Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 151

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 151
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 annum with repayment beginning January 2, 2024. As of December 31, the entire TicketSmarter Related
Party note balance totaled $2,700,000, and is classified as current, with an accrued interest balance of $488,711, respectively. 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.

    34

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. No payments have been made to date in 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.

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