KUST News & Events

Kustom Entertainment (KUST) and Cycurion (CYCU) announced they have entered into a revised, non-binding Memorandum of Understanding that establishes revised terms for the sale of Kustom's legacy video solutions segment to Cycurion from the previously announced MOU on January 22, 2026. The parties have moved into the final stage of the transaction, focusing on the completion of definitive documentation. Based on the progress made to date, the parties currently anticipate the transaction will close on or prior to June 30, 2026. Under the terms of the agreement, the aggregate purchase price is $5,500,000, structured to provide Kustom with immediate liquidity, long-term yield, and equity upside. The consideration consists of: Cash Payment: A $1,250,000 cash down payment payable at closing. Secured Promissory Note: A $4,250,000 secured promissory note bearing 7% interest, payable in 36 monthly installments. Equity Upside: The issuance to Kustom of 2,000,000 common stock purchase warrants with a two-year term and an exercise price of $2.80 per share. Performance Adjustments: An earn-out and clawback mechanism, capped at $1,000,000, based on the Business achieving specific net income milestones, as defined in the definitive agreement, milestones over a one-year period for the clawback and a three-year period for the earn-out. "We are pleased to have reached an agreement on the revised economic terms of this divestiture," said Stanton Ross, CEO of Kustom. "This moves us into the final stretch of a transition that allows Kustom Entertainment to focus on its core growth initiatives while ensuring our legacy video customers continue to receive high-level service under Cycurion's stewardship."

Kustom Entertainment announced that its video solutions business, operating under the Digital Ally brand, has secured a notable three-year subscription order from a leading health system in the Kansas City metropolitan area. The system is a member of one of the largest non-profit integrated health systems serving the United States. The order consists of a hardware component including 68 FirstVu Pro body-worn cameras and 9 docking systems coupled with a cloud-based service component with an initial three-year subscription contract. This deployment is part of a strategic initiative by the health system to enhance the security, safety, and protection of its patients, employees, and guests by documenting interactions between security personnel and the public, as well as providing objective records of unusual events within the clinical environment.

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.