Business Context and Reporting Period
Company: Digital Ally, Inc. (Note: Request metadata listed "KUSTOM ENTERTAINMENT, INC." but the filing text identifies the registrant as Digital Ally, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: November 7, 2025
Reporting Period: Event date of November 7, 2025
Business Context: The Company entered into a First Amendment to a Common Stock Purchase Agreement originally dated September 15, 2025, with a specific investor.
Key Financial Metrics
This filing is an event report regarding a material definitive agreement and does not contain standard financial statements (Revenue, Profit, Cash Flow, Margins, Debt, or Liquidity ratios). The filing text does not provide a clear value for these metrics.
Material Changes and Agreement Details
The primary material change is the execution of the First Amendment to the Common Stock Purchase Agreement, which mandates the payment of a Commitment Fee to the Investor. The payment structure is as follows:
- Equity Component: Shares of Common Stock equal to 19.99% of the shares outstanding on the date of the original Purchase Agreement execution.
- Valuation Method: Value per share based on the 5-day VWAP ending on the 10th Trading Day following the later of stockholder approval or the effectiveness of the Resale Registration Statement.
- Valuation Cap: The valuation is capped at the full commitment fee amount.
- Ownership Limit: Subject to the Beneficial Ownership Limitation defined in the Purchase Agreement.
- Cash Component: The balance of the fee is to be paid in cash using 30% of proceeds from any subsequent financings, including the Purchase Agreement.
Guidance, Outlook, and Risks
Management Commentary: The filing states that the description of the Amendment is not complete and is qualified in its entirety by reference to the full text of the Amendment filed as Exhibit 10.1.
Risks and Contingencies: The payment of the commitment fee is contingent upon specific valuation dates (stockholder approval or registration statement effectiveness) and the availability of proceeds from subsequent financings for the cash portion. The equity issuance is subject to beneficial ownership limitations.
Investor Verification Checklist
- Verify the exact number of shares outstanding on the date of the original Purchase Agreement (September 15, 2025) to calculate the 19.99% equity issuance.
- Review the full text of the First Amendment (Exhibit 10.1) for the specific definition of the "Commitment Fee" total value.
- Confirm the status of the Resale Registration Statement and whether stockholder approval has been obtained to determine the valuation date.
- Assess the Company's ability to generate proceeds from subsequent financings to satisfy the cash portion of the commitment fee.
- Check for any existing beneficial ownership limitations that might restrict the Investor's ability to receive the full 19.99% allocation.