Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 76

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 76
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 for acquiring the Purchased Assets, Kustom 440 paid JC Entertainment the aggregate purchase price amount $542,959, with
the sum of $400,000 paid at the time of closing (“Closing”), and the remainder to be paid on or before thirty days from the
time of Closing. Kustom 440 shall receive a credit for all non-refunded festival ticket sales for the 2024 Country Stampede to be calculated
immediately prior to Closing, and JC Entertainment shall be entitled to keep all ticket sale proceeds made and/or received prior to Closing.
Kustom 440 shall be obligated, to the extent a refund is sought after Closing, to provide such refund, if appropriate, to the customer
requesting a refund, and shall indemnify and hold harmless JC Entertainment from all claims, liabilities, costs, suits, or the like relating
to such refund request.

The
Company accounts for business combinations using the acquisition method and the Company has early adopted the amendments of Regulation
S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, the presentation of the assets acquired,
historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are
not required to be presented. Under the acquisition method, the purchase price of the Country Stampede Acquisition has been allocated
to the acquired tangible and identifiable intangible assets and assumed liabilities based on their estimated fair values at the time
of the Country Stampede Acquisition. This allocation involves a number of assumptions, estimates, and judgments that could materially
affect the timing or amounts recognized in our condensed consolidated financial statements. The Country Stampede Acquisition was structured
as an asset purchase; however the parties agreed to coordinate the election to invoke IRS Section 338(h)(10) in relation to this transaction
for tax purposes. Therefore, the excess purchase price over the fair value of net tangible assets acquired was recorded as goodwill,
which will be amortized over 15 years for income tax filing purposes. Likewise, the other acquired assets were stepped up to fair value
and is deductible for income tax purposes. The results of operations of acquired businesses are included in the condensed consolidated
statement of operations from the acquisition date.

The
purchase price of the Country Stampede Acquisition was allocated to tangible assets, goodwill, identifiable intangible assets, and assumed
liabilities based on their preliminary estimated fair values at the time of the acquisition. The Company retained the services of an
independent valuation