Form 8-K

8-K — KUSTOM ENTERTAINMENT, INC.

Accession: 0001493152-26-035942

Filed: 2026-08-04

Period: 2026-08-04

CIK: 0001342958

SIC: 3663 (RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT)

Item: Entry into a Material Definitive Agreement

Item: Completion of Acquisition or Disposition of Assets

Item: Other Events

Item: Financial Statements and Exhibits

Documents

8-K — form8-k.htm (Primary)

EX-10.1 (ex10-1.htm)

EX-10.2 (ex10-2.htm)

EX-10.3 (ex10-3.htm)

EX-10.4 (ex10-4.htm)

EX-99.1 (ex99-1.htm)

EX-99.2 (ex99-2.htm)

GRAPHIC (ex99-1_001.jpg)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K

8-K (Primary)

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UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

Form

8-K

CURRENT

REPORT

Pursuant

to Section 13 or 15(d) of the

Securities

Exchange Act of 1934

Date

of Report (Date of earliest event reported): August 4, 2026 (August 3, 2026)

KUSTOM

ENTERTAINMENT, INC.

(Exact

Name of Registrant as Specified in Charter)

Nevada

001-33899

20-0064269

(State

or other Jurisdiction

(Commission

(IRS

Employer

Incorporation)

File

Number)

Identification

No.)

6366

College Blvd., Overland Park, KS 66211

(Address

of Principal Executive Offices) (Zip Code)

(913)

814-7774

(Registrant’s

telephone number, including area code)

(Former

name or former address, if changed since last report)

Check

the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under

any of the following provisions:

☐

Written

communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting

material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement

communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement

communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate

by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405

of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging

growth company ☐

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities

registered pursuant to Section 12(b) of the Act:

Title

of each class

Trading

Symbol(s)

Name

of exchange on which registered

Common

Stock, $0.001 par value per share

KUST

The

Nasdaq Capital Market LLC

Item

1.01. Entry into a Material Definitive Agreement.

Acquisition

previously disclosed, on June 24, 2026, Kustom Entertainment, Inc. (the “Company”), entered into an Asset Purchase Agreement

(the “Agreement”) with Cycurion, Inc., a Delaware corporation (“Buyer”, together with the Company, the “Parties”),

as amended by Amendment No. 1 and Forbearance / Extension Agreement dated July 23, 2026 (the “Amendment”, and together with

the “Acquisition Agreement”). The transaction closed on August 3, 2026. Pursuant to the Acquisition Agreement, the Company

sold to Buyer all assets of the Company relating to the video-solutions division, including the development, sale, licensing, support

and servicing of video hardware, camera products, platforms, software and software solutions (the “Business”). The Company

delivered to Buyer all of the Company’s right, title and interest in all assets, claims, rights and interests used primarily in

or held for the use of the Business (the “Acquired Assets”). In consideration for the sale, assignment and delivery of the

Acquired Assets and in consideration of the other agreements contained in Acquisition Agreement, Buyer will pay to the Company an aggregate

consideration consisting of: (i) a cash payment of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00), (ii) a Secured Promissory

Note in the original principal amount of Four Million Two Hundred Fifty Thousand Dollars ($4,250,000), (iii) contingent cash consideration

of up to One Million Dollars ($1,000,000) payable solely upon satisfaction of the applicable earnout conditions set forth herein and

in the Earnout Agreement (as defined in the Acquisition Agreement), and (iv) shares of Buyer’s Series H Convertible Preferred Stock

having an aggregate stated value of Six Hundred Thousand Dollars ($600,000), issued pursuant to the Amendment in replacement of the warrants

originally contemplated by the Agreement, which were cancelled.

connection with the Acquisition Agreement, the Parties entered into a secured promissory note (the “Note”), pursuant to which

the Buyer issued to the Company a Note in the original principal amount of $4,250,000 in partial consideration for the acquisition. The

Note is secured in accordance with the terms of the Security Agreement described below.

The

Parties entered into a security agreement, dated August 3, 2026 (the “Security Agreement”) pursuant to which the Company

was granted a security interest in the Acquired Assets of the Company as security for the obligations under the Note.

The

Parties also entered into a registration rights agreement, dated August 3, 2026 (the “Registration Rights Agreement”), pursuant

to which Seller agreed to register for resale the shares of common stock issuable upon conversion of the Series H Preferred Stock (the

“Series H Preferred Stock”), subject to the terms thereof. Seller agreed to file and maintain an effective registration statement

covering such shares in accordance with the requirements set forth in the Registration Rights Agreement.

The

Parties also entered into an earnout and clawback agreement, dated August 3, 2026 (the “Earnout and Clawback Agreement), which

establishes the Company’s right to receive contingent earnout payments of up to $1,000,000 based upon the future performance of

the Business and providing for certain clawback provisions and adjustment mechanisms.

The

Parties also entered into a leak-out agreement, dated August 3, 2026, (the “Leak-Out Agreement”), which governs the disposition

of shares of common stock issued upon conversion of the Series H Preferred Stock or payment of dividends thereon. The Leak-Out Agreement

generally limits sales by the Company and its affiliates during the applicable leak-out period based on a percentage of daily trading

volume.

The

foregoing description of the Note, the Security Agreement and the Registration Rights Agreement do not purport to be complete and are

qualified in their entirety by reference to the full texts of the Note, the Security Agreement and the Registration Rights Agreement,

the forms of which are filed as Exhibits 10.1, 10.2, and 10.3, to this Current Report on Form 8-K and is incorporated herein by reference.

Common

Stock Purchase Agreement Amendment

August 3, 2026, the Company entered into the Second Amendment to Common Stock Purchase Agreement (the “Amendment”), dated

as of September 15, 2025, as amended (the “Purchase Agreement”), with a certain investor (the “Investor”), pursuant

to which the definition of ELOC Purchase Maximum Amount was amended to mean a number of shares equal to the Beneficial Ownership Limitation

(as defined in the Purchase Agreement); provided however, if the Investor sells shares of Common Stock during the ELOC Purchase Valuation

Period, then the Company may direct the Investor to purchase additional shares of Common Stock subject to the Beneficial Ownership Limitation.

The

foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the

full text of the Amendment, the form of which is filed as Exhibits 10.4, to this Current Report on Form 8-K and is incorporated

herein by reference.

Item

2.01. Completion of Acquisition or Disposition of Assets.

August 3, 2026, the Company completed the disposition of substantially all of the Acquired Assets pursuant to the Acquisition Agreement

described in Item 1.01 above, which description is incorporated herein by reference.

Accordingly,

pro forma financial information required by Item 9.01 of Form 8-K with respect to the disposition is included as Exhibit 99.1, to this

Current Report on Form 8-K.

Item

8.01 Other Events

August 3, 2026, the Company issued a press release announcing the completion of the transaction, a copy of which is attached as Exhibit

99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item

9.01 Financial Statements and Exhibits.

(b)

Pro Forma Financial Information.

The

unaudited pro forma condensed consolidated balance sheet of the Company as of March 31, 2026, and the unaudited pro forma condensed consolidated

statements of operations for the three months ended March 30, 2026 and for the year ended December 31, 2025, are attached hereto as Exhibit

99.2 and incorporated herein by reference. These unaudited pro forma financial statements give effect to the sale to Cycurion on the

basis, and subject to the assumptions, set forth in accordance with Article 11 of Regulation S-X.

(d)

Exhibits

See

the Exhibit Index below, which is incorporated by reference herein.

Exhibit

No.

Description

10.1

Secured Promissory Note, dated August 3, 2026.

10.2

Security Agreement, dated August 3, 2026, by and between Kustom Entertainment, Inc. and Cycurion, Inc.

10.3

Registration Rights Agreement, dated August 3, 2026, by and between Kustom Entertainment, Inc. and Cycurion, Inc.

10.4

Form of Second Amendment to Common Stock Purchase Agreement between Kustom Entertainment, Inc. and a certain Purchaser, dated August 3, 2026.

99.1

Press Release dated August 4, 2026.

99.2

Unaudited Pro Forma Financial Information of Kustom Entertainment, Inc.

104

Cover

Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant

to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by

the undersigned hereunto duly authorized.

Date:

August 4, 2026

Kustom

Entertainment, Inc.

By:

/s/

Stanton E. Ross

Name:

Stanton

E. Ross

Title:

Chairman,

President and Chief Executive Officer

EX-10.1

Filename: ex10-1.htm · Sequence: 2

Exhibit

10.1

SECURED

PROMISSORY NOTE

Principal: $4,250,000.00

Dated: August 3, 2026

FOR

VALUE RECEIVED, Cycurion Inc., a Delaware corporation (“Borrower”), hereby promises to pay to the order of Kustom

Entertainment, Inc., a Nevada corporation (“Lender”), the principal sum of Four Million Two Hundred Fifty Thousand

Dollars ($4,250,000.00) (the “Principal”), together with interest on the outstanding Principal at a fixed rate of

seven percent (7.00%) per annum (the “Interest Rate”), in accordance with the terms of this Secured Promissory Note

(this “Note”).

Definitions.

For

purposes of this Note, the following terms shall have the meanings set forth below:

“Asset

Purchase Agreement” means that certain Asset Purchase Agreement, dated as of June 24, 2026, as amended by Amendment No. 1 and

Forbearance / Extension Agreement dated July 23, 2026, by and between Borrower and Lender.

“Acquired

Assets” shall have the meaning assigned to it in the Asset Purchase Agreement.

“Business

Day” means any day other than a Saturday, Sunday, or other day on which commercial banks in the State of New York are authorized

or required by law to close.

“Collateral”

has the meaning set forth in Section 4(a) and shall be limited to the assets of the Acquired Assets conveyed pursuant to the Asset Purchase

Agreement.

“Event

of Default” has the meaning set forth in Section 5(a).

“Interest

Rate” means seven percent (7.00%) per annum.

“Lender”

means Kustom Entertainment, Inc., a Nevada corporation, and its permitted successors and assigns.

“Note”

means this Secured Promissory Note, as amended, restated, supplemented, or otherwise modified from time to time.

“Obligations”

means all present and future obligations of the Borrower under this Note, including without limitation all amounts of Principal, interest,

and any other sums payable hereunder.

“Permitted

Liens” means (i) liens for taxes not yet due, (ii) statutory liens arising in the ordinary course of business, and (iii) liens

consented to in writing by Lender.

“Principal”

means the original principal amount of $4,250,000.00, as reduced from time to time pursuant to payments made hereunder.

“Default

Period” means the period commencing on the occurrence of an Event of Default and continuing until such Event of Default has

been cured or waived in writing by Lender.

Payments.

(a)

Amortization. The Borrower shall repay the Principal and accrued interest in thirty (30) consecutive monthly installments of $154,835.60

each beginning February 15, 2027.

(b)

Interest Only Payments. The Borrower will make interest-only payments for the first six (6) months beginning August 15, 2026,

whereby the unpaid portion of the principal will accrue to the outstanding balance of the note.

(c)

Commencement. Payments shall begin on August 15, 2026, and continue on the same day of each succeeding month until paid in full.

(d)

Application of Payments. Each payment shall be applied first to accrued but unpaid interest, and thereafter to Principal.

(e)

Business Day Adjustment. If any payment date falls on a day other than a Business Day, such payment shall be due on the next succeeding

Business Day.

(f)

No Setoff. All payments shall be made without setoff, deduction, or counterclaim.

(g)

Interest Calculation. Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months and shall

accrue for the actual number of days elapsed.

(h)

Method of Payment. All payments shall be made in lawful money of the United States by wire transfer of immediately available funds

or such other method as Lender may reasonably designate in writing.

Prepayment.

(a)

Voluntary Prepayment. The Borrower may prepay this Note, in whole or in part, at any time without premium or penalty.

(b)

Prepayment Discount. Notwithstanding the foregoing, if the Borrower elects to prepay this Note in full, the following principal

reductions shall apply:

(i)

0–6 Months: Principal shall be reduced by $1,250,000, as applied to the outstanding Principal balance at the time of prepayment,

net of all prior principal payments made.

(ii)

6–12 Months: Principal shall be reduced by $500,000, as applied to the outstanding Principal balance at the time of prepayment,

net of all prior principal payments made.

(iii)

After 12 Months: No reduction applies.

(c)

Clarification. Any reduction shall apply only to the then-outstanding Principal balance and shall not result in any payment by

Lender to Borrower.

Security and Collateral.

(a)

Grant of Security Interest. As security for the full and punctual payment and performance of all obligations under this Note (the

“Obligations”), Borrower hereby grants to Lender a security interest in all right, title, and interest of Borrower

in and to the assets comprising the Acquired Assets conveyed pursuant to that certain Asset Purchase Agreement dated June 24, 2026 (collectively,

the “Collateral”).

(b)

No Expansion of Collateral. The Collateral shall be limited solely to the assets expressly conveyed under the Asset Purchase Agreement

and shall not include any other assets of Borrower.

(c)

Perfection. Lender may file UCC-1 financing statements solely with respect to the Collateral. Borrower shall reasonably cooperate

in such filings.

(d)

Priority. Lender’s security interest shall be first priority solely with respect to the Collateral, subject only to Permitted

Liens.

Events of Default and Acceleration.

(a)

Event of Default. Each of the following shall constitute an “Event of Default”:

(i)

failure to pay any installment within fifteen (15) days after its due date;

(ii)

material breach of this Note that remains uncured for thirty (30) days after written notice;

(iii)

insolvency, bankruptcy filing, or assignment for benefit of creditors; or

(iv)

sale or disposition of all or substantially all of the Collateral outside the ordinary course without Lender consent.

(b)

Default Interest. During the Default Period, interest shall accrue at a rate equal to the lesser of (i) twelve percent (12%) per

annum or (ii) the maximum rate permitted by law.

(c)

Acceleration. Upon an Event of Default that remains uncured, Lender may declare all outstanding Principal and accrued interest

immediately due and payable.

(d)

Exclusive Remedies. Lender’s remedies shall be limited to enforcement against the Collateral and payment obligations under

this Note.

(e)

Collection Costs. Borrower shall pay reasonable and documented out-of-pocket collection costs, including reasonable attorneys’

fees, actually incurred by Lender.

Notices.

All

notices, requests, demands, and other communications required or permitted under this Note shall be in writing and shall be deemed to

have been duly given: (a) when delivered by hand; (b) one (1) business day after being sent by a nationally recognized overnight courier;

or (c) three (3) business days after being mailed by certified or registered mail and email, return receipt requested, to the following

addresses:

If to Borrower:

Cycurion, Inc.

1640 Boro Place, Suite 420C

McLean, VA 22102

E-mail: [***]

Attention: L. Kevin Kelly, Chief Executive

Officer

with a copy

to:

Seward & Kissel LLP

One Battery Park Plaza

New York, NY 10004

E-mail: [***]

Attention: Keith J. Billotti, Esq.

If to Lender:

Kustom Entertainment, Inc.

6366 College Blvd

Overland Park, KS 66211

Email: [***]

Attention: Stanton E. Ross,

Chairman, President and Chief Executive Officer

with a copy

to:

Sullivan & Worcester

LLP

1251 Avenue of the Americas

New York, NY 10020

(212) 660-3060

Email: [***]

Attention: David E. Danovitch,

Esq.; Joseph E. Segilia, Esq.

Either

party may change its address for notices by providing written notice to the other party in accordance with this Section.

Governing Law.

This

Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles.

Limitation of Liability.

Notwithstanding

anything herein to the contrary, Lender agrees that its recourse shall be limited solely to the Collateral and the Borrower, and no officer,

director, or affiliate shall have any personal liability.

Waiver of Consequential Damages.

no event shall Borrower be liable for any indirect, incidental, special or consequential damages.

10.

Amendment.

This

Note may be amended only by a written agreement signed by both Borrower and Lender.

11.

Assignment.

Lender

may not assign this Note without the prior written consent of Borrower, not to be unreasonably withheld.

12.

Confidentiality.

