Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 219

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 2
Chunk 219
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 respectively. The increase is attributable to the amortization
of debt discounts associated with the senior secured promissory notes that were paid off with proceeds from the February 2025 public equity
offering..

Other income (expense)

Other income (expense) decreased
to $16,700 for the three months ended March 31, 2025, from $27,602 during the three months ended March 31, 2024, which reflects income
related to a warehouse sublease within the corporate headquarters during early 2024 which ceased upon the sale of the building which occurred
in 2024.

Gain on Extinguishment of Debt - related
party

On September 22, 2023, a trust, the beneficiaries
of which are TicketSmarter’s Chief Executive Officer and his spouse, made a loan in the amount of $2,325,000 to TicketSmarter
to support TicketSmarter’s operations. The Related Party Note bears interest of 13.25% per annum with repayment beginning January
2, 2024. On October 2, 2023 an additional $375,000 was advanced to Ticketsmarter which increased the loan balance to $2,700,000.
The use of proceeds of the TicketSmarter Related Party Note was to resolve numerous outstanding payables at a discounted rate, the discount
received 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.

50

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 during the three months ended March
31, 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