Item 2. Properties
Item 2.
Properties.
On April 30, 2021, the Company closed on a purchase and sale agreement
to acquire a 71,361 square feet commercial office building located in Lenexa, Kansas which was intended to serve as the Company’s
future office and warehouse needs for executive offices and for management and warehouse operations for the video solutions operating
segment. The building contains approximately 30,000 square feet of office space and the remainder warehouse space. The total purchase
price was approximately $5.3 million. The Company funded the purchase price with cash on hand, without the addition of external debt or
other financing.
On
October 26, 2023, the Company entered into a Loan and Security Agreement (the “Kompass Loan Agreement”) by and between the
Company, Digital Ally Healthcare, and Kompass Kapital Funding, LLC, a Kansas limited liability company (“Kompass”). In connection
with the Kompass Loan Agreement, on October 26, 2023, the Company entered into a Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing by and between the Company, as grantor, and Kompass, as grantee, and mortgaged its real property having an address
of 14001 Marshall Drive, Lenexa, KS 66215.
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During
the year ended December 31, 2024 the Company sold its building for $5,900,000 less closing costs of $36,634. The carrying amount of the
building on the date of sale was $5,461,623. As a result of the sale the Company recorded a gain of $401,743 in the Consolidated Statement
of Operations during the year ended December 31, 2024. As part of the sale agreement the Company leased the space back for a period of
6 months, ending February 12, 2025. The Company is searching for suitable facilities for its long-term needs.
The Company entered into an operating
lease with a third party on October 16, 2024, for office space used by the entertainment segment and temporarily by the video solutions
segment. The terms of the lease include 36 monthly payments of $7,251.92 with a maturity date of October 31, 2027. The remaining lease
term for the Company’s office space lease as of December 31, 2024 was thirty-four months.
On
June 30, 2021, the Company completed the acquisition of a private medical billing company, through Nobility Healthcare, a majority
owned subsidiary. Upon completion of this acquisition, Nobility Healthcare became responsible for the operating lease for the
seller’s office space. The lease terms include monthly payments ranging from $2,648 to $2,774 and terminate in July 2024. The
Company was responsible for property taxes, utilities, insurance and its proportionate share of common area costs related to this
location. The lease term expired in July 2024 and was not renewed by the Company.
On
August 31, 2021, the Company completed the acquisition of another private medical billing company, through Nobility Healthcare. Upon
completion of this acquisition, Nobility Healthcare became responsible for the operating lease for the seller’s office space. The
lease was renewed in April 2023 with favorable terms and payments ranging from 7,436 to 8,877 thereafter, and with a termination date
in March 2030.
On
September 1, 2021, the Company completed the acquisition of Goody Tickets, LLC and TicketSmarter, LLC, through TicketSmarter. Upon completion
of this acquisition, the Company became responsible for the operating lease for the TicketSmarter office space. The lease terms included
monthly payments ranging from $7,211 to $7,364 and the lease was originally going to expire in December 2022. The Company signed a six-month
extension through June 2023 and is currently on a month-to-month lease with plans to relocate the entertainment operating segment.
On
January 1, 2022, the Company completed the acquisition of another private medical billing company, through Nobility Healthcare. Upon
completion of this acquisition, Nobility Healthcare became responsible for the operating lease for the seller’s office space. The
lease terms include monthly payments ranging from $4,233 to $4,626 and terminate in June 2025. The Company plans to relocate the revenue
cycle management operating segment acquired operations to existing owned or leased facilities upon termination of this operating lease.
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