Kustom Entertainment to Sell Legacy Video Segment for $5.5M, Receive Warrants and Note
Kustom Entertainment will sell its legacy video solutions segment to Cycurion for $5.5 million, comprising $1.25 million cash and a $4.25 million note over 36 months at 7%. The deal grants 2 million warrants at $2.80 strike, an earn-out/clawback up to $1 million and closing by June 30, 2026.
1. Transaction Terms
Under the revised MOU, Cycurion will acquire Kustom’s legacy video solutions segment for $5.5 million, including a $1.25 million cash payment at closing and a $4.25 million secured promissory note over 36 months at 7%. Kustom will also receive 2 million warrants exercisable at $2.80 per share and an earn-out/clawback arrangement capped at $1 million based on net income milestones.
2. Closing Timeline and Conditions
The parties have entered a 30-day exclusivity period to finalize definitive documentation, with customary closing conditions and regulatory approvals. They anticipate completing the transaction on or before June 30, 2026, subject to signing the final Asset Purchase Agreement.
3. Strategic Rationale
Management views the divestiture as a strategic move allowing Kustom Entertainment to concentrate on its core live event production and ticketing technology business, while enabling Cycurion to integrate the video solutions segment into its cybersecurity and AI platform to enhance product offerings.