Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 56

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 56
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 of the date of the second modification, reduced the interest rate from 13.25% per annum to 8% per annum, and extended and reduced the
repayment amount from $54,000 per week to $11,000 per week beginning April 1, 2025. The modification was deemed to be an extinguishment
of debt resulting in a gain on extinguishment of note payable – related party of $1,249,372 during the three months ended March
31, 2025.

Company Related Party Note

On August 22, 2024, Digital Ally’s
Chief Executive Officer, made a loan in the amount of $100,000 to the Company to support its operations. In addition, on October 24, 2024,
Digital Ally’s Chief Executive Officer, made an additional loan in the amount of $40,000 to the Company to support its operations.
These transactions were recorded as related party notes payable (the “Company Related Party Notes”). The Company Related Party
Notes bear interest at prime rate (8.00% as of March 31, 2025 and December 31, 2024) per annum with repayment due on demand. The Company
paid off the Company Related Party Notes in full during the three months ended March 31, 2025. As of December 31, 2024, the entire Company
Related Party note of $140,000, is classified as current, with an accrued interest balance of $3,465. The Company Related Party Notes
balance is $-0- and $140,000 and an accrued interest balance of $-0- and $3,465 as of March 31, 2025 and December 31, 2024, respectively.

NOTE 14. GAIN ON EXTINGUISHMENT OF LIABILITIES

The Company
recorded gains on the extinguishment of liabilities for the three months ended March 31, 2025 and 2024 of $2,220,097,
and $682,345,
respectively. The gains reflect income related to the video solutions and entertainment segment’s ability to negotiate down
payables and other contract obligations during the three months ended March 31, 2025 utilizing funds generated by the closing of the
February 2025 public equity offering on February 13, 2025. The discount received was recognized as a gain on extinguishment of
liabilities in the condensed consolidated statement of operations for the three months ended March 31