Cycurion has determined that a 7-for-1 reverse stock split is not in the best interest of shareholders at this time, citing substantial risks of market manipulation and irregular short selling. The decision follows a forensic review of trading activity, which the company suggests indicates market abuse. Management stated that a reverse split would not resolve underlying issues and would divert focus from building the business through sustainable performance. The company intends to pursue parties responsible for improper trading identified in its review.

Business Growth and Strategic Acquisitions

The company emphasized its focus on expanding operations and increasing profitability. Over the past year, Cycurion completed two strategic acquisitions: Digital Ally, contributing approximately $5.1 million in revenue, and Secuvant, contributing approximately $2.5 million. Organic revenue grew to approximately $15.5 million, lifting the annual revenue run rate to approximately $28 million. The firm also secured a new ten-year contract valued at $58 million and built approximately $8 million of contracted backlog.

Analysis of Reverse Stock Split Risks

Management analyzed the potential impact of a reverse split based on trading patterns from 2025. If a 7-for-1 split had been announced while the stock traded around $0.60, the implied post-split price would have been approximately $4.20. However, historical data suggests the stock could have been driven down to an effective range of $1.20 to $1.50, leaving it vulnerable to falling below $1.00 again. The Board concluded that the risk of reducing shareholder ownership without achieving stable price support was too high.

Evidence of Suspected Market Abuse

Cycurion's review revealed trading activity it deems inconsistent with fair and orderly markets. In October 2025, approximately 89.9 million shares changed hands in a single session against a float of roughly 86.5 million shares, representing more than 100% turnover. On March 16, 2026, the stock fell approximately 45% intraday, triggering the Regulation SHO Rule 201 short-sale circuit breaker. Despite restrictions, records show a surge in short sales marked as "short exempt" on March 16 and 17. The company also identified order patterns consistent with "spoofing," involving rapid sequencing of cancellations to create false impressions of supply and demand. Cycurion is in contact with NASDAQ regarding these findings.

Cycurion has entered into an Asset Purchase Agreement to acquire Kustom Entertainment’s video solutions division for a total consideration of $6.5 million to expand its public safety technology portfolio. The transaction, structured to minimize immediate dilution, includes $1.25 million in cash, a $4.25 million secured promissory note, and a contingent cash earnout of up to $1.0 million. The acquisition is expected to close in early July 2026, subject to standard closing conditions and regulatory approvals.

The acquired business encompasses the development, sale, and support of video hardware, camera products, and software solutions. This includes the well-established Digital Ally-branded in-car video systems, body-worn cameras, and digital evidence management solutions utilized by law enforcement and public safety organizations across the United States. Kustom holds approximately 58 patents related to video surveillance and evidence management, with additional patents pending.

This acquisition aligns with Cycurion’s strategy to build a comprehensive public safety platform by integrating Kustom’s video capabilities with its ARx AI-powered cybersecurity and Panoptic threat visibility solutions. The company anticipates creating a differentiated offering that enhances recurring revenue and supports profitable growth. The transaction structure is designed to align a significant portion of the purchase consideration with future performance.

Upon closing, Cycurion expects to immediately access approximately 1,000 new customer relationships, including police departments and municipal agencies. These overlapping client bases provide opportunities for cross-selling integrated video, evidence management, and AI-driven security solutions. The company believes the acquisition can enhance operating leverage and support margin expansion.

Financial metrics for the acquired business indicate approximately $5.1 million in annual revenue and a contracted backlog of about $8.0 million. The backlog is primarily derived from recurring subscriptions and multi-year contracts. Additionally, the deal includes warrants to purchase up to 2,000,000 shares of Cycurion common stock at an exercise price of $2.80 per share.

Transaction Breakdown

Acquired Business Metrics