Kustom to Divest Video Unit for $1.25M Cash, $4.25M Note and Warrants
KUST•Kustom Entertainment agreed to sell its video solutions unit—including Digital Ally‐branded in-car systems, body-worn cameras and digital evidence management—for $1.25M cash, a $4.25M promissory note, up to $1M in milestone payments and 2M Cycurion warrants. The divestiture, closing in early July with minimal shareholder dilution, transfers 58 patents and 1,000 customer relationships to Cycurion while allowing Kustom to focus resources on its core business.
1. Terms of Asset Sale
Kustom Entertainment has entered into an agreement to sell its video solutions unit to Cycurion for $1.25 million in cash, a $4.25 million secured promissory note, up to $1.0 million in contingent milestone payments and warrants for approximately 2 million shares of Cycurion common stock. The transaction is structured to close in early July with minimal immediate dilution to Kustom shareholders.
2. Assets and Patents Included
The unit being divested includes Digital Ally-branded in-car video systems, body-worn cameras and digital evidence management solutions used by law enforcement and public safety organizations. The deal also transfers a portfolio of 58 granted patents with additional applications pending, as well as relationships with about 1,000 agency customers.
3. Strategic Rationale and Impact
By divesting this business, Kustom will reallocate capital and management attention toward its core offerings, while the sale proceeds and promissory note strengthen its balance sheet. Cycurion will integrate Kustom’s video and evidence management capabilities with its AI-driven cybersecurity platform to boost recurring revenue and customer engagement.