Lender

agrees to keep the terms of this Note and related transactions confidential, except as required by law.

13.

Entire Agreement.

This

Note, together with the Asset Purchase Agreement, constitutes the entire agreement between the parties.

14.

Counterparts; Electronic Signatures.

This

Note may be executed in counterparts and by electronic signature, each of which shall be deemed an original and all of which together

shall constitute one and the same instrument.

[Signature

Page Follows]

WITNESS WHEREOF, the Borrower and Lender hereto have caused this Note to be duly executed on the day and year first above written.

BORROWER:

CYCURION,

INC.

By:

/s/ L.

Kevin Kelly

L. Kevin Kelly

Chairman and Chief Executive Officer

ACKNOWLEDGED

AND AGREED:

LENDER:

KUSTOM

ENTERTAINMENT, INC.

By:

/s/ Stanton

E. Ross

Stanton E. Ross

Chairman, President and Chief Executive Officer

[Signature

Page to Secured Promissory Note]

EX-10.2

Filename: ex10-2.htm · Sequence: 3

Exhibit

10.2

SECURITY

AGREEMENT

This

SECURITY AGREEMENT, dated as of August 3, 2026 (this “Agreement”), is between Cycurion, Inc., a Delaware corporation

(the “Company”), and Kustom Entertainment, Inc., a Nevada corporation, as the holder of certain of the Company’s

obligations currently in its favor (“Kustom Entertainment”), and memorializes and ratifies the Company’s agreement

to grant a security interest solely in the collateral described herein to Kustom Entertainment and its endorsees, transferees, and assigns

regarding the such obligations (collectively, the “Secured Party”).

I T N E S S E T H:

WHEREAS,

the Company issued to the Secured Party a Secured Promissory Note, dated August 3, 2026, in the original principal amount of up to $4,250,000.00

subject to the terms and conditions set forth therein (the “Note”);

WHEREAS,

originally when the Note was sold and issued and in order to induce the Secured Party to extend the loan(s) evidenced by the Note, the

Company agreed to execute and deliver to the Secured Party an agreement containing all of the terms and conditions of this Agreement,

which therein would grant to the Secured Party a security interest in certain property of the Company to secure the prompt payment, performance

and discharge in full of all of the Company’s obligations under the Note.

NOW,

THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the parties hereto hereby agree as follows:

Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms

used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel

paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,

“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”,

“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have the respective meanings

given such terms in Article 9 of the UCC.

(a)

“Collateral” means the “Acquired Assets” (as defined in the Asset Purchase Agreement), together with all

products and proceeds thereof, in each case whether now existing or hereafter arising. The Collateral shall be limited solely to the

Acquired Assets and shall not include (i) any other assets, properties, or rights of the Company not acquired pursuant to the Asset Purchase

Agreement, (ii) any equity interests of the Company or any of its affiliates, or (iii) any assets of the Company unrelated to the Acquired

Assets. Notwithstanding anything to the contrary, the Collateral shall not include any assets, claims or rights set forth on Schedule

I (Excluded Litigation and Retained Claims).

Notwithstanding

the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes

void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the extent

that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law); provided,

however, that to the extent permitted by applicable law, this Agreement shall create a valid security interest in such asset and,

to the extent permitted by applicable law, this Agreement shall create a valid security interest in the proceeds of such asset.

(b)

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual

property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights

arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered

and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,

without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent of

the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications

for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, (iii)

all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service marks, logos,

domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired,

all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark

Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof,

or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under the laws of the United States, any other

country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all

licenses for any of the foregoing, and (vii) all causes of action for infringement of the foregoing.

(c)

“Liens” means a lien, charge, pledge, security interest, encumbrance, and right of first refusal, preemptive right,

or other restriction.

(d)

“Majority in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal

amounts of the Note at the time of such determination) of the Secured Party.

(e)

“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly

executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

(f)

“Obligations” means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or

several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing to, of the Company to the Secured

Party, including, without limitation, all obligations under this Agreement, the Note, and any other instruments, agreements or other

documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or

involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether

or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations

or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured

Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified

from time to time. Without limiting the generality of the foregoing, the term “Obligations” shall include, without limitation:

(i) principal of, and interest on the Note and the loan(s) extended pursuant thereto; (ii) any and all other fees, indemnities, costs,

obligations and liabilities of the Company from time to time under or in connection with this Agreement, the Note, and any other instruments,

agreements or other documents executed and/or delivered in connection herewith or therewith; and (iii) all amounts (including but not

limited to post-petition interest) in respect of the foregoing that would be payable but for the fact that the obligations to pay such

amounts are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company.

(g)

“Organizational Documents” means with respect to the Company, the documents by which the Company was organized (such

as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without limitation,

any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of

the Company (such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

(h)

“Permitted Liens” means the following:

(i)

Liens imposed by law for taxes that are not yet due or are being contested in good faith, which in each case, have been appropriately

reserved for;

(ii)

carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, and other like Liens imposed by law,

arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested

in good faith;

(iii)

pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and

other social security laws or regulations;

(iv)

deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds

and other obligations of a like nature, in each case in the ordinary course of business;

(v)

Liens under this Agreement; and

(vi)

Any other Liens in favor of the Secured Party.

(i)

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint

venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

(j)

“Pledged Interests” means the ownership and other equity interests in partnerships and limited liability companies

(if any) included in the Collateral.

(l)

“UCC” means the Uniform Commercial Code of the State of Delaware and or any other applicable law of any state or states

that have jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent

of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will

be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the

definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing

ones shall be controlling.

Grant of Security Interest in Collateral. As an inducement for the Secured Party to extend the loan(s) as evidenced by the Note

and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the

Company hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Party a perfected, first priority security

interest (subject only to Permitted Liens and any liens permitted under the Note or Asset Purchase Agreement) in and to, a lien upon

and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral

(a “Security Interest” and, collectively, the “Security Interests”).

Delivery of Certain Collateral. The Company shall deliver to the Secured Party or its agent such instruments or other items constituting

Collateral only to the extent required under applicable law to perfect the Secured Party’s security interest therein. For the avoidance

of doubt, (a) the Company shall not be required to deliver possession of equipment, inventory, books and records, or other operational

assets in the ordinary course of business, and (b) except upon the occurrence and during the continuance of an Event of Default, the

Company shall retain possession and control of the Collateral and shall be entitled to use, operate, and dispose of such Collateral in

accordance with the terms of this Agreement, the Note, and the Asset Purchase Agreement. Any delivery of Collateral pursuant to this

Section shall be made together with such endorsements or instruments of assignment as are reasonably necessary to effectuate such delivery

and perfection, in form and substance reasonably acceptable to the Company and the Secured Party.

Representations, Warranties, Covenants, and Agreements of the Company. Except as set forth under the corresponding section of

the disclosure schedules delivered to the Secured Party concurrently herewith (the “Disclosure Schedules”), which

Disclosure Schedules shall be deemed a part hereof, the Company represents and warrants to, and covenants and agrees with, the Secured

Party as follows:

(a)

The Company has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement

and otherwise to carry out its obligations hereunder. The execution, delivery, and performance by the Company of this Agreement and the

filings contemplated therein have been duly authorized by all necessary action on the part of the Company and no further action is required

by the Company. This Agreement has been duly executed by the Company. This Agreement constitutes the legal, valid, and binding obligation

of the Company, enforceable against the Company in accordance with its terms except as such enforceability may be limited by applicable

bankruptcy, insolvency, reorganization, and similar laws of general application relating to or affecting the rights and remedies of creditors

and by general principles of equity.

(b)

The Company has no place of business or offices where their respective books of account and records are kept (other than temporarily

at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A

attached hereto. Except as specifically set forth on Schedule A, the Company is the record owner of the real property where such

Collateral is located, and there exist no mortgages or other liens on any such real property except for Liens as set forth on Schedule

A. Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee, bailee, warehouseman,

agent, or processor.

(c)

Except as set forth on Schedule B attached hereto, the Company is the sole owner of the Collateral (except for non-exclusive licenses

granted by the Company in the ordinary course of business), free and clear of any liens, security interests, encumbrances, rights, or

claims, and are fully authorized to grant the Security Interests. Except as set forth on Schedule C attached hereto, there is

not on file in any governmental or regulatory authority, agency or recording office an effective financing statement, security agreement,

license or transfer or any notice of any of the foregoing (other than those that will be filed in favor of the Secured Party pursuant

to this Agreement) covering or affecting any of the Collateral. Except as set forth on Schedule C attached hereto and except pursuant

to this Agreement, Permitted Liens, and liens permitted under the Note or Asset Purchase Agreement, as long as this Agreement shall be

in effect, the Company shall not execute and shall not knowingly permit to be on file in any such office or agency any other financing

statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Party pursuant to the terms

of this Agreement). For the avoidance of doubt, the Collateral does not include any assets or claims retained by Seller and listed on

Schedule I.

(d)

No written claim has been received that any Collateral or the Company’s use of any Collateral violates the rights of any third

party. There has been no adverse decision to the Company’s claim of ownership rights in or exclusive rights to use the Collateral

in any jurisdiction or to the Company’s right to keep and maintain such Collateral in full force and effect, and there is no proceeding

involving said rights pending or, to the best knowledge of the Company, threatened before any court, judicial body, administrative or

regulatory agency, arbitrator, or other governmental authority.

(e)

The Company shall at all times maintain its books of account and records relating to the Collateral at its principal place of business

and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records

or tangible Collateral unless it delivers to the Secured Party at least thirty (30) days prior to such relocation (i) written notice

of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing

statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken to perfect the Security

Interests to create in favor of the Secured Party a valid, perfected and continuing perfected first priority lien in the Collateral.

(f)

This Agreement creates in favor of the Secured Party a valid security interest in the Collateral, securing the payment and performance

of the Obligations. Upon the filing of UCC financing statements as contemplated herein, such security interest shall be perfected to

the extent required under applicable law. Except for the filing of UCC financing statements, no additional actions shall be required

to create, perfect, or maintain the Security Interests, except to the extent reasonably requested by the Secured Party and consistent

with market practice for similarly situated transactions. Without limiting the foregoing, the Company shall not be required to (i) enter

into deposit account control agreements, (ii) deliver control agreements with respect to investment property, or (iii) record security

interests with respect to Intellectual Property, in each case unless otherwise agreed in writing.

(g)

The Company hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests,

with the proper filing and recording agencies in any jurisdiction deemed proper by it.

(h)

The execution, delivery and performance of this Agreement by the Company does not (i) violate any of the provisions of any Organizational

Documents of the Company or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable law,

rule or regulation applicable to the Company or (ii) conflict with, or constitute a default (or an event that with notice or lapse of

time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with

or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Company’s

debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or

affected. If any, all required consents (including, without limitation, from stockholders or creditors of the Company) necessary for

the Company to enter into and perform its obligations hereunder have been obtained.

(i)

[Reserved].

(j)

[Reserved].

(k)

The Company shall at all times maintain the liens and Security Interests provided for hereunder as valid and perfected, first priority

liens and security interests in the Collateral in favor of the Secured Party until this Agreement and the Security Interest hereunder

shall be terminated pursuant to Section 14 hereof. The Company hereby agrees to defend the same against the claims of any and all persons

and entities. The Company shall safeguard and protect all Collateral for the account of the Secured Party. At the request of the Agent,

the Company will sign and deliver to the Agent on behalf of the Secured Party at any time or from time to time one or more financing

statements pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices

wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein.

Without limiting the generality of the foregoing, the Company shall pay all fees, taxes, and other amounts necessary to maintain the

Collateral and the Security Interests hereunder, and the Company shall obtain and furnish to the Agent from time to time, upon demand,

such releases and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.

(l)

The Company will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for

non-exclusive licenses granted by the Company in its ordinary course of business, sales of inventory by the Company in its ordinary course

of business and the replacement of worn-out or obsolete equipment by the Company in its ordinary course of business) without the prior

written consent of a Majority in Interest, except for dispositions in the ordinary course of business or as permitted under the Note

or Asset Purchase Agreement.

(m)

The Company shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and shall

not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

(n)

The Company shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral

hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established reputation

having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances by other such

entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover the full replacement

cost thereof. The Company shall cause each insurance policy issued in connection herewith to provide, and the insurer issuing such policy

to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional insured under each such insurance policy;

(b) if such insurance be proposed to be cancelled or materially changed for any reason whatsoever, such insurer will promptly notify

the Agent and such cancellation or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent

of such notice, unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the

right (but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from the

insurer of such default. If no Event of Default (as defined in the Note) exists and if the proceeds arising out of any claim or series

of related claims do not exceed $100,000, loss payments in each instance will be applied by the applicable The Company to the repair

and/or replacement of property with respect to which the loss was incurred to the extent reasonably feasible, and any loss payments or

the balance thereof remaining, to the extent not so applied, shall be payable to the applicable The Company; provided, however,

that payments received by the Company after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence

or series of related occurrences shall be paid to the Agent on behalf of the Secured Party and, if received by the Company, shall be

held in trust for the Secured Party and immediately paid over to the Agent unless otherwise directed in writing by the Agent. Copies

of such policies or the related certificates, in each case, naming the Agent as lender loss payee and additional insured shall be delivered

to the Agent at least annually and at the time any new policy of insurance is issued.

(o)

The Company shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Party promptly, in sufficient detail, of any

material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect on the value

of the Collateral or on the Secured Party’ security interest, through the Agent, therein.

(p)

The Company shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing

statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time

request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Party’ security interest in the

Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with respect to

the Company’s Intellectual Property (“Intellectual Property Security Agreement”) in which the Secured Party

have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual Property

Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions hereof.

(q)

Upon reasonable prior notice (so long as no Event of Default has occurred or continuing, which in either such event, no prior notice

is required), the Company shall permit the Agent and its representatives and agents to inspect the Collateral no more than once per year

(unless an Event of Default exists) during normal business hours and to make copies of records pertaining to the Collateral as may be

reasonably requested by the Agent from time to time.

(r)

The Company shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce, and collect any rights, claims,

causes of action and accounts receivable in respect of the Collateral.

(s)

The Company shall promptly notify the Secured Party in sufficient detail upon becoming aware of any attachment, garnishment, execution,

or other legal process levied against any Collateral and of any other information received by the Company that may materially affect

the value of the Collateral, the Security Interest or the rights and remedies of the Secured Party hereunder.

(t)

All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Company with respect to the Collateral

is accurate and complete in all material respects as of the date furnished.

(u)

The Company shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any

rights and franchises material to its business.

(v)

The Company will not change its name, type of organization, jurisdiction of organization, organizational identification number (if it

has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least thirty (30) days prior

written notice to the Secured Party of such change and, at the time of such written notification, the Company provides any financing

statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this

Agreement.

(w)

Except in the ordinary course of business, the Company may not consign any of its inventory or sell any of its inventory on bill and

hold, sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably

withheld.

(x)

[Reserved].

(y)

The Company was organized and remains organized solely under the laws of the state set forth next to the Company’s name in Schedule

D attached hereto, which Schedule D sets forth the Company’s organizational identification number or, if the Company

does not have one, states that one does not exist.

(z)

(i) The actual name of the Company is the name set forth in Schedule D attached hereto; (ii) the Company has no other trade names

except as set forth on Schedule E attached hereto; (iii) the Company has not used any name other than that stated in the preamble

hereto or as set forth on Schedule E for the preceding five (5) years; and (iv) no entity has merged into the Company or been

acquired by the Company within the past five years except as set forth on Schedule E.

(aa)

[Reserved].

(bb)

The Company, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the Pledged

Interests consistent with the terms of this Agreement without the further consent of the Company as contemplated by Section 8-106 (or

any successor section) of the UCC. Further, the Company agrees that it shall not enter into a similar agreement (or one that would confer

“control” within the meaning of Article 8 of the UCC) with any other person or entity.

(cc)

[Reserved].

