KUSTOM ENTERTAINMENT AND CYCURION ANNOUNCE AGREEMENT ON TERMS FOR SALE OF LEGACY VIDEO SOLUTIONS SEGMENT
Rhea-AI Summary
Kustom Entertainment (Nasdaq: KUST) and Cycurion (Nasdaq: CYCU) agreed revised terms for sale of Kustom’s legacy video solutions segment, targeting a closing on or before June 30, 2026. The aggregate purchase price is $5,500,000 with a $1,250,000 cash down payment, a $4,250,000 secured promissory note at 7% payable over 36 months, and 2,000,000 warrants exercisable at $2.80 for two years after registration. A performance-based earn-out and clawback, capped at $1,000,000, applies; the deal is subject to definitive documentation, customary closing conditions, regulatory approvals, and a 30-day no-shop exclusivity period.
Positive
- Immediate liquidity: $1.25M cash down payment at closing
- Secured $4.25M promissory note at 7% over 36 months
- Equity upside: 2,000,000 warrants at $2.80 (two-year term)
Negative
- Performance adjustments: earn-out and clawback up to $1.0M
- Proceeds partly deferred via promissory note, delaying full cash realization
- Transaction subject to definitive documentation and regulatory approvals, risking delay or non‑closing
News Market Reaction – KUST
In the Apr 17 session, KUST gained 1.04%, reflecting a mild positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Historical Context
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Apr 13 | FY25 results | Positive | +8.2% | Improved revenue and net loss plus RCM sale and divestiture plans. |
| Mar 03 | Body camera contract | Positive | -6.0% | Multi-year body camera subscription with a major Kansas City health system. |
| Feb 10 | TicketSmarter recognition | Positive | +12.4% | TicketSmarter named a top resale site, reinforcing live events strategy. |
| Jan 22 | Video segment MOU | Positive | -5.1% | Initial non-binding MOU to divest video solutions segment to Cycurion. |
| Jan 12 | Nobility divestiture | Positive | -17.4% | Completed sale of 51% Nobility Healthcare stake to minority owner. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Recent KUST news skewed positive on strategy and divestitures, yet price reactions have been mixed, with several selloffs following seemingly constructive portfolio-streamlining announcements.
Over the last few months, Kustom Entertainment has systematically reshaped its portfolio. On Jan 8, 2026, it completed the Nobility Healthcare divestiture for about $1.45M, then on Jan 22 signed an MOU to sell its video solutions segment. Subsequent news highlighted TicketSmarter’s Forbes recognition and a body camera subscription win, reinforcing the pivot toward live events and ticketing. On Apr 13, fiscal 2025 results showed revenue of $13.755M and a sharply reduced net loss. Today’s revised sale terms for the legacy video segment fit this ongoing streamlining.
Key Terms
secured promissory note financial
common stock purchase warrants financial
earn-out financial
clawback financial
no-shop financial
Asset Purchase Agreement financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
TARGET JUNE 30, 2026 CLOSING DATE
OVERLAND PARK, KS and MCLEAN, VA, April 17, 2026 (GLOBE NEWSWIRE) -- Kustom Entertainment, Inc. (Nasdaq: KUST) (“Kustom” or the “Company”), and Cycurion, Inc. (Nasdaq: CYCU) today announced they have entered into a revised, non-binding Memorandum of Understanding (“MOU”) that establishes revised terms for the sale of Kustom’s legacy video solutions segment (the “Business”) to Cycurion from the previously announced MOU on January 22, 2026.
The parties have moved into the final stage of the transaction, focusing on the completion of definitive documentation. Based on the progress made to date, the parties currently anticipate the transaction will close on or prior to June 30, 2026.
