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.