(dd)

[Reserved].

(ee)

[Reserved].

(ff)

To the extent that any Collateral is in the possession of any third party, the applicable The Company shall join with the Agent in notifying

such third party of the Secured Party’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement

and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

(gg)

[Reserved].

(hh)

The Company shall immediately provide written notice to the Secured Party of any and all accounts which arise out of contracts with any

governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests in such accounts

and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate with the Agent in

taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar federal, state or local statute

or rule to perfect or continue the perfected status of the Security Interests in such accounts and proceeds thereof.

(ii)

[Reserved].

(jj)

Without limiting the generality of the other obligations of the Company hereunder, the Company shall promptly (i) cause to be registered

at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with respect

to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office to be duly

recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license) or creates

any additional material Intellectual Property.

(kk)

The Company will from time to time, at the joint and several expense of the Company, promptly execute and deliver all such further instruments

and documents, and take all such further action as may be necessary or desirable, or as the Agent may reasonably request, in order to

perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce

their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

(ll)

Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,

and domain names owned, directly or indirectly, by the Company as of the date hereof. Schedule F lists all material licenses in

favor of the Company for the use of any patents, trademarks, copyrights, and domain names as of the date hereof. All material patents

and trademarks of the Company have been duly recorded at the United States Patent and Trademark Office and all material copyrights of

the Company have been duly recorded at the United States Copyright Office.

(mm)

Except as set forth on Schedule G attached hereto, none of the Company or other persons or entities obligated on any of the Collateral

is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state, or local statute or rule in

respect of such Collateral.

Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership

interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon

the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets of the

issuer), it is agreed by The Company that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement

of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights notwithstanding

any provisions in the Organizational Documents or agreements to which the Company is subject or to which the Company is party.

Defaults. The following events shall be “Events of Default”:

(a)

The occurrence of an Event of Default (as defined in the Note) under the Note;

(b)

Any representation or warranty of the Company in this Agreement shall prove to have been incorrect in any material respect when made;

(c)

The failure by the Company to observe or perform any of its obligations hereunder for thirty (30) days after delivery to the Company

of notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such time

frame and the Company is using best efforts to cure same in a timely fashion; or

(d)

If any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability

thereof shall be contested by the Company, or a proceeding shall be commenced by the Company, or by any governmental authority having

jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof, or the Company shall deny that the Company

has any liability or obligation purported to be created under this Agreement.

Duty to Hold in Trust.

(a)

Upon the occurrence of any Event of Default and at any time thereafter, the Company shall, upon receipt of any revenue, income, dividend,

interest or other sums subject to the Security Interests, whether payable pursuant to the Note or otherwise, or of any check, draft,

note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Party

and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured Party, pro-rata in proportion to their

respective then-currently outstanding principal amount of the Note for application to the satisfaction of the Obligations (and if the

Note is not outstanding, pro-rata in proportion to the initial purchases of the Note).

Rights and Remedies Upon Default.

(a)

Upon the occurrence of any Event of Default and at any time thereafter, the Secured Party, acting through the Agent, shall have the right

to exercise all of the remedies conferred hereunder and under the Note, and the Secured Party shall have all the rights and remedies

of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Party, shall have the following rights

and powers:

(i)

The Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any

person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and the Company shall assemble

the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at the Company’s premises

or elsewhere, and make available to the Agent, without rent, all of the Company’s respective premises and facilities for the purpose

of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

(ii)

Upon notice to the Company by Agent, all rights of the Company to exercise the voting and other consensual rights which it would otherwise

be entitled to exercise and all rights of the Company to receive the dividends and interest which it would otherwise be authorized to

receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Party, any interest,

cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s discretion all voting

rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right (but not the obligation) to exercise

all rights with respect to the Collateral as it were the sole and absolute owner thereof, including, without limitation, to vote and/or

to exchange, at its sole discretion, any or all of the Collateral in connection with a merger, reorganization, consolidation, recapitalization

or other readjustment concerning or involving the Collateral or the Company or any of its direct or indirect subsidiaries.

(iii)

The Agent shall have the right to operate the business of the Company using the Collateral and shall have the right to assign, sell,

lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with or without

special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at such time or times

and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable, all without (except as

shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to the Company or right of redemption

of the Company, which are hereby expressly waived. Upon each such sale, lease, assignment or other transfer of Collateral, the Agent,

for the benefit of the Secured Party, may, unless prohibited by applicable law which cannot be waived, purchase all or any part of the

Collateral being sold, free from and discharged of all trusts, claims, right of redemption and equities of the Company, which are hereby

waived and released.

(iv)

The Agent shall have the right (but not the obligation) to notify any account the Company and any obligors under instruments or accounts

to make payments directly to the Agent, on behalf of the Secured Party, and to enforce the Company’ rights against such account

the Company and obligors.

(v)

The Agent, for the benefit of the Secured Party, may (but is not obligated to) direct any financial intermediary or any other person

or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Party, or its designee.

(vi)

The Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Company at the United

States Patent and Trademark Office and/or Copyright Office into the name of the Secured Party or any designee or any purchaser of any

Collateral.

(b)

The Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered

adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving any

warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Company will only be

credited with payments actually made by the purchaser. In addition, the Company waives (except as shall be required by applicable statute

and cannot be waived) any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Agent’s

rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession of

the Collateral and to exercise its rights and remedies with respect thereto.

(c)

For the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement

or applicable law, the Company hereby grants to the Agent, for the benefit of the Agent and the Secured Party, an irrevocable, nonexclusive

license (exercisable without payment of royalty or other compensation to the Company) to use, license or sublicense following an Event

of Default, any Intellectual Property now owned or hereafter acquired by the Company, and wherever the same may be located, and including

in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs

used for the compilation or printout thereof.

Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments

made on account of any insurance policy insuring any portion of the Collateral shall be applied in the following order:

first,

to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation,

any taxes, fees and other costs incurred in connection therewith) of the Collateral,

second,

to the reasonable attorneys’ fees and expenses incurred by the Agent in enforcing the Secured Party’ rights hereunder and

in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the

Secured Party (based on then-outstanding principal amounts of the Note at the time of any such determination), and

third,

to the payment of any other amounts required by applicable law, after which the Secured Party shall pay to the applicable the Company

any surplus proceeds.

The

Secured Party’s recourse shall be limited solely to the Collateral and the Obligations, and the Secured Party shall have no right

to seek or recover any deficiency judgment or other recourse against the Company, except to the extent expressly permitted under the

Note. The Company shall not be liable for any deficiency remaining after application of proceeds from the Collateral. No interest in

excess of the Interest Rate provided in the Note shall accrue on any alleged deficiency, and any provision to the contrary is hereby

deleted.

the extent permitted by applicable law, the Company waives all claims, damages, and demands against the Secured Party arising out of

the repossession, removal, retention, or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the

Secured Party as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

10.

[Reserved].

11.

Costs and Expenses. The Company agrees to pay all reasonable out-of-pocket fees, costs and expenses, subject to a cap to be agreed

upon, absent an Event of Default, incurred in connection with any filing required hereunder, including without limitation, any financing

statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto or any expenses

of any searches reasonably required by the Agent. The Company shall also pay all other claims and charges which in the reasonable opinion

of the Agent is reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security Interests therein. The Company

will also, upon demand, pay to the Agent the amount of any and all reasonable expenses, including the reasonable fees and expenses of

its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Party, may incur in connection with the creation,

perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration,

continuance, amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including

the reasonable fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Party,

and the Secured Party may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the

sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights

of the Secured Party under the Note. Until so paid, any fees payable hereunder shall be added to the principal amount of the Note and

shall bear interest at the Default Rate.

12.

Responsibility for Collateral. The Company assumes all liabilities and responsibility in connection with all Collateral, and the

Obligations shall in no way be affected or diminished by reason of the loss, destruction, damage, or theft of any of the Collateral or

its unavailability for any reason. Without limiting the generality of the foregoing and except as required by applicable law, (a) neither

the Agent nor any Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts in respect of the

Collateral or to preserve any rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral

for sale, and (b) the Company shall remain obligated and liable under each contract or agreement included in the Collateral to be observed

or performed by the Company thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability under any such

contract or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating

to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations of the

Company under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received

by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such

contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts

which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled at any time or times.

13.

Security Interests Absolute. All rights of the Secured Party and all obligations of the Company hereunder, shall be absolute and

unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into

in connection with the foregoing, or any portion hereof or thereof, against any other The Company; (b) any change in the time, manner

or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or

any consent to any departure from the Note or any other agreement entered into in connection with the foregoing; (c) any exchange, release

or no perfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral

for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Party to obtain, adjust,

settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any

other circumstance which might otherwise constitute any legal or equitable defense available to the Company, or a discharge of all or

any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the

Secured Party shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute

of limitations. The Company expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance.

In the event that at any time any transfer of any Collateral or any payment received by the Secured Party hereunder shall be deemed by

final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or

insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in any

such event, the Company’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied

by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance

with the terms and provisions hereof. The Company waives all right to require the Secured Party to proceed against any other person or

entity or to apply any Collateral which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy.

The Company waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.

14.

Term of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Note

have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities of

the Company contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative and

in full force and effect regardless of the termination of this Agreement.

15.

Power of Attorney; Further Assurances.

(a)

The Company authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns

with full power of substitution, as the Company’s true and lawful attorney-in-fact, with power, in the name of the Agent or the

Company, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any notes, checks, drafts, money orders

or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Collateral

that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight

or express bill, bill of lading, storage or warehouse receipts, drafts against the Company, assignments, verifications and notices in

connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests

or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv) to demand, collect, receipt for, compromise,

settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting

any Intellectual Property; and (vi) generally, at the option of the Agent, and at the expense of the Company, at any time, or from time

to time, to execute and deliver any and all documents and instruments and to do all acts and things which the Agent deems necessary to

protect, preserve and realize upon the Collateral and the Security Interests granted therein in order to effect the intent of this Agreement

and the Note all as fully and effectually as the Company might or could do; and the Company hereby ratifies all that said attorney shall

lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the

term of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall

be deemed to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which

the Company is subject or to which the Company is a party. Without limiting the generality of the foregoing, after the occurrence and

during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications for

or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United States

Patent and Trademark Office and the United States Copyright Office.

(b)

On a continuing basis, the Company will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing

and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C attached

hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably requested

by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and purposes of this Agreement,

or for assuring and confirming to the Agent the grant or perfection of a perfected security interest in all the Collateral under the

UCC.

(c)

The Company hereby irrevocably appoints the Agent as the Company’s attorney-in-fact, with full authority in the place and instead

of the Company and in the name of the Company, from time to time in the Agent’s discretion, to take any action and to execute any

instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its

sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without

the signature of the Company where permitted by law, which financing statements may (but need not) describe the Collateral as “all

assets” or “all personal property” or words of like import, and ratifies all such actions taken by the Agent. This

power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of

the Obligations shall be outstanding.

16.

Notices. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed given (a)

on the date established by the sender as having been delivered personally, (b) on the date delivered by a private overnight courier as

established by the sender by evidence obtained from the courier, (c) on the date sent by facsimile or other electronic transmission,

with confirmation of transmission, if sent during normal business hours of the recipient, if not, then on the next business day, or (d)

on the fifth (5th) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.

Such communications, to be valid, must be addressed as follows:

to the Company:

Cycurion,

Inc.

1640

Boro Place, Suite 420C

McLean,

VA 22102

E-mail:

[***]

Attention:

L. Kevin Kelly, Chief Executive Officer

with

a copy to:

Seward

& Kissel LLP

One

Battery Park Plaza

New

York, NY 10004

E-mail:

[***]

Attention:

Keith J. Billotti, Esq.

to the Secured Parties:

Kustom

Entertainment, Inc.

6366

College Blvd

Overland

Park, KS 66211

Email:

[***]

Attention:

Stanton E. Ross, Chairman, President and Chief Executive Officer

with

a copy to:

Sullivan

& Worcester LLP

1251

Avenue of the Americas

New

York, NY 10020

(212)

660-3060

Email:

[***]

Attention:

David E. Danovitch, Esq.; Joseph E. Segilia, Esq.

to such other address or to the attention of such person or persons as the recipient party has specified by prior written notice to the

sending party (or in the case of counsel, to such other readily ascertainable business address as such counsel may hereafter maintain).

If more than one method for sending notice as set forth above is used, the earliest notice date established as set forth above shall

control.

17.

Other Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the

guarantee, endorsement or property of any other person, firm, corporation, or other entity, then the Agent shall have the right, in its

sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying

or affecting any of the Secured Party’ rights and remedies hereunder.

18.

Appointment of Agent. The Secured Party hereby appoints itself to act as their agent (the “Agent”) for purposes

of exercising any and all rights and remedies of the Secured Party hereunder. Such appointment shall continue until revoked in writing

by a Majority-in-Interest, at which time a Majority in Interest shall appoint a new Agent, provided that the Agent may not be removed

as Agent unless it consents thereto. For so long as there is only a single Secured Party, such Secured Party shall act as Agent. The

Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.

19.

Miscellaneous.

(a)

No course of dealing between the Company and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part

of the Secured Party, any right, power, or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single

or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise

of any other right, power, or privilege.

(b)

All of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Note or by any

other agreements, instruments, or documents or by law shall be cumulative and may be exercised singly or concurrently.

(c)

This Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the

subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the

parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement may be

waived, modified, supplemented, or amended except in a written instrument signed, in the case of an amendment, by the Company and the

Secured Party or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.

(d)

If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,

void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force

and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts

to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,

covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining

terms, provisions, covenants, and restrictions without including any of such that may be hereafter declared invalid, illegal, void, or

unenforceable.

(e)

No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing

waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition, or requirement hereof, nor

shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

(f)

This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company

and the Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured

Party (other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person to whom such Secured

Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred Obligations,

by the provisions of this Agreement that apply to the “Secured Party.”

(g)

Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order

to carry out the provisions and purposes of this Agreement.

(h)

Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the

construction, validity, enforcement, and interpretation of this Agreement shall be governed by and construed and enforced in accordance

with the internal laws of the State of New York without regard to the principles of conflicts of law thereof. Except to the extent mandatorily

governed by the jurisdiction or situs where the Collateral is located, the Company agrees that all proceedings concerning the interpretations,

enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto or its

respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the

state and federal courts sitting in the state of New York. Except to the extent mandatorily governed by the jurisdiction or situs where

the Collateral is located, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting

in the state of New York, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated

hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally

subject to the jurisdiction of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal

service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified

mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement

and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall

be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives,

to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating

to this Agreement or the transactions contemplated hereby.

(i)

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all

of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission,

such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same

with the same force and effect as if such facsimile signature were the original thereof.

(j)

The Company shall solely be liable for the obligations of the Company to the Secured Party hereunder.

(k)

The Company shall indemnify, reimburse and hold harmless the Agent and the Secured Party and their respective partners, members, shareholders,

officers, directors, employees and agents (and any other persons with other titles that have similar functions) (collectively, “Indemnitees”)

from and against any and all losses, claims, liabilities, damages, penalties, suits, costs and expenses, of any kind or nature, (including

fees relating to the cost of investigating and defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee

in any way related to or arising from or alleged to arise from this Agreement or the Collateral, except any such losses, claims, liabilities,

damages, penalties, suits, costs and expenses which result from the gross negligence or willful misconduct of the Indemnitee as determined

by a final, nonappealable decision of a court of competent jurisdiction. This indemnification provision is in addition to, and not in

limitation of, any other indemnification provision in the Note, or any other agreement, instrument or other document executed or delivered

in connection herewith or therewith.

(l)

Nothing in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in the Company or any if

its direct or indirect subsidiaries that is a partnership or as a member in the Company or any of its direct or indirect subsidiaries

that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any partnership

agreement or limited liability company agreement, as applicable, of any the Company or any of its direct or indirect subsidiaries or

otherwise, unless and until any such Secured Party exercises its right to be substituted for the Company as a partner or member, as applicable,

pursuant hereto.