Key Transaction Terms
Under the terms of the agreement, the aggregate purchase price is
- Cash Payment: A
$1,250,000 cash down payment payable at closing. - Secured Promissory Note: A
$4,250,000 secured promissory note bearing7% interest, payable in 36 monthly installments. - Equity Upside: The issuance to Kustom of 2,000,000 common stock purchase warrants with a two-year term (beginning after the underlying shares become registered) and an exercise price of
$2.80 per share. - Performance Adjustments: An earn-out and clawback mechanism, capped at
$1,000,000 , based on the Business achieving specific net income milestones, as defined in the definitive agreement, milestones over a one-year period for the clawback and a three-year period for the earn-out.
Strategic Comments
“We are pleased to have reached an agreement on the revised economic terms of this divestiture,” said Stanton Ross, CEO of Kustom. “This moves us into the final stretch of a transition that allows Kustom Entertainment to focus on its core growth initiatives while ensuring our legacy video customers continue to receive high-level service under Cycurion’s stewardship.”
“The acquisition of Kustom’s video solutions segment is a cornerstone of our portfolio expansion,” added L. Kevin Kelly, Chairman and CEO of Cycurion. “Our financial teams have worked closely to validate the pro forma outlook for this business, and we are eager to finalize the documentation and integrate these camera and software solutions into our broader technology offerings.”
Final Timeline and Documentation
The parties have agreed to a 30-day "no-shop" exclusivity period to facilitate the drafting of the final Asset Purchase Agreement. The transaction remains subject to the completion of definitive documentation, customary closing conditions, and any necessary regulatory approvals.
About Kustom Entertainment, Inc.
Kustom Entertainment, Inc. is a leader in live event production and ticketing technology, specializing in large-scale music festivals and end-to-end event management. Its flagship event, Country Stampede, is held annually at the Azura Amphitheater in Bonner Springs, Kansas.
The Company also maintains a legacy segment engaged in video solution technology (in-car and body-worn cameras) for law enforcement and security, currently integrating artificial intelligence to enhance its specialized product lines.
For additional information, please visit www.kustoment.com and www.digitalally.com.
About Cycurion, Inc.
Based in McLean, Virginia, Cycurion is a forward-thinking provider of IT cybersecurity solutions and AI, committed to delivering secure, reliable, and innovative services to clients worldwide. Specializing in cybersecurity, program management, and business continuity, Cycurion harnesses its AI-enhanced ARx platform and expert team to empower clients and safeguard their operations. Along with its subsidiaries, Axxum Technologies LLC, Cloudburst Security LLC, and Cycurion Innovation, Inc., Cycurion serves government, healthcare, and corporate clients committed to securing the digital future. More info: www.cycurion.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 and are subject to risks and uncertainties including the ability of the parties to finalize definitive documentation and the satisfaction of closing conditions by the anticipated June 30, 2026 date. Such statements include, but are not limited to, statements regarding the anticipated closing of the transactions contemplated by the MOU; the acceleration of the Company’s inorganic growth strategy; the integration of the Business; and other statements that are not historical facts, including statements which may be accompanied by words such as “continue,” “will,” “may,” “could,” “should,” “expect,” “expected,” “plans,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” and similar expressions are intended to identify such forward-looking statements. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of today’s date. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s performance or achievements to be materially different from any expected future results, performance, or achievements. Forward-looking statements speak only as of the date they are made, and the Company assumes no duty to update forward-looking statements, except as required by law. Examples of such risks and uncertainties include, but are not limited to, the outcomes of the parties’ investigations and Business integration, risks related to the closings of the transactions contemplated by the MOU, any potential legal proceedings, or the future performance of the Company’s stock. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, some of which are beyond the control of the Company, including, but not limited to, the risks described from time to time in the Company’s periodic filings with the U.S. Securities and Exchange Commission, including, without limitation, the risks described in the Company’s 2025 Annual Report on Form 10-K under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (as applicable). These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and the Company undertakes no duty to update this information.
For Additional Information, Please Contact:
Kustom Entertainment: Stanton E. Ross, CEO at (913) 456-5878
Cycurion Investor Relations:(888) 341-6680 investors@cycurion.com
Cycurion Media Relations:(888) 341-6680 media@cycurion.com
