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| RELATED PARTY TRANSACTIONS | NOTE 17. RELATED PARTY TRANSACTIONS
Transactions with Related Party of TicketSmarter
Note payable – related party is comprised of the following:
Accrued interest – related party was $0 and $0 at June 30, 2026 and December 31, 2025, respectively.
Debt obligations mature during the twelve-month periods following June 30, 2026 as follows:
Goodman Trust Note
The note payable to the Goodman Trust (the “Goodman Trust”), the beneficiaries of which are the Chief Executive Officer of TicketSmarter, Inc. and his spouse, originated in 2023 when the Goodman Trust advanced a total of $2,700,000 to TicketSmarter to resolve outstanding payables at discounted rates. The officer has no role at the parent company and is not an officer or director of Kustom Entertainment, Inc. Following four amendments between August 2024 and June 2025, the outstanding principal balance is $2,000,000, bearing interest at 8% per annum, payable in weekly installments of $9,600 beginning approximately January 2037, with all payments subordinated to the Company’s intercompany arrangements with TicketSmarter.
The note was recorded at fair value at the June 4, 2025 modification date, with the resulting debt discount of $1,627,452 amortized to non-cash interest expense using the effective interest method over the remaining term of the note. During the three and six months ended June 30, 2026, the Company recognized $12,933 and $24,520, respectively, of non-cash interest expense related to amortization of the debt discount, and no cash interest was paid. The unamortized discount balance was $1,575,370 as of June 30, 2026, compared to $1,599,890 as of December 31, 2025.
See the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding the original loan, the amendments, and the related fair value determinations.
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