback mechanism tied to 2026–2027 revenue. Closing is conditioned on due diligence, financial carve-out delivery, board approvals, third-party consents, and absence of a material adverse effect, with no assurance the transaction will complete.
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Insights
Cycurion is using a structured, performance-tied deal to add a video-surveillance platform and recurring revenue base.
The acquisition gives Cycurion a portfolio of video hardware, body cameras and evidence management solutions plus approximately $5.1 million annual revenue and about $8.0 million backlog, largely recurring. Consideration mixes $1.25 million cash, a $4.25 million note, up to $1.0 million earnout and warrants for 2,000,000 shares at $2.80.
This structure shifts part of the value into a 7.0% secured note and performance-based earnout, aligning payments with future results while limiting immediate cash outlay. Security and leak-out agreements, beneficial ownership limits and volume caps constrain Kustom’s equity monetization, which may help manage stock overhang.
Impact will depend on due diligence outcomes, successful closing and integration of Digital Ally-branded products with Cycurion’s ARx and Panoptic platforms. Revenue-based earnout and clawback provisions tied to 2026 and 2027 performance create incentives on both sides but also add complexity around measurement and potential disputes.
8-K Event Classification
Key Figures
Key Terms
Asset Purchase Agreement financial
Secured Promissory Note financial
Earnout and Clawback Agreement financial
Leak-Out Agreement financial
Registration Rights Agreement regulatory
beneficial ownership limitations financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On June 24, 2026, Cycurion, Inc., a Delaware corporation (the “Company”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Kustom Entertainment, Inc., a Nevada corporation (“Kustom”). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Asset Purchase Agreement.
Pursuant to the Asset Purchase Agreement, the Company agreed to acquire substantially all of the assets relating to Kustom’s video-solutions business, including intellectual property, contracts, customer relationships, inventory, accounts receivable, operating assets and other assets used in the development, sale, licensing and servicing of video surveillance technologies, body-worn cameras, in-car video systems, digital evidence management solutions and related products and services (the “Acquired Assets”), and to assume certain specified liabilities of Kustom (the “Assumed Liabilities”).
As consideration for the acquisition, the Company agreed to pay aggregate consideration consisting of: (i) a cash payment of $1,250,000 at closing, (ii) a secured promissory note in the original principal amount of $4,250,000 bearing interest at 7.0% per annum and maturing three years following issuance, (iii) contingent cash consideration of up to $1,000,000 payable upon satisfaction of specified earnout performance criteria and (iv) warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $2.80 per share.
The secured promissory note will be secured by certain of the Acquired Assets pursuant to a Security Agreement to be entered into by the parties at closing. The earnout consideration will be subject to the terms and conditions of an Earnout Agreement, and the warrants will be governed by a Warrant Agreement and related Registration Rights Agreement and Leak-Out Agreement.
The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnification obligations of the parties. The representations and warranties were made solely for purposes of the Asset Purchase Agreement and may be subject to limitations, qualifications and exceptions agreed upon by the parties.
In connection with the transaction, the parties also agreed to enter into, certain ancillary agreements, including those described Item 8.01.
The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. The Company intends to file the forms of the ancillary agreements described in Item 8.01, to the extent required by applicable U.S. Securities and Exchange Commission (“SEC”) rules, as exhibits to a subsequent filing with the SEC.
Item 7.01 Regulation FD Disclosure.
On June 29, 2026, the Company issued a press release announcing its entry into the Asset Purchase Agreement with Kustom. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference therein.
Item 8.01 Other Events.
On June 29, 2026, the Company issued a press release announcing its entry into the Asset Purchase Agreement with Kustom, pursuant to which the Company agreed to acquire substantially all of the assets comprising Kustom’s video-solutions business. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Assignment and Assumption Agreement
Pursuant to the Assignment and Assumption Agreement, Kustom will assign to the Company certain tangible and intangible assets associated with the acquired business, and the Company will assume only those liabilities expressly identified as Assumed Liabilities under the Asset Purchase Agreement. The agreement further clarifies that the Company will not assume liabilities other than those specifically assumed under the Asset Purchase Agreement.
Intellectual Property Assignment Agreement
Pursuant to the Intellectual Property Assignment Agreement, Kustom will assign to the Company specified intellectual property assets used in the acquired business, including certain patents, trademarks, domain names and related intellectual property rights, together with associated goodwill and rights to enforce such intellectual property. The agreement also provides for additional actions following closing to perfect and record the Company’s ownership of the assigned intellectual property assets.
Bill of Sale
Pursuant to the Bill of Sale, Kustom will transfer, assign and convey to the Company all of Kustom’s right, title and interest in and to the Acquired Assets acquired under the Asset Purchase Agreement, free and clear of liens, subject to the terms of the Asset Purchase Agreement. The Bill of Sale appoints the Company as Kustom’s attorney-in-fact for the limited purpose of collecting and obtaining possession of transferred assets and confirms that the Company will not assume any liabilities except those expressly assumed under the Asset Purchase Agreement.
Non-Competition and Non-Solicitation Agreement
Pursuant to the Non-Competition and Non-Solicitation Agreement, Kustom has agreed that, for a period of three years following the closing, it will not directly or indirectly engage in, invest in or otherwise participate in a business that competes with the acquired video-solutions business, including businesses involving body-worn cameras, in-car video systems, mobile video surveillance technologies and digital evidence management solutions. Kustom has also agreed during such period not to solicit employees, customers or vendors of the acquired business and not to disparage the Company or the acquired business. The agreement provides the Company with customary equitable remedies, including injunctive relief, in the event of a violation of the restrictive covenants.
