$KUST

KUSTOM ENTERTAINMENT, INC.

CIK:0001342958|SEC Filings

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2026	Jun. 30, 2025	Jun. 30, 2026	Jun. 30, 2025
Revenue:
Total revenue	$ 5,381,310	$ 2,859,073	$ 8,587,067	$ 5,061,504
Cost of revenue:
Total cost of revenue	6,558,024	4,411,538	9,545,264	6,035,895
Gross loss	(1,176,714)	(1,552,465)	(958,197)	(974,391)
Selling, general and administrative expenses:
Selling, advertising and promotional expense	370,170	95,629	513,545	171,493
General and administrative expense	1,306,767	2,113,207	2,414,135	3,509,284
Total selling, general and administrative expenses	1,676,937	2,208,836	2,927,680	3,680,777
Operating loss	(2,853,651)	(3,761,301)	(3,885,877)	(4,655,168)
Other income (expense):
Interest income	55,481	45,946	132,287	77,921
Interest expense	(28,648)	(77,280)	(96,098)	(869,553)
Other income	20,492	18,767	20,492	35,467
Loss on extinguishment of debt – related party		(1,249,372)
Change in fair value of derivative liabilities	(6)	857,189	(289,361)	3,373,080
Litigation settlement	(984,000)		(984,000)
Gain on extinguishment of liabilities		10,619	63,259	2,230,716
Total other income (expense) from continuing operations	(936,681)	(394,131)	(1,153,421)	4,847,631
Income (loss) before income tax benefit (provision) from continuing operations	(3,790,332)	(4,155,432)	(5,039,298)	192,463
Income tax expense benefit (provision)
Net income (loss) from continuing operations	(3,790,332)	(4,155,432)	(5,039,298)	192,463
Loss from discontinued operations	(756,436)	(333,772)	(5,392,785)	(414,585)
Net loss from discontinued operations	(756,436)	(333,772)	(5,392,785)	(414,585)
Net loss	(4,546,768)	(4,489,204)	(10,432,083)	(222,122)
Net income (loss) attributable to noncontrolling interests		(55,997)		(59,608)
Net income (loss) attributable to common stockholders	$ (4,546,768)	$ (4,545,201)	$ (10,432,083)	$ (281,730)
Basic:
Continuing operations	$ (4.58)	$ (60.76)	$ (7.93)	$ 5.52
Discontinued operations	(0.91)	(5.70)	(8.49)	(13.60)
Net income (loss) attributable to common stockholders per share – basic	(5.49)	(66.46)	(16.42)	(8.08)
Diluted:
Continuing operations	(4.58)	(60.76)	(7.93)	5.52
Discontinued operations	(0.91)	(5.70)	(8.49)	(13.60)
Net income (loss) attributable to common stockholders per share – diluted	$ (5.49)	$ (66.46)	$ (16.42)	$ (8.08)
Weighted average shares outstanding:
Basic	827,849	68,390	635,258	34,867
Diluted	827,849	68,390	635,258	34,867
Product [Member]
Revenue:
Total revenue	$ 2,644,529	$ 1,740,828	$ 2,980,635	$ 2,445,416
Cost of revenue:
Total cost of revenue	3,988,277	3,317,407	4,368,645	3,928,494
Service, Other [Member]
Revenue:
Total revenue	2,736,781	1,118,245	5,606,432	2,616,088
Cost of revenue:
Total cost of revenue	$ 2,569,747	$ 1,094,131	$ 5,176,619	$ 2,107,401

