Kustom Entertainment (Nasdaq: KUST) sets $5.5M sale terms for legacy video unit
Rhea-AI Filing Summary
Kustom Entertainment, Inc. has entered into a revised, non-binding Memorandum of Understanding with Cycurion, Inc. to sell Kustom’s legacy video solutions segment for an aggregate purchase price of $5,500,000, including a $1,250,000 cash down payment payable at closing.
The parties have moved into the final stage of the transaction and currently anticipate closing on or prior to June 30, 2026, subject to definitive documentation, customary closing conditions, and any required regulatory approvals. A 30-day no-shop exclusivity period is in place while they finalize an Asset Purchase Agreement.
Management describes the divestiture as a way for Kustom to focus on core growth initiatives in live event production and ticketing technology, while Cycurion views the acquisition as a cornerstone of its portfolio expansion and plans to integrate the camera and software solutions into its broader cybersecurity and AI offerings.
Positive
- None.
Negative
- None.
Insights
Kustom agrees non-binding $5.5M sale of video unit to refocus on core events.
Kustom Entertainment and Cycurion have outlined revised terms to sell Kustom’s legacy video solutions segment for an aggregate $5,500,000, including a $1,250,000 cash down payment at closing. The structure is described as providing immediate liquidity, long-term yield, and equity upside, indicating a mix of cash, debt, and equity consideration.
The parties expect closing on or before June 30, 2026, and have agreed to a 30-day no-shop exclusivity period to finalize an Asset Purchase Agreement. However, the MOU remains non-binding and the transaction is still subject to definitive documentation, customary closing conditions, and any required regulatory approvals, so execution risk remains meaningful.
Strategically, Kustom’s CEO frames the sale as enabling greater focus on core growth initiatives in live event production and ticketing, while Cycurion’s CEO calls the acquisition a cornerstone of its portfolio expansion. Future filings will clarify the final deal structure, closing status, and post-divestiture financial profile, which will be key to assessing the impact on Kustom’s earnings mix and balance sheet.
8-K Event Classification
Key Figures
Key Terms
non-binding Memorandum of Understanding regulatory
no-shop exclusivity period financial
Asset Purchase Agreement financial
forward-looking statements regulatory
Private Securities Litigation Reform Act of 1995 regulatory
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s telephone number, including area code)
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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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
If 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. ☐
Item 8.01. Other Events.
On April 17, 2026, Kustom Entertainment, Inc. (the “Company”) issued a press release announcing that it has entered into a revised non-binding Memorandum of Understanding (“MOU”) with Cycurion, Inc. (“CYCU”) regarding the contemplated divestiture of the Company’s Video Solutions Segment, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. This MOU replaces the non-binding MOU entered into with CYCU on January 22, 2026, as previously announced on January 22, 2026.
Forward-Looking Statements
Exhibit 99.1 attached to this Form 8-K contains, and may implicate, forward-looking statements regarding the Company, and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated. 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. Forward-looking statements are not guarantees of future actions or performance. These forward-looking statements are based on information currently available to the Company and its current plans or expectations and are subject to a number of risks and uncertainties that could significantly affect current plans. 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. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, performance, or achievements. Except as required by applicable law, including the security laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
Description | |
| 99.1 | Press Release dated April 17, 2026. | |
| 104 | Cover Page Interactive Data File. (Embedded within the Inline XBRL document.) |
SIGNATURE
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.
Dated: April 17, 2026
| Kustom Entertainment, Inc. | ||
| By: | /s/ Stanton E. Ross | |
| Name: | Stanton E. Ross | |
| Title: | Chairman, President and Chief Executive Officer | |
Exhibit 99.1
KUSTOM ENTERTAINMENT AND CYCURION ANNOUNCE AGREEMENT ON TERMS FOR SALE OF LEGACY VIDEO SOLUTIONS SEGMENT
TARGET JUNE 30, 2026 CLOSING DATE
OVERLAND PARK, KS and MCLEAN, VA – April 17, 2026 – 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 $5,500,000, structured to provide Kustom with immediate liquidity, long-term yield, and equity upside. The consideration consists of:
| ● | Cash Payment: A $1,250,000 cash down payment payable at closing. | |
| ● | Secured Promissory Note: A $4,250,000 secured promissory note bearing 7% 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