(m)

To the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,

approval or action of any partner or member, as applicable, of the Company or any direct or indirect subsidiary of the Company or compliance

with any provisions of any of the Organizational Documents, the Company hereby represent that all such consents and approvals have been

obtained.

[Signature

Page Follows]

WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

CYCURION,

INC.

By:

/s/

L. Kevin Kelly

Kevin Kelly

Chairman

and Chief Executive Officer

KUSTOM

ENTERTAINMENT, INC.

By:

/s/

Stanton E. Ross

Stanton

E. Ross

Chairman,

President and Chief Executive Officer

[Signature

Page to Security Agreement]

DISCLOSURE

SCHEDULES

Security

Agreement

The

following are the Disclosure Schedules (the “Disclosure Schedules”) referred to in that certain Security Agreement,

dated as of August 3, 2026 (the “Agreement”), by and between Cycurion, Inc., a Delaware corporation (the “Company”),

and Kustom Entertainment, Inc., a Nevada corporation (“Kustom Entertainment”), as the holder a Secured Promissory

Note dated August 3, 2026, in the original principal amount of $4,250,000.00 (the “Note”), by virtue of the Company

and the Secured Parties having entered into on August 3, 2026, and Kustom Entertainment’s endorsees, transferees, and assigns (collectively,

the “Secured Party”).

Schedules

Update - Video Solutions Asset Sale

Schedule

Subsidiaries

of the Company:

subsidiary of Kustom Entertainment is being transferred to Cycurion in connection with the transaction, and accordingly no Kustom Entertainment

subsidiary is a debtor under this Agreement.

Kustom

Entertainment (Video Solutions Collateral as of Closing):

Location

Description

Address

Notes

Principal

Office; Books and Records; Video Solutions Operations and Inventory Storage

6366

College Blvd, Overland Park, KS 66211

Leased

premises (approx. 5,119 sq ft) under Lease dated October 16, 2024 between THF College Boulevard, LLC (Landlord) and Kustom Entertainment,

Inc. (Tenant); three-year term commencing November 1, 2024 and expiring October 31, 2027. Office, fixed assets, books and records

of the Video Solutions Business; portion of Video Solutions inventory currently maintained at this location.

Off-Site

Warehouse Storage of Video Solutions Inventory

8201

East 23rd Street, Dock 19, Space 19G, Kansas City, MO 64129

Approximately

14,000 sq ft. Leased from Interstate Underground Warehouse and Industrial Park, Inc. (Missouri corporation). Currently month-to-month

following expiration of the initial term. Subject to a statutory warehouseman’s lien under Missouri law in favor of the landlord

(see Schedule B).

Other

than as set forth above (the statutory warehouseman’s lien at the Interstate Underground location), no Video Solutions Collateral

is held by any consignee, bailee, agent, or processor as of the date hereof. Kustom Entertainment, Inc. does not own real property.

Schedule

Ownership

Interest to Collateral

the knowledge of Kustom Entertainment, the Video Solutions Business assets being transferred to Cycurion at closing will be transferred

free and clear of any liens, security interests, encumbrances, or third-party rights, other than (i) Permitted Liens (including the item

disclosed below); and (ii) non-exclusive end-user software licenses granted to customers in the ordinary course of the Video Solutions

Business.

Disclosed

Permitted Liens / Statutory Liens:

Statutory

warehouseman’s lien under Missouri law in favor of Interstate Underground Warehouse and Industrial Park, Inc., 8201 East 23rd Street,

Kansas City, MO 64129, with respect to Video Solutions inventory stored at the leased premises (Lease Section 32). Lien arises in the

ordinary course as security for storage charges; not anticipated to be material; rent current.

Schedule

Filing

Jurisdictions – Delaware

Schedule

Legal

Names and Organizational Identification Numbers

Schedule

Mergers

and Acquisitions

be outlined in the Acquisition Agreement between Cycurion, Inc. and Kustom Entertainment, Inc.

Kustom

Entertainment, Inc. — Trade Names and Prior Names:

Kustom

Entertainment, Inc. (NASDAQ: KUST) was formerly known as Digital Ally, Inc. (NASDAQ: DGLY). The corporate name was changed from Digital

Ally, Inc. to Kustom Entertainment, Inc. effective January 8, 2026 pursuant to a Certificate of Amendment to the Company’s Articles

of Incorporation filed with the Secretary of State of the State of Nevada. The Nasdaq trading symbol changed from “DGLY”

to “KUST” on the same date.

Trade

names used in connection with the Company’s business segments include: “Digital Ally Video Solutions” (the segment

being transferred), “TicketSmarter,” “Kustom 440,” and “Country Stampede.”

Structure

of the Transaction:

The

transaction with Cycurion is structured as an asset sale. Kustom Entertainment, Inc. is selling the operating assets and liabilities

of the Video Solutions Business directly to Cycurion (or its designee) pursuant to the definitive Asset Purchase Agreement. No subsidiary

of Kustom Entertainment is being transferred, conveyed, merged, or otherwise included in the transaction. The asset transfer includes

inventory, accounts and subscription receivables, prepaid expenses, property, plant and equipment, intellectual property (patents, trademarks,

domain names, and licenses), customer contracts, and the deferred revenue and other operating liabilities associated with the Video Solutions

Business, as more particularly described in the Asset Purchase Agreement.

Schedule

F – Transferred Intellectual Property

1. Patents

The

patents listed below are the Patents included in the Transferred Intellectual Property and pledged under the Security Agreement (Schedule

F). They are recorded in the books of the Video Solutions Business at an aggregate capitalized cost of $224,851.08 and an aggregate

net book value of $22,998.83 as of March 31, 2026 (general ledger account 1480-000-01). The capitalized-cost records (25 grouped

entries) do not correspond one-to-one with the individual patents below, and many patents are fully amortized; the list below - not the

cost records - is the authoritative description of the patents being transferred. All are United States patents owned of record by Digital

Ally, Inc. (now Kustom Entertainment, Inc.). Bibliographic detail and status to be confirmed by Kustom Entertainment’s IP counsel

(Erise IP, P.A.) prior to execution and USPTO recordation.

Utility Patents

Patent

No.

Title

Priority

Issued

Status

12,328,528

Video

recording manager device and system for redundant mobile video recording

11/23/2023

6/10/2025

Active

12,300,082

Remote

video triggering and tagging

8/8/2018

5/13/2025

Active

12,160,688

System

for automatically triggering a recording

3/9/2017

12/3/2024

Active

12,154,345

Systems

and methods of legibly capturing vehicle markings

9/19/2016

11/26/2024

Active

12,151,623

Portable

video and imaging system

9/28/2012

11/26/2024

Active

12,136,436

Computer

program, method, and system for managing multiple data recording devices

8/14/2013

11/5/2024

Active

12,062,287

Tracking

and analysis of drivers within a fleet of vehicles

6/22/2015

8/13/2024

Active

11,950,017

Redundant

Mobile Video Recording

11/23/2023

4/2/2024

Active

11,817,130

Forensic

video recording with presence detection

8/14/2013

11/14/2023

Active

11,792,370

System

for automatically triggering a recording

3/9/2017

10/17/2023

Active

11,769,383

Remote

video triggering and tagging

8/8/2018

9/26/2023

Active

11,711,487

Comprehensive

video collection and storage

2/5/2016

7/25/2023

Active

11,667,251

Portable

video and imaging system

9/28/2012

6/6/2023

Active

11,651,594

Systems

and methods of legibly capturing vehicle markings

9/19/2016

5/16/2023

Active

11,532,334

Forensic

video recording with presence detection

8/14/2013

12/20/2022

Active

11,310,399

Portable

video and imaging system

9/28/2012

4/19/2022

Active

11,290,693

System

for automatically triggering a recording

3/9/2017

3/29/2022

Active

11,244,570

Tracking

and analysis of drivers within a fleet of vehicles

6/22/2015

2/8/2022

Active

11,024,137

Remote

video triggering and tagging

8/8/2018

6/1/2021

Active

11,007,942

Vehicle-mounted

video system with distributed processing

9/16/2005

5/18/2021

Active

10,964,351

Forensic

video recording with presence detection

8/14/2013

3/30/2021

Active

10,917,614

Multi-functional

remote monitoring system

10/30/2008

2/9/2021

Active

10,911,725

Systems

for automatically triggering a recording

3/9/2017

2/2/2021

Active

Patent

No.

Title

Priority

Issued

Status

10,904,474

Comprehensive

video collection and storage

2/5/2016

1/26/2021

Active

10,885,937

Computer

program, method, and system for managing multiple data recording devices

8/14/2013

1/5/2021

Active

10,860,866

Systems

and methods of legibly capturing vehicle markings

9/19/2016

12/8/2020

Active

10,757,378

DUAL

LENS CAMERA UNIT

8/14/2013

8/25/2020

Active

10,730,439

Vehicle-mounted

video system with distributed processing

9/16/2005

8/4/2020

Active

10,696,241

Mobile

video and imaging system

9/28/2012

6/30/2020

Active

10,521,675

SYSTEMS

AND METHODS OF LEGIBLY CAPTURING VEHICLE MARKINGS

9/19/2016

12/31/2019

Active

10,272,848

Mobile

video and imaging system

9/28/2012

4/30/2019

Active

10,271,015

Multi-functional

remote monitoring system

10/30/2008

4/23/2019

Active

10,257,396

Portable

video and imaging system

9/28/2012

4/9/2019

Active

10,075,681

DUAL

LENS CAMERA UNIT

8/14/2013

9/11/2018

Active

10,074,394

Computer

program, method, and system for managing multiple data recording devices

8/14/2013

9/11/2018

Active

10,013,883

Tracking

and analysis of drivers within a fleet of vehicles

6/22/2015

7/3/2018

Active

9,712,730

Portable

video and imaging system

9/28/2012

7/18/2017

Active

9,325,950

Vehicle-mounted

video system with distributed processing

9/16/2005

4/26/2016

Active

9,253,452

Computer

program, method, and system for managing multiple data recording devices

8/14/2013

2/2/2016

Active

9,237,262

Portable

video and imaging system

9/28/2012

1/12/2016

Active

9,159,371

Forensic

video recording with presence detection

8/14/2013

10/13/2015

Active

9,019,431

Portable

video and imaging system

9/28/2012

4/28/2015

Active

8,976,339

Traffic

scanning LIDAR

4/14/2010

3/10/2015

Active

8,781,292

Computer

program, method, and system for managing multiple data recording devices

8/14/2013

7/15/2014

Active

8,629,977

Traffic

scanning LIDAR

4/14/2010

1/14/2014

Active

8,520,069

Vehicle-mounted

video system with distributed processing

9/16/2005

8/27/2013

Active

8,503,972

Multi-functional

remote monitoring system

10/30/2008

8/6/2013

Active

7,371,021

Vibration

resistant camera for mounting to archery bow

8/5/2004

5/13/2008

Expired

Design Patents

Patent

No.

Title

Priority

Issued

Status

D715,347

Data

recording device

9/25/2013

10/14/2014

Active

D715,846

Data

recording device

9/25/2013

10/21/2014

Active

D746,888

Data

recording device

10/24/2014

1/5/2016

Active

D746,892

Data

recording device

10/24/2014

1/5/2016

Active

Trademarks

The

following U.S. trademark registrations are owned by Digital Ally, Inc. (now Kustom Entertainment, Inc.) and used in connection with the

Video Solutions Business:

Mark

Reg.

No.

Reg.

Date

Renewal

Class

Status

/ Next Action

CAPTURE

TRUTH

7337643

26-Mar-2024

26-Mar-2034

Declaration

of Use - 6 Year, 26-Mar-2030

CAPTURE

TRUTH and Design

5177126

04-Apr-2017

04-Apr-2027

Renewal, 04-Apr-2027

DIGITAL

ALLY

3766107

30-Mar-2010

30-Mar-2030

Renewal, 30-Mar-2030

DIGITAL

ALLY

3325411

30-Oct-2007

30-Oct-2027

Renewal, 30-Oct-2027

DIGITAL

ALLY and Design

5161921

14-Mar-2017

14-Mar-2027

09,

Renewal, 14-Mar-2027

DIGITAL-ALLY

(stylized)

5285280

12-Sep-2017

12-Sep-2027

09,

Renewal, 12-Sep-2027

ECA

5087035

22-Nov-2016

22-Nov-2036

Renewal, 22-Nov-2036

EVIDENCE

CAPTURE ASSURANCE

5087034

22-Nov-2016

22-Nov-2036

Renewal, 22-Nov-2036

EVO-HD

6629546

25-Jan-2022

25-Jan-2032

09,

Declaration

of Use - 6 Year, 25-Jan-2028

FIRSTVU

7558146

05-Nov-2024

05-Nov-2034

Declaration

of Use - 6 Year, 05-Nov-2030

LOGO

(Shield Design)

5285282

12-Sep-2017

12-Sep-2027

09,

Renewal, 12-Sep-2027

VOICEVAULT

3986346

28-Jun-2011

28-Jun-2031

Renewal, 28-Jun-2031

VuLink

4668370

06-Jan-2015

06-Jan-2035

Renewal, 06-Jan-2035

VUSCHOOLS

5287624

12-Sep-2017

12-Sep-2027

First

Renewal, 12-Sep-2027

All

marks are registered with the United States Patent and Trademark Office (USPTO) in the name of Digital Ally, Inc. Trademark assignment

recordation will be filed with the USPTO in connection with the closing.

Domain Names

digitalallyinc.com

digitalally.com

Copyrights

None

separately registered. Software code and product documentation owned by the Video Solutions Business are protected as unregistered copyrights

and trade secrets.

Schedule

The

Company

NONE

Schedule

Pledged

Securities

All

of the equity held by the Company in its Video Solutions Business subsidiary, as set forth below, which equity constitutes 100% of the

equity of each such subsidiary:

NONE

Schedule

I - Excluded Litigation and Retained Claims

ANNEX

SECURITY

AGREEMENT

THE

AGENT

Appointment. The Secured Party (all capitalized terms used herein and not otherwise defined shall have the respective meanings

provided in the Security Agreement to which this Annex B is attached (the “Agreement”)), by their acceptance of the

benefits of the Agreement, hereby designate Tom Heckman (the “Agent”) as the Agent to act as specified herein and

in the Agreement. The Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions

of the Agreement and the Notes and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated

to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may

perform any of its duties hereunder by or through its agents or employees.

Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.

Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action

taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence

of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct

as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent shall

be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Transaction Document a fiduciary

relationship in respect of the Company or any Secured Party; and nothing in the Agreement or any other Transaction Document, expressed

or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or any other

Transaction Document except as expressly set forth herein and therein.

Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate,

has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Company and its

subsidiaries in connection with such Secured Party’s investment in the Company, the creation and continuance of the Obligations,

the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii)

its own appraisal of the creditworthiness of the Company and its subsidiaries, and of the value of the Collateral from time to time,

and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured Party with any

credit, market or other information with respect thereto, whether coming into its possession before any Obligations are incurred or at

any time or times thereafter. The Agent shall not be responsible to the Company or any Secured Party for any recitals, statements, information,

representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for the execution,

effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of the Agreement or any other

Transaction Document, or for the financial condition of the Company or the value of any of the Collateral, or be required to make any

inquiry concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement or any other Transaction

Document, or the financial condition of the Company, or the value of any of the Collateral, or the existence or possible existence of

any default or Event of Default under the Agreement, the Notes or any of the other Transaction Documents.

Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all

of the Secured Party. To the extent practical, the Agent shall request instructions from the Secured Party with respect to any material

act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and shall be entitled to

act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions are not provided despite

the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such action is

taken, shall be entitled to appropriate indemnification from the Secured Party in respect of actions to be taken by the Agent; and the

Agent shall not incur liability to any person or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured Party

shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance

with the terms of the Agreement or any other Transaction Document, and the Company shall have no right to question or challenge the authority

of, or the instructions given to, the Agent pursuant to the foregoing and (b) the Agent shall not be required to take any action which

the Agent believes (i) could reasonably be expected to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction

Documents or applicable law.

Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,

statement, certificate, telex, teletype or facsimile, cablegram, radiogram, order or other document or telephone message signed, sent

or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Transaction

Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and

the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding,

the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Company or

is cared for, protected, or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or lawfully

created, perfected, or enforced or are entitled to any particular priority.

Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Company, the Secured Party will

jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes,

from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements

of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder

or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other Transaction

Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have

resulted solely from the Agent’s own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the

Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent

for costs and expenses associated with taking such action.

Resignation by the Agent.

(a)

The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents at

any time by giving thirty (30) days’ prior written notice (as provided in the Agreement) to the Company and the Secured Party.

Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

(b)

Upon any such notice of resignation, the Secured Party, acting by a Majority in Interest, shall appoint a successor Agent hereunder.

(c)

If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who shall

serve as Agent until such time, if any, as the Secured Party appoint a successor Agent as provided above. If a successor Agent has not

been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead the Company and

the Secured Party in a proceeding for the appointment of a successor Agent, and all fees, including, but not limited to, extraordinary

fees associated with the filing of interpleader and expenses associated therewith, shall be payable by the Company on demand.

Rights with respect to Collateral. Each Secured Party agrees with all other Secured Party and the Agent (i) that it shall

not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other

agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any of the other

Secured Party in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement)

and (ii) that such Secured Party has no other rights with respect to the Collateral other than as set forth in this Agreement and the

other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall

thereupon succeed to and become vested with all the rights, powers, privileges, and duties of the retiring Agent and the retiring Agent

shall be discharged from its duties and obligations under the Agreement. After any retiring Agent’s resignation or removal hereunder

as Agent, the provisions of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be

taken by it while it was Agent.

EX-10.3

Filename: ex10-3.htm · Sequence: 4

Exhibit 10.3

REGISTRATION

RIGHTS AGREEMENT

REGISTRATION

RIGHTS AGREEMENT (this “Agreement”), dated as of August 3, 2026 (the “Execution Date”), is entered

into by and between Cycurion, Inc., a Delaware corporation (the “Company”), and Kustom Entertainment, Inc. (together

with its permitted assigns, “KUST”). Capitalized terms used herein and not otherwise defined herein shall have the

respective meanings set forth in that certain Asset Purchase Agreement, dated as of June 24, 2026, by and between the parties hereto,

as amended by that certain Amendment No. 1 and Forbearance / Extension Agreement dated July 23, 2026, and as may be further amended,

restated, supplemented, or otherwise modified from time to time (collectively, the “Asset Purchase Agreement”).

WHEREAS:

The

Company and KUST have mutually agreed, upon the terms and subject to the conditions of an Asset Purchase Agreement and, to induce KUST

to enter into the Asset Purchase Agreement and Amendment No. 1 and Forbearance / Extension Agreement to Asset Purchase Agreement, pursuant

to which the Company agreed to issue to KUST shares of the Company’s Series H Preferred Stock having an aggregate stated value

of $600,000 (the “Series H Preferred Stock”), the Company has agreed to provide certain registration rights under

the Securities Act of 1933 (the “Securities Act”), and applicable state securities laws.

NOW,

THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the Company and KUST hereby agree as follows:

1. DEFINITIONS.

used in this Agreement, the following terms shall have the following meanings:

a. “Person”

means any individual or entity, including, but not limited to, any corporation, limited liability company, association, partnership,

organization, business, individual, governmental or political subdivision thereof, or governmental agency.

b. “Register,”

“Registered,” and “Registration” refer to a registration effected by preparing and filing with

the United States Securities and Exchange Commission (the “SEC”) of one or more registration statements of the Company

in compliance with the Securities Act and/or pursuant to Rule 415 under the Securities Act or any successor rule providing for the offering

of securities on a delayed and continuous basis (“Rule 415”), and the such registration statement(s) taking effect

under the Securities Act .

c. “Registrable

Securities” means all of (i) the shares of Common Stock issued or issuable upon conversion of the Series H Preferred Stock

issued pursuant to the Asset Purchase Agreement and Amendment No. 1 and Forbearance / Extension Agreement thereto, (ii) all shares of

Common Stock issued or issuable as payment of dividends on the Series H Preferred Stock, (iii) any additional shares of Common Stock

issued or issuable pursuant to the Asset Purchase Agreement, and (iv) any and all shares of capital stock issued or issuable with respect

to the foregoing securities as a result of any stock split, combination, stock dividend, recapitalization, exchange, reclassification

or similar event.

d. “Registration

Statement” means one or more registration statements of the Company on covering the resale of the Registrable Securities including

the Initial Registration Statement and any New Registration Statement or Other Registration Statement (each as defined herein).

2. REGISTRATION.

a. Mandatory

Registration. The Company shall, by the date that is sixty (60) calendar days following the Execution Date, file with the SEC an

initial Registration Statement on Form S-1 or Form S-3 (to the extent the Company is eligible to use such form) covering the maximum

number of Registrable Securities as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations, and

interpretations so as to permit the resale of such Registrable Securities by KUST, including, but not limited to, under Rule 415 at then-prevailing

market prices (and not fixed prices) (the “Initial Registration Statement”). The Initial Registration Statement shall

register only Registrable Securities. The Company shall use its reasonable best efforts to have the Initial Registration Statement and

any amendment thereto declared effective by the SEC at the earliest possible date, but in no event later than ninety (90) calendar days

following the Execution Date.

b. Rule

424 Prospectus. In addition to the Initial Registration Statement, the Company shall, as required by applicable securities regulations,

from time to time file with the SEC, pursuant to Rule 424 promulgated under the Securities Act, such prospectuses and prospectus supplements,

if any, to be used in connection with sales of the Registrable Securities under each Registration Statement. KUST and its counsel shall

have a reasonable opportunity to review and comment upon such prospectuses prior to its filing with the SEC, and the Company shall give

due consideration to all such comments. KUST shall use its reasonable best efforts to comment upon any prospectus within two (2) business

days from the date KUST receives the final pre-filing version of such prospectus.

c. Sufficient

Number of Shares Registered. In the event the number of shares available under the Initial Registration Statement is insufficient

to cover all of the Registrable Securities, the Company shall amend the Initial Registration Statement or file a new Registration Statement

(a “New Registration Statement”) so as to cover all of such Registrable Securities (subject to the limitations set

forth in Section 2.e.) as soon as practicable, but in any event not later than ten (10) business days after the necessity therefor

arises, subject to any limits that may be imposed by the SEC pursuant to Rule 415. The Company shall use its reasonable best efforts

to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof. In

the event that any of the Registrable Securities are not included in the Initial Registration Statement, or have not been included in

any New Registration Statement, and the Company files any other registration statement under the Securities Act (other than on Form S-4,

Form S-8, or with respect to other employee related plans or rights offerings), then the Company shall use its reasonable best efforts

to also include in such other registration statement such Registrable Securities that have not been previously Registered (such other

registration statement that Registers Registrable Securities, an “Other Registration Statement”).

d. Effectiveness.

KUST and its counsel shall have a reasonable opportunity to review and comment upon any Registration Statement and any amendment or supplement

to such Registration Statement and any related prospectus prior to its filing with the SEC, and the Company shall give due consideration

to all reasonable comments. KUST shall furnish all information reasonably requested by the Company for inclusion therein. The Company

shall use its reasonable best efforts to keep all Registration Statements effective, including, but not limited to, pursuant to Rule

415 and available for the resale by KUST of all of the Registrable Securities covered thereby at all times until the earlier of:

(i) the

date as of which KUST may sell all of the Registrable Securities without any restrictions (including without volume or manner-of-sale

restrictions) under Rule 144 or any other similar rule or regulation of the SEC (“Rule 144”); and

(ii) the

date on which KUST shall have sold all the Registrable Securities covered thereby and no Registrable Securities remain issuable under

the Asset Purchase Agreement (the “Registration Period”).

the event that any Registration Statement filed hereunder is no longer effective and Rule 144 is available for sales of the Registrable

Securities, the Company shall provide an opinion upon request of KUST that KUST may sell any such Registrable Securities held by KUST

pursuant to Rule 144 with all costs related to such opinion to be borne by the Company. Each Registration Statement (including any amendments

or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state

a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they

were made, not misleading.

e. Offering.

If the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement

filed pursuant to this Agreement as constituting an offering of securities that does not permit such Registration Statement to become

or remain effective and be used for resales by KUST under Rule 415 at then-prevailing market prices (and not fixed prices), or, if after

the filing of the Initial Registration Statement with the SEC pursuant to Section 2.a., the Company is otherwise required by the

Staff or the SEC to reduce the number of Registrable Securities included in such initial Registration Statement, then the Company shall

reduce the number of Registrable Securities to be included in such Initial Registration Statement (with the prior consent, which shall

not be unreasonably withheld, delayed, or denied of KUST and its legal counsel as to the specific Registrable Securities to be removed

therefrom) until such time as the Staff and the SEC shall so permit such Registration Statement to become effective and be used as aforesaid.

In the event of any reduction in Registrable Securities pursuant to this paragraph, the Company shall file one or more New Registration

Statements in accordance with Section 2.c. until such time as all Registrable Securities have been included in Registration Statements

that have been declared effective and the prospectuses contained therein are available for use by KUST. Notwithstanding any provision

herein or in the Asset Purchase Agreement to the contrary, the Company’s obligations to register Registrable Securities (and any

related conditions to KUST’s obligations) shall be qualified as necessary to comport with any requirement of the SEC or the Staff

as addressed in this Section 2.e.. Notwithstanding the foregoing, the Company shall not be responsible for any delays in effectiveness

caused by the SEC or the Staff.

f. Liquidated

Damages. If: (i) the Initial Registration Statement is not filed in accordance with Section 2(a) above (if the Company files the

Initial Registration Statement without affording KUST the opportunity to review (and, with respect to disclosure on KUST, to comment)

on the same as required by Section 3(b) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company

fails to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the SEC

pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever

is earlier) by the SEC that such Registration Statement will not be “reviewed” or will not be subject to further review,

or (iii) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the SEC in accordance

with Section 2.a. above, or (iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason

to remain continuously effective as to all Registrable Securities included in such Registration Statement, or KUST is otherwise not permitted

to utilize the prospectus therein to resell such Registrable Securities, for more than thirty (30) consecutive calendar days or more

than an aggregate of forty five (45) calendar days (which need not be consecutive calendar days) during any 12-month period (any such

failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iii), the date on which such

Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause

(iv) the date on which such thirty (30) or forty five (45) calendar day period, as applicable, is exceeded being referred to as “Event

Date”), then, in addition to any other rights KUST may have hereunder or under applicable law, on each such Event Date and

on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable

Event is cured or, if earlier, the Company shall pay to KUST an amount in cash, as partial liquidated damages and not as a penalty, equal

to the product of 0.0025 multiplied by the Maximum Commitment Amount; provided, however, that the Company shall not be

required to make any payments with respect to Registrable Securities which may be freely tradable pursuant to Rule 144 or any other exemption

from registration under the Securities Act. The parties agree that the maximum aggregate liquidated damages payable to KUST under this

Agreement shall be 12% of the Maximum Commitment Amount. If the Company fails to pay any partial liquidated damages pursuant to this

Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 12% per annum (or such lesser

maximum amount that is permitted to be paid by applicable law) to KUST, accruing daily from the date such partial liquidated damages

are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof

shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. Notwithstanding the foregoing, no liquidated

damages shall accrue for any delay caused by the action or inaction of KUST or its representatives. “Maximum Commitment Amount”

means the aggregate value of the Registrable Securities issued or issuable to KUST pursuant to the Asset Purchase Agreement and the Series

H Preferred Stock, as determined based on the fair market value thereof as of the Execution Date.

3. RELATED

OBLIGATIONS.

With

respect to a Registration Statement and whenever any Registrable Securities are to be Registered pursuant to Section 2, including

on any Other Registration Statement, the Company shall use its reasonable best efforts to effect the registration of the Registrable

Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following

obligations:

a. The

Company shall prepare and file with the SEC such amendments (including post-effective amendments on Form S-1 or Form S-3) and supplements

to any Registration Statement and any Other Registration Statement and the prospectus used in connection with such Registration Statement

and Other Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be

necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, comply with

the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration

Statement or applicable Other Registration Statement until such time as all of such Registrable Securities shall have been disposed of

in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.

b. The

Company shall permit KUST to review and comment upon each Registration Statement or any Other Registration Statement and all amendments

and supplements thereto at least two (2) business days prior to their filing with the SEC, and not file any document in a form that includes

disclosure relating specifically to KUST to which KUST reasonably objects; provided, however, that any delay in KUST or

its counsel review of the Registration Statement beyond the two (2) business day period shall extend the deadlines set forth in Section

2.a. of this Agreement by such delay period. KUST shall use its reasonable best efforts to comment upon the Registration Statement or

any Other Registration Statement and any amendments or supplements thereto within two (2) business days from the date KUST receives the

final version thereof. The Company shall furnish to KUST, without charge, and within one (1) business day, any comments and/or any other

correspondence from the SEC or the Staff to the Company or its representatives relating to the Registration Statement or any Other Registration

Statement. The Company shall respond to the SEC or the Staff, as applicable, regarding the resolution of any such comments and/or correspondence

as promptly as practicable and in any event within two weeks upon receipt thereof.

c. Upon

request of KUST, the Company shall furnish to KUST, (i) promptly after the same is prepared and filed with the SEC, at least one copy

of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated

therein by reference and all exhibits, (ii) upon the effectiveness of any Registration Statement, a copy of the prospectus included in

such Registration Statement and all amendments and supplements thereto (or such other number of copies as KUST may reasonably request),

and (iii) such other documents, including copies of any preliminary or final prospectus, as KUST may reasonably request from time to

time in order to facilitate the disposition of the Registrable Securities owned by KUST. For the avoidance of doubt, any filing available

to KUST via the SEC’s live EDGAR system shall be deemed “furnished to KUST” hereunder.

d. The

Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement

under such other securities of New York, Delaware, and such other jurisdictions in the United States as KUST reasonably requests and

is reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions, (ii) prepare and file in those

jurisdictions, such amendments (including post- effective amendments) and supplements to such registrations and qualifications as may

be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary

to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions

reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however,

that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction

where it would not otherwise be required to qualify but for this Section 3.d). (y) subject itself to general taxation in any such

jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify KUST who

holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or

qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in

the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

e. As

promptly as practicable after becoming aware of such event or facts, the Company shall notify KUST in writing of the happening of any

event or existence of such facts as a result of which the prospectus included in any Registration Statement, as then in effect, includes

an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements

therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to

such Registration Statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to KUST

(or such other number of copies as KUST may reasonably request). The Company shall also promptly notify KUST in writing (i) when a prospectus

or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment

thereto has become effective (notification of such effectiveness shall be delivered to KUST by e-mail or facsimile on the same day of

such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to any Registration Statement

or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment

to a Registration Statement would be appropriate.

f. The

Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration

statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or

suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify KUST of the

issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such

purpose. In addition, if the Company shall receive any comment letter from the SEC relating to any Registration Statement under which

Registrable Securities are Registered, the Company shall notify KUST of the issuance of such order and use its reasonable best efforts

to address such comments in a manner satisfactory to the SEC.

g. The

Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class

or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules

of such exchange or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market. The Company shall

pay all fees and expenses in connection with satisfying its obligation under this Section.

h. The

Company shall cooperate with KUST to facilitate the timely preparation and delivery of shares representing the Registrable Securities

in book-entry form through The Depository Trust Company’s Deposit/Withdrawal at Custodian system (“DWAC”), subject

to the Company’s transfer agent procedures, applicable law, and the terms of the Asset Purchase Agreement.

i. The

Company shall at all times maintain the services of its Transfer Agent and registrar with respect to its Common Stock.

j. If

reasonably requested by KUST, the Company shall (i) incorporate in a prospectus supplement or post-effective amendment such information

relating solely to KUST as KUST reasonably requests to be included therein with respect to the sale and distribution of the Registrable

Securities, including the number of Registrable Securities being sold and the purchase price and other terms of the offering, provided

that such information is accurate and complete in all material respects and complies with applicable law; (ii) make all required filings

of such prospectus supplement or post-effective amendment as soon as reasonably practicable following receipt of such information; and

(iii) supplement or amend any Registration Statement as may be reasonably necessary to reflect such information.

k. The

Company shall use its reasonable best efforts to cause the Registrable Securities covered by any Registration Statement to be registered

with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable

Securities.

l. Within

one (1) business day after any Registration Statement which includes Registrable Securities is declared effective by the SEC or otherwise

takes effect, or any prospectus supplement or post-effective amendment including Registrable Securities is filed with the SEC, the Company

shall deliver, and shall cause legal counsel for the Company to deliver, to the Transfer Agent for such Registrable Securities (with

copies to KUST) confirmation of the effectiveness of such Registration Statement in the form attached hereto as Exhibit A. Thereafter,

if requested by KUST at any time, the Company shall require its counsel to deliver to KUST a written confirmation whether or not (i)

the effectiveness of such Registration Statement has lapsed at any time for any reason (including, without limitation, the issuance of

a stop order), (ii) any comment letter has been issued by the SEC, and (iii) whether or not the Registration Statement is current and

available to KUST for sale of all of the Registrable Securities.

m. The

Company shall take all other reasonable actions necessary to expedite and facilitate disposition by KUST of Registrable Securities pursuant

to any Registration Statement.

