Cycurion Acquires Kustom Entertainment's Video Solutions Division for $8.4M
Cycurion (CYCU) entered into a Memorandum of Understanding ("MOU") to acquire the video-solutions division of Kustom Entertainment (KUST). The contemplated transaction is valued between $6.0-8.4M based on the pro forma financial information agreed upon by the parties, with the purchase price to be paid in $1.0-1.4M 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 $5.1M, or 35% in 2026 compared to 2025, and approximately $8M 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. The acquisition is expected to be accretive to Cycurion's earnings profile through: Immediate Revenue and Backlog Addition: Approximately $5.1M in annual revenue from Kustom's subscription-based video storage, cloud management, and service contracts, plus an $8M 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. 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.
