Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 201

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 201
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 Kustom 440, entered into an Asset Purchase Agreement (the “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 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