4. OBLIGATIONS

OF KUST.

a. The

Company shall notify KUST in writing of the information the Company reasonably requires from KUST in connection with any Registration

Statement hereunder. KUST shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and

the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration

of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

Notwithstanding the foregoing, the Registration Statement shall contain the “Selling Stockholder” and “Plan of Distribution”

sections, each in substantially the form provided to the Company by KUST.

b. KUST

agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration

Statement hereunder.

c. KUST

agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in

Section 3(f) or the first sentence of Section 3(e), KUST will immediately discontinue disposition of Registrable Securities pursuant

to any Registration Statement covering such Registrable Securities until the withdrawal of any stop order contemplated by Section 3.f.

or KUST’s receipt of copies of a supplemented or amended prospectus as contemplated by Section 3.e. Notwithstanding the foregoing,

the Company shall use commercially reasonable efforts, subject to applicable securities laws and the procedures of its transfer agent,

to cause its transfer agent to issue shares of Common Stock in book-entry form through DWAC in respect of any sale of Registrable Securities

pursuant to a binding contract of sale entered into prior to KUST’s receipt of such notice and for which settlement has not yet

occurred.

5. EXPENSES

OF REGISTRATION.

All

reasonable Registration expenses, other than sales or brokerage commissions, incurred in connection with registrations, filings, or qualifications

pursuant to Sections 2 and 3, including, without limitation, all Company registration, listing and qualifications fees,

printers and accounting fees, and fees and disbursements of counsel for the Company (but not counsel for KUST) shall be paid by the Company.

6. INDEMNIFICATION.

a. To

the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend KUST, each Person, if any,

who controls or is under common control with KUST, the members, the directors, officers, partners, employees, agents, representatives

of KUST, and each Person, if any, who is an “affiliate” of KUST within the meaning of the Securities Act or the Exchange

Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties,

charges, costs, attorneys’ fees, amounts paid in settlement, or expenses, joint or several, (collectively, “Claims”)

incurred in investigating, preparing, or defending any action, claim, suit, inquiry, proceeding, investigation, or appeal taken from

the foregoing by or before any court or governmental, administrative, or other regulatory agency, body, or the SEC, whether pending or

threatened, whether or not an Indemnified Person is or may be a party thereto (“Indemnified Damages”), to which any

of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise

out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement, any Other

Registration Statement or any post-effective amendment thereto, or the omission or alleged omission to state a material fact required

to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement

of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement

thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein,

in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation

by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any

rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or any

Other Registration Statement, (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”).

The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable

legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding

anything to the contrary contained herein, the indemnification agreement contained in this Section 6.a.: (i) shall not apply to

a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information

about KUST furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of a Registration

Statement, any Other Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available

by the Company pursuant to Section 3.c. or Section 3.e.; (ii) with respect to any superseded prospectus, shall not inure

to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject

thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the

superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely

made available by the Company pursuant to Section 3.c. or Section 3.e., and the Indemnified Person was promptly advised

in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding

such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of KUST to deliver or to cause to be

delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section

3.c. or Section 3.e.; and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without

the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed, denied, or conditioned. Such indemnity

shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive

the transfer of the Registrable Securities by KUST pursuant to Section 9. The Company’s aggregate liability under this Section

6 shall not exceed the net proceeds that the Company receives from the issuance of the Registrable Securities.

b. KUST

agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors

and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act), and each of their

respective Affiliates, employees, directors, officers, trustees, agents, and Representatives (collectively, the “Company Indemnified

Parties”), from and against any Losses resulting from (i) any untrue statement or alleged untrue statement of a material fact contained

in any Registration Statement under which KUST’s Registrable Securities were registered under the Securities Act (including any

final, preliminary or summary prospectus contained therein or any amendment or supplement thereto or any documents incorporated by reference

therein, including any information deemed part of any prospectus pursuant to Rule 159 under the Securities Act), or (ii) any omission

or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading,

in each case to the extent, but only to the extent, that such untrue statement or omission is based upon information furnished in writing

by KUST to the Company specifically for inclusion in such Registration Statement (including, without limitation, any written information

provided for inclusion in the “Selling Stockholder” or “Plan of Distribution” sections) and was known by KUST

to be untrue or misleading at the time it was furnished.

c. Promptly

after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action or proceeding (including

any governmental action or proceeding) involving a Claim, such Indemnified Person shall, if a Claim in respect thereof is to be made

against the Company under this Section 6, deliver to the Company a written notice of the commencement thereof, and the Company

shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel

mutually satisfactory to the Company and to the Indemnified Person; provided, however, that an Indemnified Person shall

have the right to retain its own counsel with the fees and expenses to be paid by the Company, if, in the reasonable opinion of counsel

retained by the Company, the representation by such counsel of the Indemnified Person and the Company would be inappropriate due to actual

or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding.

The Indemnified Person shall cooperate fully with the Company in connection with any negotiation or defense of any such action or Claim

by the Company and shall furnish to the Company all information reasonably available to the Indemnified Person which relates to such

action or Claim. The indemnifying party shall keep the Indemnified Person fully apprised at all times as to the status of the defense

or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, Claim or proceeding

effectuated without its written consent; provided, however, that the Company shall not unreasonably withhold, delay or

condition its consent. The Company shall not, without the consent of the Indemnified Person, consent to entry of any judgment or enter

into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff

to such Indemnified Person of a release from all liability in respect to such Claim or litigation. Following indemnification as provided

for hereunder, the Company shall be subrogated to all rights of the Indemnified Person with respect to all third parties, firms or corporations

relating to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable

time of the commencement of any such action shall not relieve the Company of any liability to the Indemnified Person under this Section

6, except to the extent that the Company is prejudiced in its ability to defend such action.

d. The

indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation

or defense, as and when bills are received or Indemnified Damages are incurred.

e. The

indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Person against

the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7. CONTRIBUTION.

the extent any indemnification by the Company is prohibited or limited by law, the Company agrees to make the maximum contribution with

respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided,

however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f)

of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation,

and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such

seller from the sale of such Registrable Securities.

8. REPORTS

AND DISCLOSURE UNDER THE SECURITIES ACTS.

Notwithstanding

any other provision contained herein to the contrary, during such times that the Registration Statement is not available for resales

of Registrable Securities held by KUST, with a view to making available to KUST the benefits of Rule 144, the Company agrees, at the

Company’s sole expense, to:

a. make

and keep current public information available, as such term is understood and defined in Rule 144;

b. file

with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act;

c. furnish

to KUST so long as KUST owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied

with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent

annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information

as may be reasonably requested to permit KUST to sell such securities pursuant to Rule 144 without registration; and

d. take

such additional action as is reasonably requested by KUST to enable KUST to sell the Registrable Securities pursuant to Rule 144, including,

without limitation, delivering all such legal opinions, consents, certificates, resolutions, and instructions to the Company’s

Transfer Agent as may be requested from time to time by KUST at the Company’s expense and otherwise fully cooperate with KUST and

KUST’s broker to effect such sale of securities pursuant to Rule 144.

The

Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that

KUST shall, whether or not it is pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent

injunctions, without having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.

9. ASSIGNMENT

OF REGISTRATION RIGHTS.

The

Company may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of KUST, which

shall not be unreasonably withheld, conditioned, or delayed; provided, however, that the Company may assign this Agreement without such

consent to any successor entity in connection with a merger, consolidation, or sale of all or substantially all of its assets.

KUST

may not assign its rights or obligations under this Agreement without the prior written consent of the Company; provided, however, that

KUST may assign this Agreement, without consent, to any of its Affiliates, so long as such Affiliate agrees in writing to be bound by

the terms of this Agreement

10. AMENDMENT

OF REGISTRATION RIGHTS.

provision of this Agreement may be (i) amended other than by a written instrument signed by both parties hereto or (ii) waived other

than in a written instrument signed by the party against whom enforcement of such waiver is sought. Failure of any party to exercise

any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a

waiver thereof.

11. REPRESENTATIONS

AND WARRANTIES.

a. Due

Authorization. The Company has the requisite power and authority to enter into this Agreement and to perform and consummate the transactions

contemplated hereby and the execution and delivery by the Company of this Agreement and the performance and consummation of the transactions

contemplated hereby (i) are within the power and authority of the Company and (ii) have been duly authorized by all necessary action

of the Company. This Agreement has been duly and validly executed and delivered by the Company. Assuming the due authorization, execution,

and delivery by KUST of this Agreement, this Agreement constitutes a valid and binding obligation of the Company enforceable against

it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or

other similar laws relating to enforcement of creditors’ rights generally, and general equitable principles relating to the availability

of remedies and the public policy underlying such laws, and except as rights to indemnity or contribution, including but not limited

to, indemnification provisions set forth in Section 6 of this Agreement, may be limited by federal or state securities law or

the public policy underlying such laws. The Company’s Board of Directors, at a duly called meeting or by a written consent, has

unanimously adopted and approved this Agreement and the transactions contemplated hereby, and no other corporate actions on the part

of the Company are necessary in connection with the authorization, execution and delivery of this Agreement by the Company and the performance

by the Company of the transactions contemplated hereby.

b. No

Conflicts. The execution, delivery and performance of this Agreement by the Company and the performance by the Company, or the consummation,

of the transactions contemplated by this Agreement and the compliance by the Company with the terms of this Agreement do not and will

not conflict with or do not result and will not result in any breach or violation of any of the terms or provisions of, or do not constitute

or will not constitute a default under, do not cause or will not cause (or do not permit or will not permit) the maturation or acceleration

of any liability or obligation or the termination of any right under, or do not result in the creation or imposition of any lien, charge

or encumbrance upon, any property or assets of the Company pursuant to the terms of (i) the charter or bylaws or other applicable organizational

documents of the Company; (ii) any indenture, mortgage, deed of trust, voting trust agreement, stockholders’ agreement, note agreement

or other material agreement or instrument to which the Company is a party or by which it is bound or to which its respective property

is subject; or (iii) any law, statute, judgment, decree, order, rule or regulation applicable to the Company of any government, arbitrator,

court, regulatory body or administrative agency or other governmental agency or body, domestic or foreign, having jurisdiction over the

Company or its activities or properties.

c. Consents

and Approvals. No consent, approval, authorization, order, registration, notice, filing, license, recording, or qualification of

or with any court, government, or governmental agency or body, domestic or foreign, having jurisdiction (other than under the Securities

Act) over the Company or any of its Subsidiaries or any of their properties, is required for the execution and delivery by the Company

of this Agreement, the performance by the Company of its obligations hereunder and the consummation of the transactions contemplated

hereby.

Acknowledgment Regarding KUST’s Acquisition of Common Stock. The Company acknowledges and agrees that KUST is acting solely

in the capacity of an arm’s-length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company

further acknowledges that KUST is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect

to this Agreement and the transactions contemplated hereby, and that any advice given by KUST or any of its respective representatives

or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to KUST’s acquisition

of Common Stock. The Company further represents that its decision to enter into this Agreement has been based solely on the independent

evaluation of the transactions contemplated hereby by the Company and its representatives.

12. MISCELLANEOUS.

a. A

Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.

If the Company receives conflicting instructions, notices, or elections from two or more Persons with respect to the same Registrable

Securities, the Company shall act upon the basis of instructions, notice, or election received from the registered owner of such Registrable

Securities.

b. Any

notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing

and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by e-mail (provided

confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) business

day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the

same. The addresses for such communications shall be:

to the Company:

Cycurion,

Inc.

1640

Boro Place, Suite 420C

McLean,

VA, 22102

and/or

email address and/or to the attention of such other person as the recipient party has specified by written notice given to each other

party three (3) business days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of

such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s email account

containing the time, date, recipient email address, as applicable, and an image of the first page of such transmission, or (C) provided

by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by email or receipt

from a nationally recognized overnight delivery service in accordance with clause (i), (ii), or (iii) above, respectively.

c. All

questions concerning the construction, validity, enforcement, and interpretation of this Agreement shall be governed by the laws of the

State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York

or any other jurisdictions) that would cause the application of the laws of any other state.

d. Any

disputes, claims, or controversies hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein

shall be referred to and resolved solely and exclusively by binding arbitration to be conducted before the JAMS, or its successor pursuant

the expedited procedures set forth in the JAMS Comprehensive Arbitration Rules and Procedures (the “Rules”), including

Rules 16.1 and 16.2 of those Rules. The arbitration shall be held in New York, New York, before a tribunal consisting of three (3) arbitrators

each of whom will be selected in accordance with the “strike and rank” methodology set forth in Rule 15. Either party to

this Agreement may, without waiving any remedy under this Agreement, seek from any federal or state court sitting in the Borough of Manhattan

in the City of New York, State of New York, any interim or provisional relief that is necessary to protect the rights or property of

that party, pending the establishment of the arbitral tribunal. The costs and expenses of such arbitration shall be allocated by the

arbitrators based on the relative merits of the parties’ positions. The arbitrators’ decision must set forth a reasoned basis

for any award of damages or finding of liability. The arbitrators’ decision and award will be made and delivered as soon as reasonably

possible and in any case within sixty (60) days’ following the conclusion of the arbitration hearing and shall be final and binding

on the parties and may be entered by any court having jurisdiction thereof.

e. If

any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not

affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any

provision of this Agreement in any other jurisdiction.

f. TO

THE MAXIMUM PERMITTED BY LAW, EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR

THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED

HEREBY.

g. This

Agreement and the Asset Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter

hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein

and therein. This Agreement and the Asset Purchase Agreement supersede all prior agreements and understandings among the parties hereto

with respect to the subject matter hereof and thereof.

h. Subject

to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the successors and permitted

assigns of each of the parties hereto.

i. The

headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

j. This

Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one

and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission

or by e-mail in a “.pdf” format data file of a copy of this Agreement bearing the signature of the party so delivering this

Agreement.

k. Each

party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such

other agreements, certificates, instruments, and documents, as the other party may reasonably request in order to carry out the intent

and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

l. The

language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of

strict construction will be applied against any party.

m. This

Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the

benefit of, nor may any provision hereof be enforced by, any other Person.

WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the Execution Date.

CYCURION,

INC.

