Kustom Entertainment Closes $6.1 Million Divestiture of Legacy Video Solutions Business to Cycurion

Rhea-AI Summary

Kustom Entertainment (Nasdaq: KUST) closed the previously announced divestiture of its legacy video solutions business assets to Cycurion (Nasdaq: CYCU) on August 3, 2026, completing a $6.1 million transaction under amended asset purchase terms.

Consideration to Kustom includes $1.25 million upfront cash (including a $250,000 non-refundable payment at amendment signing), a $4.25 million secured promissory note bearing 7.0% annual interest over 36 months, and $600,000 of Cycurion Series H preferred stock with a 12.0% annual cumulative dividend payable quarterly in Cycurion common shares, a $1.45 conversion price, and institutional protections such as senior liquidation preferences, class voting rights, and registration rights.

According to Kustom, the divestiture completes its strategic transformation into a pure-play live entertainment and ticketing technology company, enabling full focus on expanding its festival portfolio, scaling its proprietary ticketing platform, and growing revenues in the live events market, including the planned 2027 capacity expansion of its Country Stampede festival and more than 20 planned live event days across 2026–2027.

Positive

• $6.1 million total consideration for divested video solutions assets
• $1.25 million upfront cash, including $250,000 already received at amendment signing
• $4.25 million secured promissory note at 7.0% annual interest over 36 months
• $600,000 Series H preferred stock from Cycurion with 12.0% cumulative dividend
• Completion of divestiture to focus on core live entertainment and ticketing
• Country Stampede capacity planned to double to 35,000 fans per show in 2027
• More than 20 planned live event days across 2026 and 2027

Negative

• None.

News Explained

For existing KUST holders, the preferred-equity component is issued by Cycurion: its conversion and share-paid dividends concern Cycurion common stock, so the disclosed terms could add Cycurion shares without issuing KUST shares.

Market Context

CYCU’s historical record included both +9.15% and -32.68% 24-hour reactions to recent news, placing ...

Analysis

CYCU’s historical record included both +9.15% and -32.68% 24-hour reactions to recent news, placing this closing within a variable response history. The platform also reports low short positioning; subsequent filings and operating follow-through would help distinguish structural change from headline interpretation.

Key Figures

Transaction value: $6.1 million Upfront cash: $1.25 million Secured note: $4.25 million +5 more

8 metrics

Transaction value $6.1 million Closed divestiture transaction

Upfront cash $1.25 million Cash consideration, including a $250,000 amendment payment

Secured note $4.25 million 36-month secured promissory note

Note term 36 months Secured promissory note

Note interest 7.0% annual interest Secured promissory note

Preferred stock value $600,000 Series H Preferred Stock issued by Cycurion

Preferred dividend 12.0% annual cumulative dividend Payable quarterly in Cycurion common stock

Conversion price $1.45 Series H Preferred Stock conversion price

Historical Context

5 past events · Latest: Jul 22 (Positive)

Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
Jul 22	Nasdaq hearing	Positive	+8.1%	Nasdaq hearing request stayed suspension while the company pursued listing compliance.
Jul 16	Delisting determination	Negative	-32.7%	Nasdaq issued a delisting determination tied to the minimum bid price requirement.
Jul 14	Expansion strategy update	Positive	+9.2%	Management outlined revenue expansion, acquisitions, and higher-margin cybersecurity growth initiatives.
Jul 08	Reverse split decision	Positive	-5.6%	Management declined a planned reverse split while describing revenue and backlog expansion.
Jun 29	Asset acquisition agreement	Positive	-7.5%	Cycurion agreed to acquire Kustom's legacy video-solutions assets and related customer portfolio.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Recent CYCU news reactions were mixed, with three events aligned with the apparent news direction and two diverging.

