KUSTOM ENTERTAINMENT, INC. Goodwill & Intangibles Disclosure
NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets consisted of the following as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | ||||||||||||||||
Gross value | Accumulated amortization | Accumulated impairment | Net carrying value | |||||||||||||
| Amortized intangible assets: | ||||||||||||||||
| Patents and trademarks (video solutions segment) | $ | 224,851 | $ | 187,350 | $ | $ | 37,501 | |||||||||
| Sponsorship agreement network (entertainment segment) | 5,600,000 | 4,853,333 | 746,667 | — | ||||||||||||
| SEO content (entertainment segment) | 600,000 | 600,000 | ||||||||||||||
| Personal seat licenses (entertainment segment) | 117,339 | 16,949 | 100,390 | |||||||||||||
| Website enhancements (entertainment segment) | 54,908 | 23,383 | 31,525 | |||||||||||||
| 6,597,098 | 5,681,015 | 746,667 | 169,416 | |||||||||||||
| Indefinite life intangible assets: | ||||||||||||||||
| Goodwill (Entertainment segment) | 6,112,507 | 1,735,000 | 4,377,507 | |||||||||||||
| Trade name and trademarks (entertainment segment) | 900,000 | 560,000 | 340,000 | |||||||||||||
| Patents and trademarks pending (video solutions segment) | 144,710 | 144,710 | ||||||||||||||
| Total | $ | 13,754,315 | $ | 5,681,015 | $ | 3,041,667 | $ | 5,031,633 | ||||||||
| December 31, 2024 | ||||||||||||||||
Gross value | Accumulated amortization | Accumulated impairment | Net carrying value | |||||||||||||
| Amortized intangible assets: | ||||||||||||||||
| Patents and trademarks (video solutions segment) | $ | 483,521 | $ | 377,459 | $ | $ | 106,062 | |||||||||
| Sponsorship agreement network (entertainment segment) | 5,600,000 | 3,733,333 | 1,866,667 | |||||||||||||
| SEO content (entertainment segment) | 600,000 | 500,000 | 100,000 | |||||||||||||
| Personal seat licenses (entertainment segment) | 117,339 | 13,037 | 104,302 | |||||||||||||
| Software | 23,653 | 23,653 | ||||||||||||||
| Website enhancements (entertainment segment) | 35,900 | 9,833 | 26,067 | |||||||||||||
| 6,860,413 | 4,633,662 | 2,226,751 | ||||||||||||||
| Indefinite life intangible assets: | ||||||||||||||||
| Goodwill (Entertainment segment) | 6,112,507 | 307,000 | 5,805,507 | |||||||||||||
| Trade name and trademarks (entertainment segment) | 900,000 | 201,000 | 699,000 | |||||||||||||
| Patents and trademarks pending (video solutions segment) | 91,738 | 91,738 | ||||||||||||||
| Total | $ | 13,964,658 | $ | 4,633,662 | $ | 508,000 | $ | 8,822,996 | ||||||||
Patents and trademarks pending will be amortized beginning at the time they are issued by the appropriate authorities. If issuance of the final patent or trademark is denied, then the amount deferred will be immediately charged to expense.
Other intangible assets consist of sponsorship agreement network, SEO content, personal seat licenses, website enhancements and client agreements. These assets are recorded at cost and amortized on a straight-line basis over their estimated useful lives.
| Intangible Asset Useful Life | ||||
| Patents and trademarks (video solutions segment) | $ | 3 years | ||
| Sponsorship agreement network (entertainment segment) | 5 years | |||
| SEO content (entertainment segment) | 4 years | |||
| Personal seat licenses (entertainment segment) | 30 years | |||
| Software | 3 years | |||
| Website enhancements (entertainment segment) | 3 years |
Amortization for the years ended December 31, 2025 and 2024 was $ 1,350,382 and $1,377,809, respectively. Estimated amortization for intangible assets with definite lives for the next five years ending December 31 and thereafter is as follows:
| Year ending December 31: | ||||
| 2026 | $ | 59,715 | ||
| 2027 | 12,382 | |||
| 2028 | 8,663 | |||
| 2029 | 3,911 | |||
| 2030 | 3,911 | |||
| 2031 and thereafter | 80,834 | |||
| $ | 169,416 | |||
Annual impairment test
The company performed its annual goodwill and intangible asset impairment test as of December 31, 2025 on a full quantitative basis, given its prior-year impairment history and continued operating losses across certain segments. The Revenue Cycle Management segment (Nobility Healthcare) was classified as discontinued operations prior to the measurement date and was excluded from the annual impairment analysis.
