Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 58

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 58
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Acquisition Agreement”) with JC Entertainment, LLC, a Kansas limited liability
company (“JC Entertainment”). Pursuant to the Acquisition Agreement, Kustom 440 acquired certain assets associated with a
music entertainment event (“Country Stampede”), including all intellectual property arising out of and relating to Country
Stampede (“Country Stampede Intellectual Property”) and certain contracts in which JC Entertainment is a party to host and
operate the 2024 Country Stampede (the “Assumed Contracts”, and together with the Country Stampede Intellectual Property,
the “Purchased Assets”).

As consideration 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 any and all claims, liabilities, costs, suits, or the like relating to such
refund request.

The Company accounts for business
combinations using the acquisition method and that 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) relative to this transaction for tax purposes. Therefore, the excess purchase
price over the fair value of net