Company: DGLY
Filing Date: 2025-08-18
Form Type: 10-Q
Source: 0001641172-25-024667
Chunk: 66

Company: DIGITAL ALLY, INC.
Filing Date: 2025-08-18
Form: 10-Q
Item: Part I, Item 1
Chunk 66
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 35

At the time of the June
4, 2025 modification, management considered the repetitive nature of the modifications as an indication that the Officer was acting
more in his capacity as an equity holder than as a creditor. In addition, management reconsidered the accounting treatment for the
March 20, 2025 modification and changed its estimate whereby, the officer was more likely than not acting in his capacity as an
equity holder in the Company when negotiating the March 20, 2025 debt modification, as well. As a result, the Company determined to
treat the $622,622 gain on the June 4, 2025 modification as a deemed contribution of capital rather than a gain recognized in the
condensed consolidated statement of operations. In addition, the Company reconsidered the accounting treatment for the $1,249,372
gain on the March 20, 2025 modification and determined to treat it as a deemed contribution of capital rather than a gain recognized
in the condensed consolidated statement of operations. Therefore the $1,249,372 gain on the March 20, 2025 modification was reversed
during the quarter ended June 30, 2025 and recorded as a deemed contribution of capital rather than a gain recognized in the
condensed consolidated statement of operations.

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 June 30, 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 six months ended June 30, 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 June 30,