Company: DGLY
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011765
Chunk: 86

Company: DIGITAL ALLY, INC.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 86
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 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 to $11,000 per week beginning April 1, 2025. The modification was deemed to be an extinguishment
of debt resulting in a gain of $1,249,372 during the three months ended March 31, 2025.

Gain on Extinguishment of Liabilities

The Company
recorded a gain 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 gain on
extinguishment of liabilities was $682,345 for the three months ended March 31, 2024, which reflects income related to the
entertainment segment’s ability to negotiate down payables and other contract obligations during the period. The Company
utilized funds from the related party note payable to resolve numerous outstanding payables at a discounted rate, 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, 2024.

Gain on disposal of intangibles

Gain on disposal of int