Kustom Entertainment Inc. (NASDAQ: KUST) and Cycurion Inc. (NASDAQ: CYCU) announced they have entered into a revised memorandum of understanding for the sale of Kustom's legacy video solutions segment to Cycurion for $5.5 million, with a target closing date of June 30, 2026.

The transaction structure includes a $1.25 million cash payment at closing and a $4.25 million secured promissory note bearing 7% interest, payable over 36 monthly installments. Kustom will also receive 2 million common stock purchase warrants with a two-year term and an exercise price of $2.80 per share.

The agreement includes performance adjustments through an earn-out and clawback mechanism capped at $1 million, based on the business achieving specific net income milestones over defined periods. The parties have agreed to a 30-day exclusivity period to complete the final asset purchase agreement.

"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," said Stanton Ross, CEO of Kustom.

The video solutions segment provides in-car and body-worn cameras for law enforcement and security applications. The transaction remains subject to completion of definitive documentation, customary closing conditions, and regulatory approvals.

Kustom Entertainment operates in live event production and ticketing technology, while Cycurion provides cybersecurity solutions and artificial intelligence services. The companies initially announced their agreement on January 22, 2026, according to the press release.