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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 12, 2024
DIGITAL ALLY, INC.
(Exact Name of Registrant as Specified in Charter)
| Nevada | 001-33899 | 20-0064269 | ||
| (State or other Jurisdiction | (Commission | (IRS Employer | ||
| of Incorporation) | File Number) | Identification No.) |
14001 Marshall Drive, Lenexa, KS 66215
(Address of Principal Executive Offices) (Zip Code)
(913) 814-7774
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| Common stock, $0.001 par value | DGLY | The Nasdaq Capital Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Letter Agreement
As previously disclosed, on March 1, 2024, Digital Ally, Inc. (the “Company”) entered into a Note Purchase Agreement (the “Agreement”), by and between the Company, Kustom Entertainment, Inc., a Nevada corporation and wholly-owned subsidiary of the Company (“Kustom Entertainment” and, together with the Company, the “Borrowers”), and Mosh Man, LLC, a New Jersey limited liability company (the “Purchaser”), pursuant to which the Borrowers issued to the Purchaser a Senior Secured Promissory Note (the “Note”) with a principal amount of $1,425,000. On July 13, 2024, the Company entered into a Letter Agreement (the “First Letter Agreement”), by and between the Company, Kustom Entertainment and the Purchaser, amending the terms of the Agreement.
On September 12, 2024, the Company entered into a Letter Agreement (the “Second Letter Agreement”), by and between the Company, Kustom Entertainment and the Purchaser. Pursuant to the Second Letter Agreement: (a) the Purchaser agreed to advance additional $265,000 (the “Advance”) to be used by Borrowers to pay certain obligations, and the Advance will be included in the principal amount due under the Note, (b) the parties agreed to extend the repayment date of $100,000, by the Borrowers to the Purchaser, from September 12, 2024, to September 26, 2024, which payment shall be considered the September 12, 2024 payment pursuant to the Borrowers’ obligation, under the First Letter Agreement, to pay to the Purchaser $100,000 each month on the 12th calendar day of such month, (c) if, at any time, any new UCC-1 statement is filed subsequent to September 11, 2024, by any other creditor against any of the assets of the Borrowers, the filing shall constitute a default under the Note, and (d) Borrowers agreed to pay a $50,000 waiver of default and extension fee which will be included in the principal amount due under the Note.
Except as stated above, the Second Letter Agreement does not result in any other substantive changes to the Agreement.
A copy of the Second Letter Agreement is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference, and the foregoing descriptions of the Letter Agreement is qualified in its entirety by reference thereto.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Second Letter Agreement. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: September 13, 2024
| Digital Ally, Inc. | ||
| By: | /s/ Stanton E. Ross | |
| Name: | Stanton E. Ross | |
| Title: | Chairman and Chief Executive Officer | |
Exhibit 10.1
September 12, 2024
Mosh Man, LLC
173 Spring Ridge Drive
Berkely Heights, NJ 07922
Attention: Benjamin Zucker
| Re: | Modification of Note Purchase Agreement |
Dear Sirs:
Reference is made to that certain (a) Note Purchase Agreement (as modified from time to time, the “Purchase Agreement”), dated as of March 1, 2024, between Digital Ally, Inc. (the “Company”), Kustom Entertainment, Inc. (“Kustom Entertainment” and, together with the Company, the “Borrowers”), and Mosh Man, LLC (the “Purchaser”), and (b) Senior Secured Promissory Note issued pursuant to the Purchase Agreement (the “Note”) and (c) the Letter Agreement dated July 13, 2024 (the “Letter Agreement”) modifying the Purchase Agreement. Capitalized terms used but not defined herein shall have the meanings given to them in the Purchase Agreement.
Whereas the Borrowers have requested that the Purchaser advance (the “Advance”) additional funds to allow the Borrowers to meet certain obligations (in aggregate the “Obligations” and each item included in the Obligations is herein an “Obligation”), and
And whereas Purchaser has agreed to provide the Advance on the following terms.
Therefore, this amendment (this “Amendment”) confirms our recent discussions and agreement to make the Advance on the following terms which terms modify and amend the Purchase Agreement and Note.
| 1. | Purchaser agrees to advance $265,000 to be used by Borrowers to pay the Obligations. | |
| 2. | All Obligations must be pre-approved by Purchaser in writing. | |
| 3. | On the written direction of Borrowers, and on the sole discretion of Purchaser, Purchaser may directly pay any pre-approved Obligation. | |
| 4. | The amount of the Advance will be included in the principal amount due under the Note. | |
| 5. | The requirement of Company to pay to the Purchaser $100,000.00 on September 12, 2024, pursuant to Paragraph 6 of the Letter Agreement, is hereby extended to September 26, 2024. For greater certainty, all other payment requirements detailed in the Letter Agreement remain unchanged. | |
| 6. | Any new UCC-1 statement filed subsequent to September 11, 2024 by any other creditor against any of the assets of the Borrowers shall constitute a default under the Note. | |
| 7. | Borrowers agree to pay a $50,000 waiver of default and extension fee which will be included in the principal amount due under the Note. |
The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, waive, amend or modify any other provision of the Purchase Agreement, the Letter Agreement or the Note.
Nothing stated herein is intended as, nor should it be deemed to constitute, a waiver or relinquishment of any of Purchaser’s rights or remedies, whether legal or equitable, all of which are hereby expressly reserved.
All communications and notices hereunder shall be given as provided in the Note Purchase Agreement. This Amendment (a) shall be governed by and construed in accordance with the law of the State of Nevada, (b) is for the exclusive benefit of the parties hereto and beneficiaries of the Purchase Agreement, the Letter Agreement and Note and, together with the other Purchase Agreement, Letter Agreement, and the Note, constitutes the entire agreement of such parties, superseding all prior agreements among them, with respect to the subject matter hereof, (c) may be modified, waived or assigned only in writing and only to the extent such modification, waiver or assignment would be permitted under the Purchase Agreement, the Letter Agreement and Note (and any attempt to assign this Amendment without such writing shall be null and void), (d) is a negotiated document, entered into freely among the parties upon advice of their own counsel, and it should not be construed against any of its drafters and (e) shall survive the satisfaction or discharge of the amounts owing under the Purchase Agreement, the Letter Agreement and the Note. The fact that any term or provision of this Amendment is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person.
Kindly confirm your agreement with the above by signing in the space indicated below and by PDFing a partially executed copy of this Amendment to the undersigned, and which may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.
Very truly yours,
| DIGITAL ALLY, INC. | ||
| By: | /s/ Stanton E. Ross | |
| Name: | Stanton E. Ross | |
| Title: | Chief Executive Officer | |
| KUSTOM ENTERTAINMENT, INC. | ||
| By: | /s/ Stanton E. Ross | |
| Name: | Stanton E. Ross | |
| Title: | Chief Executive Officer | |
| AGREED AND ACCEPTED: | ||
| MOSH MAN, LLC | ||
| By: | /s/ Benjamin Zucker | |
| Name: | Benjamin Zucker | |
| Title: | Managing Member | |