KUSTOM ENTERTAINMENT, INC. (KUST): Completion of Acquisition or Disposition of Assets
KUSTOM ENTERTAINMENT, INC. (KUST) filed an SEC Form 8-K — Completion of Acquisition or Disposition of Assets. EX-99.2 7 ex99-2.htm EX-99.2 Exhibit 99.2 Unaudited Pro Forma Condensed Consolidated Financial Statements On August 3, 2026, Kustom Entertainment, Inc. (the “Company,” formerly Digital Ally, Inc.) closed an Asset Purchase Agreement (the “Agreement”) with Cycurion, Inc., a Delawar
How this was made
The 30-second read
Why it matters
The company monetizes its Video Solutions Business via cash plus a secured promissory note, while retaining upside and downside through a symmetrical earn-out and clawback tied to post-closing revenue.
Market read
Traders can reassess KUST’s near-term liquidity and medium-term earnings sensitivity to the earn-out revenue targets after deal completion.
What to watch
The earn-out targets ($5.5M in 2026, $5.8M in 2027) and the >20% below-target clawback could materially swing realized proceeds versus the headline purchase price.
Background
Kustom Entertainment (formerly Digital Ally) entered an Asset Purchase Agreement with Cycurion in June 2026, amended in July, and closed the transaction effective June 30, 2026.
Ticker impact
Kustom Entertainment closed the sale of its Video Solutions Business to Cycurion, including $1.25M cash, a $4.25M 7% note, and revenue-based earn-out.
Likely modest, two-sided reaction: immediate de-risking from asset monetization but uncertainty around earn-out/clawback and note terms.
The filing is a primary disclosure of deal completion and consideration structure, but it does not provide standalone guidance or a quantified impact on consolidated earnings beyond pro forma illustrative statements.
Market effects
Signals ongoing portfolio reshaping in law-enforcement/public-safety video solutions, potentially affecting competitive positioning and customer support continuity.
No clear regional market linkage beyond US-listed microcap sentiment.
Limited global spillover; transaction is asset-specific and not described as industry-wide.
Counterpoint
The headline completion may be less bullish than it looks because a large portion of consideration is contingent (earn-out) and the note introduces future credit and collection risk.
Key entities
- public_companyKustom Entertainment, Inc.
Subject issuer filing the 8-K; completed the asset sale of its Video Solutions Business.
- counterpartyCycurion, Inc.
Buyer of the Video Solutions Business assets and assumed liabilities.