By:

/s/

L. Kevin Kelly

Name:

L. Kevin Kelly

Title:

Chief Executive Officer

KUSTOM

ENTERTAINMENT, INC.

By:

/s/

Stanton E. Ross

Name:

Stanton

E. Ross

Title:

Chief Executive Officer

EXHIBIT

REGISTRATION RIGHTS AGREEMENT

FORM

OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

[ ] [ ], 2026

Equiniti

Trust Company, LLC

Challenger Road, Floor 2

Ridgefield

Park, New Jersey 07660

Re:

EFFECTIVENESS OF REGISTRATION STATEMENT

Ladies

and Gentlemen:

are counsel to Cycurion, Inc., a Delaware corporation (the “Company”), and have represented the Company in connection

with that certain Asset Purchase Agreement, dated June 24, 2026, as amended by Amendment No. 1 and Forbearance / Extension Agreement

(collectively, the “Asset Purchase Agreement”), entered into by and between the Company and Kustom Entertainment,

Inc. (“KUST”), pursuant to which the Company agreed to issue to KUST shares of the Company’s Series H Preferred

Stock having an aggregate stated value of $600,000 (the “Series H Preferred Stock”). The Series H Preferred Stock

is convertible into shares of the Company’s Common Stock, $0.0001 par value per share (the “Common Stock”),

and accrues dividends that may be paid in shares of Common Stock in accordance with its terms. The shares of Common Stock issuable upon

conversion of the Series H Preferred Stock and payment of dividends thereon are referred to herein as the “Registered Shares.”

(1)

________ Registered Shares issuable upon conversion of the Series H Preferred Stock and payment of dividends thereon, consisting

of up to _____ shares of the Company’s Common Stock, in accordance with the Asset Purchase Agreement and the Certificate of Designation

of the Series H Preferred Stock.

Pursuant

to the Asset Purchase Agreement, the Company also has entered into a Registration Rights Agreement, of even date with the Asset Purchase

Agreement with KUST (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things,

to register the Registered Shares issuable upon conversion of and payment of dividends on the Series H Preferred Stock. In connection

with the Company’s obligations under the Asset Purchase Agreement and the Registration Rights Agreement, on [________ ] [ ],

2026, the Company filed a Registration Statement (File No. 333-[ ]) (the

“Registration Statement”) with the SEC relating to the resale of the Registered Shares and the Commitment Shares.

connection with the foregoing, we advise you that a member of the SEC’s staff has advised us by telephone that the Registration

Statement has taken effect under the Securities Act of 1933, as amended (the “Securities Act”) at [ ]

[A.M./P.M.] on [ ], 2026, and we have no knowledge, after telephonic inquiry

of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that

purpose are pending before, or threatened by, the SEC, and the Registered Shares issuable upon conversion of and payment of dividends

on the Series H Preferred Stock are available for resale under the Securities Act pursuant to the Registration Statement and may be issued

without any restrictive legend, subject to applicable securities laws and the terms of the Registration Statement.

Very

truly yours,

By:

cc:

Kustom

Entertainment, Inc.

EX-10.4

Filename: ex10-4.htm · Sequence: 5

Exhibit

10.4

SECOND

AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT

This

Second Amendment to Common Stock Purchase Agreement (this “Amendment”), dated as of August [__], 2026, is by and between

Kustom Entertainment, Inc., a Nevada corporation (the “Company”), and Yield Point NY LLC, a New York limited liability

company (the “Investor”). Except as otherwise defined herein, all capitalized terms shall have the meanings set forth

in the Common Stock Purchase Agreement, dated September 15, 2025, as amended, between the Company and the Investor (the “Purchase

Agreement”).

WHEREAS,

pursuant to Annex I of the Purchase Agreement (“Annex I”), ELOC Purchase Maximum Amount is defined as (A) such number

of shares of Common Stock equal to the lowest of: of (i) 75% of the average daily trading volume over the five (5) Trading Days before

the ELOC Purchase Exercise Date, (ii) 25% of the daily trading volume on the ELOC Purchase Exercise Date, and (iii) $600,000 divided

by the last closing price on the applicable ELOC Purchase Exercise Date, or (B) if the aggregate daily trading volume exceeds 1000% of

the initial ELOC Purchase Share Amount, then such number of shares of Common Stock equal to 600% of the number of shares of Common Stock

in (A).

WHEREAS,

the Purchase Agreement requires any amendment to be approved in writing by the Company and the Investor; and

WHEREAS,

the Company and the Investor desire to amend Annex I to the Purchase Agreement pursuant to the terms hereof.

NOW,

THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Amendment, and for good and valuable consideration the receipt

and adequacy of which are hereby acknowledged, the Investors and the Company hereby agree as follows:

The defined term ELOC Purchase Maximum Amount shall be amended and restated

in its entirety as follows: “ELOC Purchase Maximum Amount” means, with respect to a ELOC Purchase made

pursuant to Section 3.1, a number of shares equal to the Beneficial Ownership Limitation; provided however, if the Investor sells shares

of Common Stock during the ELOC Purchase Valuation Period, then the Company may direct the Investor to purchase additional shares of Common

Stock subject to the Beneficial Ownership Limitation.”

5. Effect

of Amendment. Except as expressly modified by this Amendment, the Purchase Agreement shall remain unmodified and in full force and

effect.

Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation

of this Amendment shall be determined in accordance with the internal laws of the State of New York, without regard to the principles

of conflicts of law thereof.

Counterparts. This Amendment may be executed in any number of counterparts, each of

which shall be deemed an original, and all of which together shall constitute one and the same instrument.

Electronic and Facsimile Signatures. Any signature page delivered electronically or

by facsimile (including without limitation transmission by .pdf) shall be binding to the same extent as an original signature page, with

regard to any agreement subject to the terms hereof or any amendment hereto.

Headings. The headings contained in this Amendment are for reference purposes only and

shall not affect in any way the meaning or interpretation of this Amendment.

[Remainder

of page intentionally left blank.]

WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first written above.

COMPANY:

KUSTOM ENTERTAINMENT, INC.

By:

/s/ Stanton E. Ross

Name:

Stanton E. Ross

Title:

Chief Executive Officer

INVESTOR:

YIELD POINT NY LLC

By:

/s/ Ari Kluger

Name:

Ari Kluger

Title:

Authorized Person

EX-99.1

Filename: ex99-1.htm · Sequence: 6

Exhibit

99.1

FOR

IMMEDIATE RELEASE

Kustom

Entertainment Closes $6.1 Million Divestiture of Legacy Video Solutions Business to Cycurion

Completes

strategic transformation into a pure-play live entertainment and ticketing technology company; Secures $1.25M upfront cash, $4.25M secured

promissory note, and $600,000 in 12% yielding Preferred Equity.

OVERLAND

PARK, KS – August 4, 2026 – Kustom Entertainment, Inc. (Nasdaq: KUST) (“Kustom” or the “Company”),

an emerging force in live music festival production and proprietary ticketing operations, today announced the successful closing of its

previously announced divestiture of its legacy video solutions business assets to Cycurion, Inc. (Nasdaq: CYCU) (“Cycurion”).

The

transaction was completed on August 3, 2026, in accordance with the amended terms executed under the Amendment No. 1 and Forbearance

/ Extension Agreement to the Asset Purchase Agreement.

With

the closing of this $6.1 million transaction, Kustom successfully completes its strategic pivot to become a pure-play live entertainment

powerhouse. The Company will now focus 100% of its corporate resources and capital on expanding its premier festival footprint, advancing

its proprietary ticketing technology platforms, and accelerating revenue growth under the ticker symbol “KUST”.

Key

Transaction Terms & Financial Summary

The

closed divestiture transaction includes the following final terms:

●

$1.25 Million Upfront Cash Consideration:

Includes the $250,000 non-refundable cash payment delivered at amendment signing, providing immediate balance sheet liquidity.

●

$4.25 Million Secured

Promissory Note: A 36-month note bearing 7.0% annual interest, delivering recurring debt service cash flow to Kustom.

●

$600,000 High-Yield Series H Preferred

Stock: Issued by Cycurion in lieu of previously structured warrants, featuring:

○

12.0% Annual Cumulative Dividend: Payable quarterly in shares of

Cycurion common stock.

○

$1.45 Conversion Price: Convertible into common stock with customary

anti-dilution protections.

○

Institutional Protections: Includes senior liquidation preferences,

class voting rights, and registration rights.

Executive

Leadership Perspective

“Closing

this divestiture marks a historic milestone for Kustom Entertainment,” said Stanton E. Ross, CEO of Kustom Entertainment.

“By finalizing this upgraded $6.1 million agreement with Cycurion, we have strengthened our balance sheet, eliminated legacy operational

overhead, and secured non-dilutive, yield-bearing capital for our shareholders.

“More

importantly, this transaction marks the official completion of our transition into a pure-play live entertainment engine. With our legacy

video division successfully transferred, we now have the ideal platform to rapidly expand our business—both organically and through

targeted strategic acquisitions. Our team is laser-focused on scaling our live event experiences, deepening venue partnerships, and executing

on our high-margin ticketing software roadmap across the $100 billion live event industry.”

Strategic

Focus on the $100 Billion Live Entertainment Market

With

the divestiture closed, Kustom operates a streamlined, high-margin structure built to capture market share across large-scale live music

and festival operations:

●

Country Stampede Expansion:

Following the 30th Anniversary of its flagship Country Stampede Music Festival in June 2026, Kustom is expanding the event to Gilley’s

Park City in Park City, KS (Wichita metro area) for 2027—doubling capacity to 35,000 fans per show.

●

Event Pipeline: Country

Stampede serves as the anchor for more than 20 planned live event days across 2026 and 2027.

●

Proprietary Ticketing Platform: Kustom

continues to roll out its end-to-end ticketing technology, capturing transactional economics across the full live event lifecycle.

About

Kustom Entertainment, Inc.

Kustom

Entertainment, Inc. (Nasdaq: KUST) is an emerging leader in live event production and entertainment ticketing technology. The Company

specializes in large-scale music festivals and end-to-end event management solutions. By leveraging proprietary ticketing platforms and

premier venue partnerships, Kustom is dedicated to driving high-margin monetization across the entire live event lifecycle—from

the initial ticket sale to the final encore. For more information, visit www.kustom440.com.

Forward-Looking

Statements

made in this press release that are not descriptions of historical facts are forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995 and are based on management’s current expectations and assumptions. These statements are

identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,”

“expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,”

“would,” or similar expressions. Forward-looking statements involve known and unknown risks and uncertainties that could

cause actual results to differ materially, including: (i) the risk that integration or transition operations encounter unexpected challenges;

(ii) the risk that the Company’s stock price may fluctuate or decline; (iii) the risk that disruptions from the transaction will

harm the Company’s business, including current plans and operations; (iv) the diversion of management’s time and attention

from ordinary course business operations; (v) market demand for live event ticketing platforms; (vi) general economic conditions; and,

the risks described in the Company’s annual and quarterly filings with the U.S. Securities and Exchange Commission. Kustom undertakes

no duty to update these forward-looking statements except as required by law.

Media

& Investor Contacts

Stanton

E. Ross, CEO

Kustom

Entertainment, Inc.

Phone:

(913) 456-KUST (5878)

Email:

info@kustoment.com

Websites:

www.kustoment.com | www.kustom440.com | www.countrystampede.com

EX-99.2

Filename: ex99-2.htm · Sequence: 7

Exhibit 99.2

Unaudited

Pro Forma Condensed Consolidated Financial Statements

August 3, 2026, Kustom Entertainment, Inc. (the “Company,” formerly Digital Ally, Inc.) closed an Asset Purchase Agreement

(the “Agreement”) with Cycurion, Inc., a Delaware corporation (“Cycurion”), whereby the Company agreed to sell

and convey certain assets, and transfer certain liabilities, of its video solutions business (the “Video Solutions Business”),

which develops, sells, licenses, supports and services video hardware, camera products, software and related solutions for law enforcement,

public safety and commercial customers, to Cycurion. The transaction was structured as a sale of specific assets and an assumption of

specified liabilities rather than a sale of a subsidiary; accordingly, no legal entity or equity interest was transferred. The Agreement

was entered into on June 24, 2026, and was amended by Amendment No. 1 and Forbearance / Extension Agreement dated July 23, 2026 (the

“Amendment”), and the transaction closed on August 3, 2026, with an effective date of June 30, 2026.

Under

the Agreement, as amended, the Company agreed to sell and Cycurion agreed to purchase the Acquired Assets (as defined in the Agreement),

and Cycurion agreed to assume certain specified liabilities, for the consideration and on the terms and conditions provided for in the

Agreement, as amended. The transfer of the Acquired Assets and the assumption of the assumed liabilities are deemed to occur as of 11:59

p.m., New York time, on June 30, 2026. The Agreement, as amended, provides for the following consideration and principal terms:

●

cash payment of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) paid to the Company, inclusive of the $250,000 non-refundable

extension payment received on July 27, 2026 upon execution of the Amendment, which was credited against the aggregate purchase price

at Closing.

●

secured promissory note issued by the Buyer in the principal amount of Four Million Two Hundred Fifty Thousand Dollars ($4,250,000)

(the “Note”), bearing interest at 7% per annum, , for a term of three (3) years, with interest-only payments during the

first six months followed by thirty (30) monthly installments of principal and interest, maturing three years from closing. The Note

is secured by the assets acquired in the transaction and may be prepaid without penalty.

●

symmetrical earn-out and clawback arrangement based on the post-closing revenue of the Video Solutions Business for the fiscal years

ending December 31, 2026 and December 31, 2027. The Company may receive earn-out payments if revenue exceeds the applicable annual

target ($5,500,000 for 2026 and $5,800,000 for 2027), and may be subject to a clawback (a reduction of the purchase price) if revenue

falls more than 20% below target. The earn-out and clawback are each capped at $500,000 per year and $1,000,000 in the aggregate.

●

Series

H Preferred Stock of Cycurion with an aggregate stated value of $600,000, issued pursuant to the Amendment in replacement of the

two million (2,000,000) warrants originally contemplated by the Agreement, which were cancelled. The Series H Preferred Stock accrues

cumulative dividends of 12.0% per annum payable quarterly in shares of Cycurion common stock, and is convertible at the holder’s

option at $1.45 per share, subject to anti-dilution adjustments and a 9.99% beneficial ownership limitation. The Series H Preferred

Stock carries a liquidation preference of stated value plus accrued dividends, class voting protections, registration rights for

the underlying common shares, and a twelve (12) month leak-out on resales.

The

following unaudited pro forma condensed consolidated financial statements (“Unaudited Pro Forma Statements”) and explanatory

notes are based on the Company’s historical condensed consolidated financial statements adjusted to give effect to the sale of

the Video Solutions Business. The unaudited pro forma condensed consolidated statements of operations for the three months ended March

31, 2026 and for the year ended December 31, 2025 have been prepared with the assumption that the sale of the Video Solutions Business

occurred as of January 1, 2025. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2026 has been prepared with

the assumption that the sale of the Video Solutions Business was completed as of the balance sheet date. The Unaudited Pro Forma Statements

have been prepared by the Company based on assumptions deemed appropriate by the Company’s management. An explanation of pro forma

adjustments is set forth in the notes hereto.

The

Unaudited Pro Forma Statements are presented for illustrative purposes only and do not necessarily reflect what the Company’s financial

condition or results of operations would have been had the sale of the Video Solutions Business occurred on the date indicated. Additionally,

the Unaudited Pro Forma Statements do not purport to project the future financial condition or results of operations of the Company.

The

Unaudited Pro Forma Statements should be read in conjunction with the audited financial statements and the notes thereto included in

the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as the Company’s unaudited condensed

consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the period ended

March 31, 2026.

KUSTOM

ENTERTAINMENT, INC.

(formerly

Digital Ally, Inc.)

UNAUDITED

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

MARCH

31, 2026

(unaudited)

Historical

Kustom

Entertainment,

Inc.

