Deal expands recurring revenue, adds patents, strengthens cybersecurity offerings, and brings approximately 1,000 new customers with significant contracted backlog visibility

The Kustom Video Solutions acquisition marks a strategic expansion by the acquiring company, adding approximately $5.1 million in annual revenue, nearly 1,000 clients and about $8.0 million in contracted backlog. The asset purchase agreement includes Digital Ally-branded in-car and body cameras, digital evidence management products and approximately 58 patents.

The deal is expected to close in early July 2026 and is structured with a mix of cash, secured notes, earnouts and warrants to support growth while limiting immediate equity dilution.

Deal structure balances growth and capital efficiency

The transaction is valued through a blended consideration model designed to reduce immediate dilution pressure. It includes $1.25 million in cash, a $4.25 million secured promissory note carrying 7% interest over three years, up to $1 million in earnout payments and warrants for up to 2 million shares.

This structure allows the company to preserve capital flexibility while aligning long-term performance incentives with acquisition outcomes.

Expansion strengthens AI security and evidence ecosystem

The acquisition significantly enhances the company’s position in AI cybersecurity, surveillance and digital evidence management markets. With access to approximately 1,000 new customer relationships, the business expects stronger recurring revenue growth supported by the $8.0 million contracted backlog, much of which is subscription-based.

The addition of 58 patents also strengthens the company’s intellectual property base, supporting future product development and integration across its ARx AI cybersecurity and Panoptic MDR platforms.

  • Adds $5.1 million in annual recurring revenue potential

  • Expands access to nearly 1,000 enterprise clients

  • Includes in-car and body camera systems portfolio

  • Strengthens AI cybersecurity and MDR integration strategy

  • Secured $8.0 million backlog supports predictable revenue

Stanton E. Ross, CEO at Kustom Entertainment -

"Cycurion's deep relationships with the law enforcement agencies we serve, combined with their AI-driven cybersecurity expertise, positions them to grow this business far beyond what we could alone.”

The Kustom Video Solutions acquisition also positions the company to deepen its presence in law enforcement and enterprise security markets. By combining hardware assets with AI-based software capabilities, the firm aims to build a more unified digital evidence and cybersecurity ecosystem that supports scalable long-term growth.

Thus, Business Fortune is of the view that Kustom Video Solutions acquisition strengthens recurring revenue and expands AI security footprint.

FAQs

What is included in the acquisition deal?

It includes cameras, patents, clients and digital evidence systems.

When will the acquisition close?

The deal is expected to close in early July 2026.

What is the total value of the deal structure?

It includes cash, notes, earnouts and share warrants.

How many clients are added through this acquisition?

Approximately 1,000 new customer relationships are included.

What is the strategic benefit of the deal?

It strengthens AI cybersecurity and recurring revenue streams.