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2026	Jun. 30, 2025
Cash Flows from Operating Activities:
Net loss	$ (10,432,083)	$ (222,122)
Less: net income (loss) from discontinued operations, net of tax	(5,392,785)	(414,585)
Net income (loss) from continuing operations	(5,039,298)	192,463
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation and amortization	81,532	728,176
Stock based compensation	112,586	23,565
Non-cash interest expense	7,535	685,158
Gain on extinguishment of liabilities	(63,259)	(2,230,716)
Non-cash litigation settlement	384,000
Change in fair value of warrant derivative liability	289,361	(3,373,080)
(Increase) decrease in:
Accounts receivable – trade	(535,431)	384,511
Accounts receivable – other (including related party)	(3,886)	153,827
Inventories	(79,098)	176,660
Prepaid expenses	(491,717)	128,413
Operating lease right of use assets	90,073	(1,098,592)
Other assets	39,998	510,000
Increase (decrease) in:
Accounts payable	500,729	(3,468,491)
Accrued expenses	890,894	(110,904)
Accrued interest - related party		177,899
Income taxes payable	(10,441)
Operating lease obligations	(7,705)	857,279
Deferred revenues	1,153
Net cash used in operating activities – continuing operation	(3,832,974)	(6,263,832)
Net cash provided by (used in) operating activities – discontinued operation	68,635	(2,380,274)
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(182,047)	(218,474)
Purchases of intangible assets	(46,621)	(10,786)
Proceeds from sale of Nobility Healthcare	100,000
Net cash used in investing activities – continuing operation	(128,668)	(229,260)
Net cash used in investing activities – discontinued operation	(12,074)	(83,781)
Cash Flows from Financing Activities:
Net proceeds from issuance of common stock under equity line of credit	4,004,659
Net proceeds of February 2025 public equity offering with detachable warrants		14,308,300
Net proceeds of unsecured promissory note – Entertainment		600,000
Payments of related party note payable		(162,000)
Payments on Commercial Extension of Credit – Entertainment		(100,000)
Payments on Senior Secured Promissory Notes – Corporate		(3,600,000)
Payments on Merchant Advances – Corporate		(1,922,750)
Payments on unsecured promissory note – Entertainment	(25,000)
Principal payment on EIDL loan	(1,754)	(1,690)
Proceeds from issuance of common shares upon exercise of Series B warrants		3,793
Net cash provided by financing activities – continuing operation	3,977,905	9,125,653
Net cash provided by financing activities – discontinued operation
Net increase (decrease) in cash, cash equivalents and restricted cash	72,824	168,506
Cash and cash equivalents, beginning of period	757,369	454,314
Cash and cash equivalents, end of period	830,193	622,820
Supplemental disclosures of cash flow information:
Cash payments for interest	35,689	26,896
Cash payments for income taxes	10,441	5,198
Supplemental disclosures of non-cash investing and financing activities:
Note receivable received in connection with sale of discontinued operation, at initial fair value.	1,117,303
Transition to additional paid-in capital upon conversion of convertible notes	1,357,253
Issuance of common stock upon conversion of convertible notes payable	112
Deemed capital contribution related to modification of notes payable - related party		1,871,994
Fair value of warrants issued with sale of shares		6,748,425
Transition of warrant derivative liability to equity upon exercise of warrants		7,928,030
Common stock issuable in settlement of litigation	384,000
Issuance costs withheld from ELOC proceeds	638,282
Issuance of common stock upon exercise of pre-funded warrants		$ 49

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2026	Dec. 31, 2025
Current assets:
Cash and cash equivalents	$ 830,193	$ 757,369
Accounts receivable - trade	632,908	97,477
Other receivables	296,389	292,503
Notes receivable	499,764
Inventories, net	280,137	201,039
Prepaid expenses	1,262,488	635,019
Assets of revenue-cycle management business held-for-sale		911,753
Assets of video solutions business held-for-sale	4,544,887	6,148,578
Total current assets	8,346,766	9,043,738
Property, plant, and equipment, net	430,089	314,858
Goodwill and other intangible assets, net	4,881,326	4,849,422
Operating lease right of use assets, net	866,774	956,847
Notes receivable - long term	231,360
Other assets	190,389	230,387
Assets of revenue-cycle management business held-for-sale		413,752
Assets of video solutions business held-for-sale	2,602,708	3,519,523
Total assets	17,549,412	19,328,527
Current liabilities:
Accounts payable	4,396,451	3,958,981
Accrued expenses	1,279,416	388,522
Current portion of operating lease obligations	195,071	102,893
Deferred revenue – current	540,780	539,627
Debt obligations – current	503,609	707,826
Warrant derivative liabilities	14	852,844
Income taxes payable		10,441
Liabilities of revenue-cycle management business held for sale		138,029
Liabilities of video solutions business held for sale	3,484,187	3,841,162
Total current liabilities	10,399,528	10,540,325
Long-term liabilities:
Debt obligations – long term	135,720	137,541
Operating lease obligation – long term	671,703	771,586
Notes payable – related party – long term	424,630	400,110
Liabilities of revenue-cycle management business held for sale		299,723
Liabilities of video solutions business held for sale	3,642,377	4,809,286
Total liabilities	15,273,958	16,958,571
Commitments and contingencies (Note 13)
Stockholders’ Equity:
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized; none issued or outstanding – June 30, 2026 and December 31, 2025
Common stock, $0.001 par value; 13,333,333 authorized; shares issued: 2,856,860 – June 30, 2026 and 138,004 – December 31, 2025	2,857	138
Additional paid in capital	154,431,701	148,440,056
Noncontrolling interest in consolidated subsidiary		(1,885,802)
Accumulated deficit	(152,159,104)	(144,184,436)
Total equity:	2,275,454	2,369,956
Total liabilities and equity	$ 17,549,412	$ 19,328,527