Company: DGLY
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021680
Chunk: 71

Company: DIGITAL ALLY, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 71
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, 2023, a trust, the beneficiaries of which are an officer of TicketSmarter’s and his spouse, made a loan in the amount
of $2,325,000 to TicketSmarter to support TicketSmarter’s operations. On October 2, 2023 an additional $375,000 was advanced to
Ticketsmarter. The transaction was recorded as a related party note payable (the “TicketSmarter Related Party Note”). The
TicketSmarter Related Party Note bears interest of 13.25% per annum with repayment beginning January 2, 2024. As of December 31, 2024
the entire TicketSmarter Related Party note balance totaled $2,700,000, and was classified as current, with an accrued interest balance
of $488,711. The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted
rate, the discount received to resolve such outstanding payables is recognized as a gain on extinguishment of liabilities on the condensed
consolidated statement of operations. Additionally, these negotiations relieved TicketSmarter of numerous future obligations following
fiscal year 2023.

On
August 19, 2024, the parties agreed to amend the note whereby the repayment dates were extended to begin on January 2, 2025 and continue
at $54,000 for 50 consecutive weeks plus interest. The parties did not change any other provisions or terms of the note. The amendment
was determined to be a modification of the note rather than an extinguishment and reissuance of a new note. Payments totaling $22,000
have been made through September 30, 2025.

On
March 20, 2025, the parties agreed to a second modification of the TicketSmarter Related Party Note. The modification eliminated all
accrued interest totaling $582,203 as 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. At the time of the modification, management considered the officer’s lack Company-wide