Disposition

Video

Solutions

Business

(a)

Other

Adjustments

(b)

Pro

Forma

Kustom

Entertainment,

Inc.

ASSETS

Current Assets:

Cash and cash

equivalents

$ 1,224,321

$ —

$ 1,250,000

$ 2,474,321

Accounts receivable

326,278

(243,230 )

—

83,048

Subscriptions receivable

3,035,465

(3,035,465 )

—

Other receivables

292,601

—

292,601

Notes receivable

383,909

—

4,250,000

4,633,909

Inventories, net

2,148,228

(2,023,259 )

—

124,969

Prepaid expenses

1,987,805

(339,729 )

—

1,648,076

Total current assets

9,398,607

(5,641,683 )

5,500,000

9,256,924

Property plant and equipment,

net

519,516

(74,479 )

—

445,037

Goodwill and other intangible

assets, net

5,029,035

(169,309 )

—

4,859,726

Operating lease right of

use assets, net

1,041,420

(129,014 )

—

912,406

Subscriptions receivables

– long term

2,456,719

(2,456,719 )

—

Notes receivable - long

term

396,640

—

396,640

Investment in Series H

Preferred Stock of Cycurion

—

305,000

Other assets

291,930

(101,541 )

—

190,389

Total assets

$ 19,133,867

$ (8,572,745 )

$ 5,805,000

$ 16,366,122

LIABILITIES & STOCKHOLDERS’

EQUITY

Current liabilities:

Accounts payable

$ 4,284,867

$ (292,994 )

$ —

$ 3,991,873

Accrued expenses

536,526

(201,073 )

—

335,453

Current portion of operating

lease Obligations

248,841

(79,578 )

—

169,263

Deferred revenue –

current portion

3,862,440

(3,055,291 )

—

807,149

Debt obligations –

current portion

518,575

—

518,575

Warrant derivative liabilities

—

Income taxes payable

10,441

—

10,441

Total current liabilities

9,461,698

(3,628,936 )

—

5,832,762

Long-term liabilities:

Debt obligations –

long-term

136,635

—

136,635

Operating lease obligation

– long-term

771,987

(49,436 )

—

722,551

Deferred revenue –

long term

4,057,343

(4,057,343 )

—

Notes payable – related

party – long-term portion

411,698

—

411,698

Total liabilities

14,839,361

(7,735,715 )

—

7,103,646

Stockholders’ equity:

Common stock, $0.001 par value

527

—

527

Additional paid-in-capital

151,906,315

—

151,906,315

Noncontrolling interest

in consolidated Subsidiary

—

Accumulated deficit

(147,612,336 )

(837,030 )

5,805,000

(142,644,366 )

Total stockholders’

equity

4,294,506

(837,030 )

5,805,000

9,262,476

Total liabilities and stockholders’ equity

$ 19,133,867

$ (8,572,745 )

$ 5,805,000

$ 16,366,122

See

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

KUSTOM

ENTERTAINMENT, INC.

(formerly

Digital Ally, Inc.)

UNAUDITED

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR

THE THREE MONTHS ENDED MARCH 31, 2026

(unaudited)

Historical

Kustom

Entertainment,

Inc,

Disposition

Video

Solutions

Business

(a)

Other

Adjustments

(b)

Pro

Forma

Kustom

Entertainment,

Inc,

Revenue:

Product

$ 562,226

$ (226,120 )

$ —

$ 336,106

Service

and other

3,752,010

(882,359 )

—

2,869,651

Total revenue

4,314,236

(1,108,479 )

—

3,205,757

Cost of revenue:

Product

782,248

(401,591 )

—

380,657

Service

and other

2,927,941

(321,358 )

—

2,606,583

Total

cost of revenue

3,710,189

(722,949 )

—

2,987,240

Gross profit

604,047

(385,530 )

—

218,517

Selling, general and administrative expenses:

Research and development

expense

143,089

(143,089 )

—

Selling, advertising and

promotional expense

274,411

(131,036 )

—

143,375

General

and administrative expense

1,483,534

(378,450 )

—

1,105,084

Total selling, general

and administrative expenses

1,901,034

(652,575 )

—

1,248,459

—

Operating

income (loss)

(1,296,987 )

267,045

—

(1,029,942 )

Other income (expense):

Interest income

76,806

—

76,806

Interest expense

(67,450 )

—

(67,450 )

Other income (loss)

—

Change in fair value of warrant derivative

liabilities

(289,355 )

—

(289,355 )

Gain on extinguishment

of liabilities

63,259

—

63,259

Total other income (expense)

from continuing operations

(216,740 )

—

(216,740 )

Income (loss) before income tax benefit (provision)

from continuing operations

(1,513,727 )

267,045

—

(1,246,682 )

Income tax expense benefit

(provision)

—

Net income (loss) from continuing operations

(1,513,727 )

267,045

—

(1,246,682 )

Discontinued operations:

Income (loss) from discontinued

operations

(4,371,588 )

—

(4,371,588 )

Income tax expense benefit (provision)

—

Net income (loss) from

discontinued operations

(4,371,588 )

—

(4,371,588 )

Net income (loss)

(5,885,315 )

267,045

—

(5,618,270 )

Net income (loss) attributable

to common stockholders

$ (5,885,315 )

$ 267,045

$ —

$ (5,618,270 )

Net income (loss) per share attributable to

common stockholders’ information:

Net loss per share information:

Basic:

Continuing operations

$ (3.44 )

—

$ (2.84 )

Discontinued operations

$ (9.95 )

—

$ (9.95 )

Net income (loss) attributable

to common stockholders per share – basic

$ (13.39 )

—

$ (12.79 )

—

Diluted:

—

Continuing operations

$ (3.44 )

—

$ (2.84 )

Discontinued operations

$ (9.95 )

—

$ (9.95 )

Net

income (loss) attributable to common stockholders per share – diluted

$ (13.39 )

—

$ (12.79 )

Weighted average shares outstanding:

Basic

439,556

—

439,556

Diluted

439,556

—

439,556

See

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

KUSTOM

ENTERTAINMENT, INC.

(formerly

Digital Ally, Inc.)

UNAUDITED

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR

THE YEAR ENDED DECEMBER 31, 2025

(unaudited)

Historical

Kustom

Entertainment,

Inc,

Disposition

Video

Solutions

Business

(a)

Other

Adjustments

(b)

Pro

Forma

Kustom

Entertainment,

Inc,

Revenue:

Product

$ 4,337,276

$ (1,184,079 )

$ —

$ 3,153,197

Service

and other

9,416,879

(3,916,678 )

—

5,500,201

Total revenue

13,754,155

(5,100,757 )

—

8,653,398

Cost of revenue:

Product

6,333,622

(1,523,613 )

—

4,810,009

Service

and other

6,071,478

(1,259,293 )

—

4,812,185

Total

cost of revenue

12,405,100

(2,782,906 )

—

9,622,194

Gross profit

1,349,055

(2,317,851 )

—

(968,796 )

Selling, general and administrative expenses:

Research and development

expense

551,447

(551,447 )

—

Selling, advertising and

promotional expense

721,690

(426,048 )

—

295,642

General and administrative

expense

8,424,672

(1,943,934 )

6,480,738

Goodwill

and intangible asset impairment charge

2,533,667

—

2,533,667

Total selling, general

and administrative expenses

12,231,476

(2,921,429 )

—

9,310,047

Operating

loss

(10,882,421 )

603,578

—

(10,278,843 )

Other income (expense):

Interest income

116,545

—

116,545

Interest expense

(1,102,352 )

—

(1,102,352 )

Other income

346,024

—

346,024

Change in fair value of warrant derivative

liabilities

3,331,616

—

3,331,616

Gain on extinguishment

of liabilities

2,234,658

—

2,234,658

Total other income (expense)

from continuing operations

4,926,491

—

4,926,491

Loss before income tax benefit (provision)

from continuing operations

(5,955,930 )

603,578

—

(5,352,352 )

Income tax expense benefit

(provision)

—

Net loss from continuing operations

(5,955,930 )

603,578

—

(5,352,352 )

Discontinued operations:

Loss from discontinued

operations

(1,403,094 )

—

(1,403,094 )

Income tax expense benefit (provision)

—

Net loss from discontinued

operations

(1,403,094 )

—

(1,403,094 )

Net loss

(7,359,024 )

603,578

—

(6,755,446 )

Net income attributable

to noncontrolling interests

687,516

—

687,516

Net loss attributable

to common stockholders

$ (6,671,508 )

$ 603,578

$ —

$ (6,067,930 )

Net loss per share attributable to common stockholders’

information:

Net loss per share information:

Basic:

Continuing operations

$ (15.38 )

—

$ (13.82 )

Discontinued operations

$ (1.85 )

—

$ (1.85 )

Net loss attributable to

common stockholders per share – basic

$ (17.23 )

—

$ (15.67 )

Diluted:

Continuing operations

$ (15.38 )

—

$ (13.82 )

Discontinued operations

$ (1.85 )

—

$ (1.85 )

Net

loss attributable to common stockholders per share – diluted

$ (17.23 )

—

$ (15.67 )

Weighted average shares outstanding:

Basic

387,144

—

387,144

Diluted

387,144

—

387,144

See

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

KUSTOM

ENTERTAINMENT, INC.

NOTES

TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note

1 Description of the Transaction and Basis of Presentation

August 3, 2026, Kustom Entertainment, Inc. (the “Company,” formerly Digital Ally, Inc.) completed the sale of substantially

all of the operating assets comprising its Video Solutions business (the “Video Solutions Business”) to Cycurion, Inc. (the

“Buyer”), pursuant to an Asset Purchase Agreement dated June 24, 2026 (the “Agreement”), as amended by Amendment

No. 1 and Forbearance / Extension Agreement dated July 23, 2026 (the “Amendment”), subject to the assumption of certain Video

Solutions Business operating liabilities as defined in the Agreement. The transfer of the Video Solutions Business was deemed effective

as of 11:59 p.m. New York time on June 30, 2026.

Under

the Agreement, as amended, the Company sold, and the Buyer purchased the assets of the Video Solutions Business for the consideration

and on the terms and conditions provided for in the Agreement, as amended. The Agreement, as amended, provided for the following consideration

and principal terms:

●

cash payment of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) paid to the Company, inclusive of the $250,000 non-refundable

extension payment received on July 27, 2026 upon execution of the Amendment, which was credited against the aggregate purchase price

at Closing.

●

secured promissory note issued by the Buyer in the principal amount of Four Million Two Hundred Fifty Thousand Dollars ($4,250,000)

(the “Note”), bearing interest at 7% per annum, , for a term of three (3) years, with interest-only payments during the

first six months followed by thirty (30) monthly installments of principal and interest, maturing three years from closing. The Note

is secured by the assets acquired in the transaction and may be prepaid without penalty.

●

symmetrical earn-out and clawback arrangement based on the post-closing revenue of the Video Solutions Business for the fiscal years

ending December 31, 2026 and December 31, 2027. The Company may receive earn-out payments if revenue exceeds the applicable annual

target ($5,500,000 for 2026 and $5,800,000 for 2027), and may be subject to a clawback (a reduction of the purchase price) if revenue

falls more than 20% below target. The earn-out and clawback are each capped at $500,000 per year and $1,000,000 in the aggregate.

●

Series

H Preferred Stock of Cycurion with an aggregate stated value of $600,000, issued pursuant to the Amendment in replacement of the

two million (2,000,000) warrants originally contemplated by the Agreement, which were cancelled. The Series H Preferred Stock accrues

cumulative dividends of 12.0% per annum payable quarterly in shares of Cycurion common stock, and is convertible at the holder’s

option at $1.45 per share, subject to anti-dilution adjustments and a 9.99% beneficial ownership limitation. The Series H Preferred

Stock carries a liquidation preference of stated value plus accrued dividends, class voting protections, registration rights for

the underlying common shares, and a twelve (12) month leak-out on resales.

Note

2 Pro Forma Adjustments

The

pro forma adjustments included in the Unaudited Pro Forma Condensed Consolidated Statements of Operations, including certain adjustments

that were made to the historical presentation of the Company as follows:

(a)

Adjustments

to reflect the disposition of the Company’s Video Solutions Business pursuant to the terms of the Agreement. Such adjustments

include the sale of all operating assets comprising the Video Solutions Business subject to the assumption of certain Video Solutions

Business operating liabilities as defined in the Agreement.

(b)

Represents

the consideration received by the Company pursuant to the Agreement including i) $1,250,000 cash, inclusive of the $250,000 extension

payment received upon execution of the Amendment and credited against the purchase price at closing, ii) a secured promissory note

issued by the Buyer in the principal amount of $4,250,000 to the Company, bearing 7% interest, with interest-only payments for the

first six months followed by thirty monthly installments of principal and interest, maturing three years from closing, iii) a symmetrical

earn-out and clawback arrangement based on the Video Solutions Business’s revenue for fiscal years 2026 and 2027, capped at

$1,000,000 in the aggregate in either direction, and iv) Series H preferred stock of the buyer with an aggregate stated value of

$600,000, issued pursuant to the Amendment in replacement of the warrants originally contemplated by the Agreement, recorded at an

estimated fair value of approximately $305,000 as of March 31,2026, which is preliminary and subject to remeasurement based on market

inputs as of the issuance date.

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Cover

Aug. 04, 2026

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Entity File Number

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Entity Registrant Name

KUSTOM

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Entity Central Index Key

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Entity Tax Identification Number

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Entity Incorporation, State or Country Code

Entity Address, Address Line One

6366

College Blvd.

Entity Address, City or Town

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Entity Address, State or Province

Entity Address, Postal Zip Code

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City Area Code

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Local Phone Number

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Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.

+ References

No definition available.

+ Details

Name:

dei_EntityFileNumber

Namespace Prefix:

dei_

Data Type:

dei:fileNumberItemType

Balance Type:

Period Type:

duration

- Definition

Two-character EDGAR code representing the state or country of incorporation.

+ References

No definition available.

+ Details

Name:

dei_EntityIncorporationStateCountryCode

Namespace Prefix:

dei_

Data Type:

dei:edgarStateCountryItemType

Balance Type:

Period Type:

duration

- Definition

The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b-2

+ Details

Name:

dei_EntityRegistrantName

Namespace Prefix:

dei_

Data Type:

xbrli:normalizedStringItemType

Balance Type:

Period Type:

duration

- Definition

The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b-2

+ Details

Name:

dei_EntityTaxIdentificationNumber

Namespace Prefix:

dei_

Data Type:

dei:employerIdItemType

Balance Type:

Period Type:

duration

- Definition

Local phone number for entity.

+ References

No definition available.

+ Details

Name:

dei_LocalPhoneNumber

Namespace Prefix:

dei_

Data Type:

xbrli:normalizedStringItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 13e

-Subsection 4c

+ Details

Name:

dei_PreCommencementIssuerTenderOffer

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 14d

-Subsection 2b

+ Details

Name:

dei_PreCommencementTenderOffer

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Title of a 12(b) registered security.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection b

+ Details

Name:

dei_Security12bTitle

Namespace Prefix:

dei_

Data Type:

dei:securityTitleItemType

Balance Type:

Period Type:

duration

- Definition

Name of the Exchange on which a security is registered.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection d1-1

+ Details

Name:

dei_SecurityExchangeName

Namespace Prefix:

dei_

Data Type:

dei:edgarExchangeCodeItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 14a

-Subsection 12

+ Details

Name:

dei_SolicitingMaterial

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration

- Definition

Trading symbol of an instrument as listed on an exchange.

+ References

No definition available.

+ Details

Name:

dei_TradingSymbol

Namespace Prefix:

dei_

Data Type:

dei:tradingSymbolItemType

Balance Type:

Period Type:

duration

- Definition

Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Securities Act

-Number 230

-Section 425

+ Details

Name:

dei_WrittenCommunications

Namespace Prefix:

dei_

Data Type:

xbrli:booleanItemType

Balance Type:

Period Type:

duration