---
schema_version: "secwatch.filing_event.v1"
accession: "0001493152-23-011561"
form_type: "8-K"
ticker: "KUST"
cik: "0001342958"
company_name: "KUSTOM ENTERTAINMENT, INC."
filed_at: "2023-04-07T23:59:59+00:00"
generated_at: "2026-06-17T04:29:33.561373+00:00"
event_type: "debt"
sentiment: "neutral"
materiality_score: 0.7
calibrated_materiality_score: 0.7
confidence: "high"
source: SEC EDGAR
---

# Digital Ally issues $3M secured convertible notes at 10% OID, plus warrants

## Summary
- Issued $3M Senior Secured Convertible Notes (net $2.7M after 10% OID) and warrants to investors.
- Notes convertible at $5.00/share; warrants exercisable at $5.50, $6.50, $7.50 for 1.125M shares total.
- Notes secured by substantially all assets including headquarters mortgage; rank senior to all other debt.
- Investors may require second closing of up to $3M additional notes within 18 months.
- Company must file resale registration statement within 10 business days; failure triggers 2% monthly damages.

## SEC filing metadata
- accession: 0001493152-23-011561
- form_type: 8-K
- ticker: KUST
- cik: 0001342958
- company_name: KUSTOM ENTERTAINMENT, INC.
- filed_at: 2023-04-07T23:59:59+00:00
- event_type: debt
- sentiment: neutral
- materiality_score: 0.7
- calibrated_materiality_score: 0.7
- confidence: high
- sec_items: 1.01, 2.03, 3.02, 9.01
- EDGAR index: https://www.sec.gov/Archives/edgar/data/1342958/000149315223011561/0001493152-23-011561-index.htm
- EDGAR primary document: https://www.sec.gov/Archives/edgar/data/1342958/000149315223011561/form8-k.htm

## Machine-readable alternates
- HTML: https://secwatch.observer/filing/0001493152-23-011561
- JSON: https://secwatch.observer/filing/0001493152-23-011561.json
- Plain text: https://secwatch.observer/filing/0001493152-23-011561.txt

## Key facts
- Debt Financings
  KUSTOM ENTERTAINMENT, INC. incurred senior notes of $3,000,000 with certain investors at No interest accrues under the Notes.
  - Instrument: senior notes
  - Principal: $3,000,000
  - Counterparty: certain investors
  - Rate: No interest accrues under the Notes
  - Event: incurrence
  source text: At the First Closing, the Company issued and sold to the Purchasers Senior Secured Convertible Notes in the aggregate original principal amount of $3,000,000
  evidence_url: https://www.sec.gov/Archives/edgar/data/1342958/000149315223011561/0001493152-23-011561-index.htm
- Material Agreements
  KUSTOM ENTERTAINMENT, INC. entered into Senior Secured Convertible Notes with certain investors valued at $3,000,000 principal amount (effective 2023-04-05).
  - Action: entry
  - Agreement: notes offering
  - Counterparty: certain investors
  - Value: $3,000,000 principal amount
  - Effective: 2023-04-05
  source text: On April 5, 2023, Digital Ally, Inc. (the “Company”) entered into and consummated the initial closing (the “First Closing”) of the transactions contemplated by a Securities Purchase Agreement, dated as of April 5, 2023 (the “Purchase Agreement”), between the Company and certain investors (the “Purchasers”).
  evidence_url: https://www.sec.gov/Archives/edgar/data/1342958/000149315223011561/0001493152-23-011561-index.htm
- Material Agreements
  KUSTOM ENTERTAINMENT, INC. entered into Security Agreement with Purchasers valued at Secured by substantially all assets (effective 2023-04-05).
  - Action: entry
  - Agreement: credit facility
  - Counterparty: Purchasers
  - Value: Secured by substantially all assets
  - Effective: 2023-04-05
  source text: The Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries, and are secured by substantially all of the Company’s assets, as evidenced by (i) a Security Agreement entered into at the Closing (the “Security Agreement”), (ii) a Trademark Security Agreement entered into at the Closing (the “Trademark Security Agreement”), (iii) a Patent Security Agreement entered into at the Closing (the “Patent Security Agreement”), (iv) a Guaranty executed by all direct and indirect subsidiaries of the Company (the “Guaranty”) pursuant to which each of them has agreed to guaranty the obligations of the Company under the Notes, and (v) a mortgage on the Company’s headquarters building in favor of the Purchasers.
  evidence_url: https://www.sec.gov/Archives/edgar/data/1342958/000149315223011561/0001493152-23-011561-index.htm

This AI-assisted summary is a reading aid. Review the linked SEC EDGAR filing before relying on any specific claim.