Key Employment Agreement
Pursuant to the Key Employment Agreement, the Company will employ certain key employees of the acquired video-solutions business following closing. The agreement provides for an annual base salary, participation in the Company’s benefit plans, eligibility for annual bonus opportunities, a sign-on bonus, and a grant of restricted stock units that vest over a three-year period, subject to Board approval and the applicable equity award agreement. Employment is at-will, and the employee may receive severance equal to three months of base salary if terminated by the Company without Cause, subject to execution of a customary release of claims. The employee will also be required to enter into customary confidentiality, intellectual property assignment, and restrictive covenant agreements, and the employment offer is contingent upon the closing of the acquisition transaction and satisfaction of customary onboarding requirements.
Essential Employment Agreement
Pursuant to the Essential Employment Agreement, the Company will employ certain essential employees of the acquired video-solutions business following closing. The agreement provides for an annual base salary, participation in the Company’s benefit plans, paid time off, holiday benefits, and other customary at-will employment terms. As a condition of employment, the employee will be required to execute the Company’s confidentiality, intellectual property assignment, and restrictive covenant agreements.
Secured Promissory Note
Pursuant to the Secured Promissory Note, the Company will issue to Kustom a promissory note in the original principal amount of $4.25 million bearing interest at a fixed rate of 7.0% per annum. The note provides for thirty-six monthly payments, including an initial six-month interest-only period, and may be prepaid without penalty, subject to certain principal-reduction provisions applicable to early repayment. The note is secured by a first-priority security interest in the Acquired Assets and includes customary default and acceleration provisions.
Security Agreement
Pursuant to the Security Agreement, the Company will grant Kustom a first-priority security interest in the Acquired Assets acquired, together with the products and proceeds thereof, as collateral for the Company’s obligations under the Secured Promissory Note. The collateral is expressly limited to the Acquired Assets and does not include other Company assets, equity interests or unrelated business operations. The Security Agreement permits Kustom to perfect its security interest through UCC filings and provides customary secured creditor. The Security Agreement terminates automatically upon indefeasible payment in full of the obligations secured thereby.
Warrant Agreement
Pursuant to the Warrant Agreement, the Company will issue to Kustom a warrant to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $2.80 per share. The warrant will become exercisable upon the effectiveness of a registration statement covering the resale of the warrant shares and will remain exercisable for a two-year period thereafter. The warrant contains customary anti-dilution protections for stock splits, stock dividends, reclassifications and certain extraordinary transactions, as well as cashless exercise rights if a registration statement is unavailable. The warrant also includes beneficial ownership limitations that generally prohibit Kustom from exercising the warrant to the extent such exercise would cause Kustom to beneficially own more than 4.99% of the Company’s outstanding common stock, subject to certain adjustment rights.
Registration Rights Agreement
Pursuant to the Registration Rights Agreement, the Company has agreed to file, within 60 days following closing, a registration statement covering the resale of the shares issuable under the Warrant Agreement and other registrable securities issued in connection with the acquisition and to use reasonable best efforts to have such registration statement declared effective within 90 days following closing. The Company is obligated to keep the registration statement effective until the earlier of the date on which Kustom may freely resell the securities under Rule 144 without restriction or the date all registrable securities have been sold.
Earnout and Clawback Agreement
Pursuant to the Earnout and Clawback Agreement, the parties agreed to a revenue-based contingent purchase price adjustment mechanism tied to the post-closing performance of the acquired Video Solutions Business during fiscal years 2026 and 2027. Kustom may become entitled to earnout payments of up to $500,000 per year, and $1.0 million in the aggregate, if annual revenue exceeds specified target amounts. Conversely, the Company may be entitled to clawback payments of up to $500,000 per year, and $1.0 million in the aggregate, if annual revenue falls more than 20% below specified revenue targets, subject to certain thresholds, limitations, offsets and dispute resolution procedures. Revenue determinations are based on U.S. GAAP and are subject to review and dispute procedures set forth in the agreement.
Leak-Out Agreement
Pursuant to the Leak-Out Agreement, Kustom agreed that, following the effectiveness of a registration statement covering the warrant shares issuable under the Warrant Agreement, its exercise and resale of such warrant shares will be subject to certain volume limitations for a period of twelve months. During the leak-out period, Kustom generally may not sell on any trading day more than 10% of the Company’s reported trading volume for the immediately preceding trading day, subject to applicable securities laws and the terms of the agreement. The Leak-Out Agreement also prohibits certain short sales and hedging transactions with respect to the warrant shares and permits the Company, under specified circumstances, to modify, suspend or terminate the leak-out restrictions.
Conditions Precedent Agreement
Pursuant to the Conditions Precedent Agreement, the parties agreed that the closing of the asset acquisition remains subject to the satisfaction or waiver of certain additional conditions, including completion of due diligence review, reconciliation of financial information and projections, delivery of carve-out financial statements and supporting records, receipt of required corporate approvals, cooperation from Kustom’s accounting advisors, execution of employment and related agreements with key personnel, delivery of specified transaction documents, accuracy of representations and warranties, absence of a material adverse effect on the acquired business, receipt of required third-party consents, and the Company’s determination that the financial records are sufficient to satisfy anticipated SEC reporting requirements.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits:
| Exhibit No. | Description | |
| 10.1 | Asset Purchase Agreement, dated June 24, 2026 | |
| 99.1 | Press Release, dated June 29, 2026 | |
| 104 | Inline XBRL for the cover page of this Current Report on Form 8-K |
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: | June 30, 2026 | By: | /s/ L. Kevin Kelly | |
| Name: | L. Kevin Kelly | |||
| Title: | Chief Executive Officer | |||
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
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. | |
| ● | 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:
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