Cycurion, Inc. (NASDAQ: CYCU) and Kustom Entertainment, Inc. (NASDAQ: KUST) have entered into a non‑binding memorandum of understanding to acquire Kustom’s video‑solutions division for a total consideration of $6.0 million to $8.5 million, consisting of $1.0 million to $1.4 million in cash and the remainder in Cycurion preferred stock.
The divestiture allows Kustom to concentrate on its rapidly growing live‑event production and proprietary online ticketing businesses. By shedding the video‑solutions unit, Kustom can reallocate capital and management attention to expanding its national footprint in the $100 billion global live‑entertainment market, including the upcoming 30th anniversary of the Country Stampede Music Festival.
Cycurion views the acquisition as transformative and accretive. The video‑solutions division is expected to add roughly $5.1 million in 2026 revenue—about a 35% increase over 2025—and $8.0 million in backlog. The deal expands Cycurion’s portfolio into public‑safety‑focused video and evidence‑management solutions, creating cross‑selling opportunities with its AI‑driven cybersecurity platform.
Financially, Kustom reported 2024 revenue of $19.65 million, down 30.44% from $28.25 million in 2023, and a loss of $19.84 million. Cycurion’s last twelve months saw negative EBITDA of $5.83 million and a current ratio of 0.42, placing it in a distress zone per its Altman Z‑Score of –2.15. Despite these challenges, Cycurion has an $80 million contracted backlog as of December 2025, indicating future revenue potential.
Kevin Kelly, Chairman and CEO of Cycurion, said the transaction will “create a comprehensive, secure ecosystem for public‑safety agencies and enterprises, delivering immediate top‑ and bottom‑line growth, strengthening recurring revenue, and unlocking significant cross‑selling potential.” Kustom’s leadership emphasized that the divestiture will free resources to pursue its core live‑event and ticketing strategy.
The deal positions both companies to better align with their strategic priorities: Kustom can focus on high‑margin ticketing and event production, while Cycurion gains a complementary video‑solutions capability that enhances its cybersecurity offerings and expands its market reach in the public‑safety sector.
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