KUSTOM ENTERTAINMENT, INC. 8-K

What Happened

• Kustom Entertainment, Inc. (KUST) announced on June 24, 2026 that it entered an Asset Purchase Agreement to sell all assets related to its video-solutions division to Cycurion, Inc. The transaction is anticipated to close on July 15, 2026, subject to customary closing conditions.
• Consideration to Kustom includes $1,250,000 in cash at closing, a secured promissory note with an original principal of $4,250,000, up to $1,000,000 in contingent (earnout) cash, and warrants to purchase up to 2,000,000 shares of Cycurion common stock at $2.80 per share. The parties will enter a registration rights agreement for the warrant shares.

Key Details

• Cash at closing: $1,250,000.
• Secured promissory note: $4,250,000 principal.
• Contingent earnout: up to $1,000,000 payable if earnout conditions are met.
• Warrants: up to 2,000,000 shares exercisable at $2.80; registration rights to be provided.
• Anticipated close date: July 15, 2026; closing subject to due diligence, board approvals, third-party consents, key employee arrangements and absence of a material adverse effect.
• Kustom issued a press release on June 25, 2026 announcing the agreement.

Why It Matters

• The deal represents a sale of Kustom’s video-solutions business, bringing immediate cash, a secured note and potential additional cash and equity upside, which could materially affect the company’s future revenue mix and balance sheet.
• The earnout and warrants add potential future value but also introduce execution and market risks (payment contingent on targets; possible dilution if warrants are exercised). The transaction is subject to multiple closing conditions, so there is no guarantee it will close as anticipated.
• Investors should watch for subsequent filings (closing notice, any required carve-out financials, amendments, or material updates) to understand the transaction’s final terms and the impact on Kustom’s operations and financial condition.