Key Terms

secured promissory note, preferred stock, anti-dilution protections, liquidation preferences, +1 more

5 terms

secured promissory note financial

"$4.25 Million Secured Promissory Note: A 36-month note bearing 7.0% annual interest"

A secured promissory note is a written promise to repay borrowed money that is backed by specific assets pledged as collateral; if the borrower fails to pay, the lender can seize those assets to recover losses. Investors care because the collateral reduces the lender’s risk and can make the loan safer and more likely to be repaid, similar to a pawnshop loan where an item lowers the lender’s exposure if the borrower defaults.

preferred stock financial

"$600,000 High-Yield Series H Preferred Stock: Issued by Cycurion"

Preferred stock is a type of ownership in a company that typically offers investors higher and more consistent dividend payments than common stock. Unlike regular shares, preferred stock usually doesn’t come with voting rights but provides a priority claim on the company’s assets and profits, making it a more stable and predictable investment option. This makes preferred stock attractive to those seeking steady income with lower risk.

anti-dilution protections financial

"Convertible into common stock with customary anti-dilution protections."

Anti-dilution protections are contract terms that adjust an investor's ownership or share price if a company later issues new shares at a lower price than the investor originally paid, so the investor doesn't lose as much value or voting power. They matter to investors because they limit downside from later, cheaper financings—like giving extra pieces to someone whose slice of pie would otherwise shrink—and influence expected returns and future ownership stakes.

liquidation preferences financial

"Includes senior liquidation preferences, class voting rights, and registration rights."

Liquidation preferences are contract terms that determine who gets paid first and how much when a company is sold, merged, or shuts down. Think of them like a special checkout lane that lets certain investors reclaim a set amount—often their original investment or a multiple—before other owners receive any proceeds; this protection changes how much different stakeholders can expect to get from an exit and influences investment value and negotiating power.

registration rights financial

"Includes senior liquidation preferences, class voting rights, and registration rights."

Registration rights are contractual promises that let investors require a company to file paperwork with securities regulators so those investors can sell their shares to the public. They matter because they create a path to liquidity and an exit plan—without them, investors may be stuck holding shares for a long time. Think of them like a reserved ticket that guarantees access to a public marketplace when the holder is ready to sell.

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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, Aug. 04, 2026 (GLOBE NEWSWIRE) -- 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

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

FAQ

What did Kustom Entertainment (KUST) receive in the $6.1 million divestiture to Cycurion (CYCU)?

Kustom Entertainment received $1.25 million cash, a $4.25 million secured promissory note, and $600,000 of Series H preferred stock. According to Kustom, the note bears 7.0% annual interest, and the preferred shares carry a 12.0% cumulative dividend and a $1.45 conversion price.

How does the Cycurion transaction change Kustom Entertainment’s (KUST) business focus in 2026?

The transaction completes Kustom’s shift to a pure-play live entertainment and ticketing technology company. According to Kustom, corporate resources will now fully target expanding its festival footprint, rolling out its proprietary ticketing platform, and accelerating revenue growth in the live events market.

What are the key terms of the $4.25 million promissory note Kustom Entertainment (KUST) received?

Kustom received a $4.25 million secured promissory note with a 36-month term and 7.0% annual interest. According to Kustom, this structure is intended to provide recurring debt service cash flow over three years following the divestiture of the legacy video solutions business.

What are the features of the $600,000 Series H preferred stock Kustom Entertainment (KUST) received from Cycurion?

The $600,000 Series H preferred carries a 12.0% annual cumulative dividend, payable quarterly in Cycurion common stock. According to Kustom, it has a $1.45 conversion price, senior liquidation preference, class voting rights, anti-dilution protections, and registration rights.

How will the divestiture support Kustom Entertainment’s (KUST) live event and ticketing growth plans?

The divestiture allows Kustom to redirect resources to live festivals and ticketing technology. According to Kustom, it plans to expand Country Stampede, pursue more than 20 live event days in 2026–2027, and monetize its end-to-end ticketing platform across the event lifecycle.

What are Kustom Entertainment’s (KUST) plans for the Country Stampede festival after the 2026 deal?

Kustom plans to expand Country Stampede to Gilley’s Park City in 2027, doubling capacity to 35,000 fans per show. According to Kustom, the festival will anchor more than 20 planned live event days across 2026 and 2027.

When did Kustom Entertainment (KUST) close the sale of its legacy video solutions business to Cycurion?

Kustom closed the divestiture of its legacy video solutions business assets to Cycurion on August 3, 2026. According to Kustom, the closing followed amended terms under an Amendment No. 1 and Forbearance / Extension Agreement to the original asset purchase agreement.