The fair value of each continuing reporting unit was estimated using a weighting of the income and market valuation approaches. The income approach applied a fair value methodology to each reporting unit based on discounted cash flows. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of its weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in its December 31, 2025 annual impairment test ranged from 18.4% to 22.7%. The company also applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the reporting units. The primary market multiples used are revenue and earnings before interest, taxes, depreciation, and amortization. The income and market approaches were equally weighted for all reporting units.
The combined fair values for all reporting units were then reconciled to the company’s aggregate market value of its shares of Common Stock on the date of valuation, while considering a reasonable control premium. The Company considers a reporting unit’s fair value to be substantially in excess of the reporting unit’s carrying value at a 20% premium or greater. Based on the company’s December 31, 2025 annual impairment test, the Video Solutions Segment’s fair value was substantially in excess of its carrying value, with an indicated equity fair value of $2,580,000 compared to a carrying value of approximately $595,000. The Video Solutions Segment carries no goodwill.
The Entertainment Segment was determined to be impaired. The company held total goodwill of approximately $5,805,507 related to businesses within its Entertainment Segment prior to December 31, 2025 annual impairment test, consisting of $5,579,548 attributable to TicketSmarter and $225,959 attributable to Country Stampede. As a result of its December 31, 2025 annual impairment test, the company concluded that the carrying amount of the Entertainment Segment’s equity exceeded its estimated fair value and recorded a non-cash goodwill impairment charge of $1,428,000, which is included in goodwill and intangible asset impairment charge on its consolidated statements of operations for the year ended December 31, 2025. The remaining goodwill balance for the Entertainment Segment was approximately $4,377,507 as of December 31, 2025. The goodwill impairment was primarily driven by the segment’s continued operating losses, the fixed cost structure of festival operations, and the structural cost challenges within certain Entertainment Segment revenue streams.
Indefinite-lived intangible assets
The Company held indefinite-lived trade names and trademarks with an aggregate carrying value of $340,000 as of December 31, 2025, consisting of the TicketSmarter trade name $210,000 and the Country Stampede trade name $130,000, each related to businesses within its Entertainment Segment.
As a result of its December 31, 2025 annual impairment test, the company concluded that the carrying amounts of both trade names exceeded their estimated fair values and recorded non-cash impairment charges totaling $359,000, which are included in goodwill and intangible asset impairment charge on its consolidated statements of operations for the year ended December 31, 2025. The company recorded a $189,000 impairment charge related to the TicketSmarter trade name, reducing its carrying value from $399,000 to $210,000, and a $170,000 impairment charge related to the Country Stampede trade name, reducing its carrying value from $300,000 to $130,000. The charges were primarily driven by the Entertainment Segment’s continued operating losses, declining revenue performance within the related businesses, and the overall challenging economic environment.
In addition, The Company recorded a non-cash impairment charge of $746,667 related to the sponsorship agreement network intangible asset within the Entertainment Segment, reducing its net carrying value to -0- as of December 31, 2025. The total goodwill and intangible asset impairment charge recorded for the year ended December 31, 2025 was $2,533,667.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 13, 2026 | Showing above |
| 2024 | May 2, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Apr 15, 2022 | |
| 2020 | Mar 31, 2021 | |
| 2019 | Apr 6, 2020 | |
| 2018 | Mar 29, 2019 | |
| 2017 | Apr 13, 2018 | |
| 2016 | Mar 28, 2017 | |
| 2015 | Mar 7, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.