Digital Ally Inc.
10/28/2024 | Press release | Distributed by Public on 10/28/2024 15:21
Accelaration/Increase of Financial Obligation Form 8 K
Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under and Off-Balance Sheet Arrangement.
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 "Original Note"),as modified pursuant to that Letter Agreement dated July 13, 2024, (the "First Letter Agreement"), as further modified pursuant to that Letter Agreement dated September 12, 2024, (the "Second Letter Agreement"), as further modified pursuant to that Amended and Restated Promissory Note, dated September 25, 2024 (the "Amended Note", and together with the Original Note, the "Note"). In connection with the Agreement, the Borrowers entered into a Security Agreement (the "Security Agreement") by and between the Borrowers, as grantor, and the Purchaser, as grantee.On October 22, 2024, the Company received a Default and Reservation Letter (the "Default Notice") from counsel for Softforge Innovation, LLC ("Softforge"), the administrative agent for the Note, (i) notifying the Company that it is in default under the Note for, among other reasons, failing to make a $100,000 payment that was due on October 10, 2024,(ii) accelerating all principal and interest payments due under the Note, and (iii) demanding the Borrowers enter into a lockbox control agreement within ten (10) business days of the date of the Default Notice. As of the date of this report, the outstanding obligation of the Company under the Note is approximately $1,600,000.
On October 24, 2024, the Company received a Notice of UCC Article 9 Public Sale (the "Sale Notice") from counsel to Softforge notifying the Company that it intends to conduct a public sale of the collateral securing the Company's obligations under the Note and Security Agreement at 11:00 a.m. ET on November 5, 2024.
The Company has notified Softforge that it disputes the claims made in the Default Notice and the Sale Notice and demanded that Softforge immediately rescind the Sale Notice and cancel the public sale. The Company intends to vigorously defend its rights, including by seeking injunctive relief and damages against Softforge.